DNA testing took the US by storm, but the novelty seems to be wearing off.
Increasingly affordable genetic sequencing technology and the appealing idea of unraveling one’s heritage has drawn millions of Americans to purchase home DNA kits. This has meant very good business for companies like Ancestry or 23andMe.
However, there are signs that the market has become saturated and that the best days of DNA testing are long behind it.
DNA testing looks out of fashion
Last month, Ancestry CEO Margo Georgiadis wrote a blog post citing “a slowdown in consumer demand across the entire DNA category” and announcing that 6% of its workforce was being laid off.
This isn’t a problem just for Ancestry — the entire market is being affected by shifts in consumer behavior. For instance, 23andMe slashed about 100 positions, or 14%, of its workforce.
More than 30 million people around the world have taken a DNA test, more than half of which have been sold by Ancestry. About 10 million DNA kits were sold by 23andMe, most of which were in the United States.
If 2018 was a fantastic year for DNA testing, the same can’t be said about 2019. According to Second Measure, a company that infers market trends from consumer credit and debit card data, Ancestry’s sales were down 38% in November — what’s typically an excellent month for sales in anticipation of the holidays — compared to the same period in 2018. Meanwhile, 23andMe’s sales were down 54% compared to a year earlier. December, the best month of the year, saw a 15% decline for Ancestry and 48% for 23andMe.
So, what might be causing this sharp decline?
One obvious explanation is that DNA testing is marketed to a niche audience that is interested in learning more about their heritage and have enough disposable income to afford to pay at least $100 for this kind of service.
After 30 million people bought DNA kits, most of the market seems to have saturated. It’s also worth noting that the ancestry results are a lot like newspapers — they’re read by all the members of the family. Why would siblings or close relatives take a heritage test when they could just read yours?
“The DNA market is at an inflection point now that most early adopters have entered the category,” Georgiadis said.
Another major blow to the DNA testing market is privacy concerns. One particularly high-profile case, involving the Golden State Killer, helped highlight how this can be a huge problem for consumer’s most precious data — their genes. To track down the criminal, police used DNA from the killer’s third and fourth cousins who had bought DNA kits and had their information uploaded to a third-party site.
While the case can be seen as a success story in which DNA ancestry technology and law enforcement came together to solve an important case, the reality is that it exposed just how loosely genetic data is being traded and sold among third parties. This includes Silicon Valley startups and pharmaceutical juggernauts. Suddenly, DNA testing wasn’t just entertainment in people’s minds — consumers quickly realized that their genetic information is precious and shouldn’t be shared lightly with anyone.
Privacy concerns have been so vocal among some groups that the Pentagon issued a statement in December 2019, recommending armed forces members not to take DNA tests as they might risk “exposing sensitive genetic information to outside parties.”
Both Ancestry and 23andMe have stepped up their game since these stories have gone public. Their privacy guidelines and terms now require “express consent” from consumers before sharing their data with third parties.
Looking to the future, it’s anyone’s guess if the DNA testing market will recover. It now seems unlikely that the industry will see the same tremendous growth it experienced in 2017 and 2018. However, don’t count DNA testing as dead yet. There are still billions of people around the world who haven’t tried the technology — and with a bit of convincing, they might want to buy.