Will FitTech startup Classium find success with a business model that its competition pivoted away from?

- September 16, 2014 6 MIN READ

Many prefer to exercise solo; they hop onto the elliptical machine and listen to Spotify or Pandora to tune out their surroundings. Others enjoy the social nature of fitness classes. But more and more Australians are looking for flexible, less-structured alternatives, rather committing to a single workout routine or class. A new Sydney-based startup Classium wants to get more Australians prioritising their daily fitness and health. Launched in August this year, Classium allows Australians to search for and book a fitness or recreational class like they would book a restaurant – and all on a web-based platform.

Founded by fitness enthusiast and IT veteran, Dennis Au, Classium is a new meeting place for fitness class seekers and their local specialised studios, gyms, bootcamps, instructor groups and personal trainers. Rather than having fleeting motivation to exercise, and then being put off by the need to sift through thousands of search results on Google, Classium allows Australians to expedite the process of finding the right class for them.

On Classium, users to search for all kinds of physical and recreational activities: strength and cardio, Pilates, yoga, martial arts, bootcamps, sports, fitness for kids, pre/post natal and dance. Class seekers can also filter the search results by time, budget, fitness level and age group.

The best part (or perhaps the worst) is that users are not required to make any long-term commitments to a particular fitness class or gym membership. Classium users have the option of participating in casual classes or programmes, so those who don’t want to be locked into a long-term contract or membership have a way of staying active regardless of whether they just moved suburbs, are on a business trip, or just wanting to try something new.

“The reason that Classium is disruptive is because it is the only website that allows users to book a class online without first having to purchase a gym membership or courses upfront.  Our system does not take commissions from anyone booking a class and it empowers users to try a class without the commitment of long-term memberships,” Au explains.

“It also assists providers in establishing their classes online minus the associated expense of building a website, a booking management system and advertising costs.”

Classium does not only function as a search and booking engine, but also a social media platform, allowing users to invite their friends to join, rate and review classes or instructors. This means that users are able to make an informed decision, removing some of the uncertainty associated with trying a new activity or instructor.

“Some of our competitors are focused upon catch-all booking platforms that sell pre-paid classes or vouchers. Other sites are little more than basic fitness directories without booking functionality or backend systems linked to existing websites,” says Au.

For fitness providers, Classium functions as a promotional platform wherein they acquire new customers. They can share images and videos and create a community around their business, and also offer discounts to fill up empty spots. Or if they want, providers can simply use Classium as a booking management system. After setting up their profiles, they can invite their existing client-base onto the system so that they have full control over their bookings in one place.

When asked about what inspired Au to create Classium, he recalls a holiday in Vietnam. Midway through 2012, Au took a break from his career and spent six months cycling across Vietnam from Hanoi to Ho Chi Minh City.

“I needed to clear my head and cycling provided the perfect opportunity for introspection and thought.  One day on the bike it occurred to me that if I wanted to locate and book a cycling class in Sydney there was no easy way to do it,” he says.

Upon returning to Sydney, Au decided to put his theory to the test. During a BBQ gathering, Au’s friends explained that when moving to a new suburb it’s often difficult to find a local yoga class or fitness provider without first having to wade through many websites.

“The worst part is, when you do find an instructor that you’re happy with, nine times out of ten you can’t get in contact with them or the class time you want is not available. And so the idea for Classium was born,” Au adds.

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When it came to the design of the www.classium.com.au, there were four values important to Au. The website has to communicate: energy, enthusiasm, inclusiveness and empowerment.

“I believe physical activity enlivens these attributes in a person when they discover an activity that they enjoy participating in,” Au explains.

He had to bear in mind the needs of a wide variety of consumers, rather than focus solely on fitness fanatics.

“Because I am entering into a “chicken and egg” or two-way market … the site design focuses on those feelings I believe we all share when we enjoy a physical activity, whether we are a professional or beginner,” says Au.

He admits that he initially wanted to create a website that catered for all types of class bookings – including painting. But the market research he undertook revealed that there are 4 million Australians participating in the fitness industry, which is predicted to increase to 7 million users by 2020.

“Most of this demand is satiated by small to medium-sized businesses with total revenue of over $1.2 billion in 2012 (Fitness Australia). However, walking the streets and talking to a number of class providers, I discovered that there is a huge gap in the fitness industry,” says Au.

“There’s currently a growing demand for fitness classes from time poor fitness enthusiast and there’s no easy way to find providers and suitable fitness classes.”

Au came to the conclusion that a platform allowing clients to locate services close to their home and work was an emerging need; and in order to fully capitalise on this market, Classium would have to be more than a booking management system. It would need to incorporate a social element.

“By adding this social aspect to fitness we provide a valuable user-based feedback mechanism that acts like a word of mouth referral system,” says Au.

Classium has been bootstrapped to date, though Au admits he has received investment offers during the initial stages of development. Whilst the offers were appealing, Au decided to decline. He says that he needed to maintain independence in order to realise his full vision for the site.

“It has been a lot of hard work getting to this point; and while I am not actively looking to raise funds, I would be very interested to find the right partner who can help me grow the business quicker,” Au adds.

Classium is currently based on three-fold monthly subscription model – solo, group and venue.  Fitness providers pay a monthly subscription fee to set up their profiles from which they can schedule as many classes as they wish. This model has been explored before by startups such as FitUsIn who chose to go with a different model after doing their own market research before they launched and went through the Innovyz START program.

Booking a class is completely free for the end-user, which was a deliberate choice on behalf of Au.

“We didn’t want to put up any barriers for booking classes and so that’s the reason that we chose not to charge users to book. Users instead pay the provider in person when they attend the class,” Au says.

“There may be other monetisation opportunities available further down the track but right now our primary concern is to grab market share.”

Au is fully cognisant of the fact that there are competitors in the FitTech marketplace – one being startup FitUsIn, which is slightly different in that  it allows fitness enthusiasts to find, compare and book the best fitness deals via fitusin.com.au or through the startup’s smartphone app. Gyms also have websites that have booking systems integrated into it – however, classes are usually exclusive to members.

Au stresses that rival platforms often require up-front purchases of class packs or vouchers, which creates another task for the user.

“Competitors’ websites force the user to ring the class provider after they make a purchase in order to find out their fitness schedules. Worse still, after they attend the first class it may not be to their liking however in some cases they are stuck with multiple prepaid sessions,” he adds.

There are currently over 30 fitness providers offering more than 1,000 classes on Classium. Au confidently says that their user base is growing at 100 percent week on week – including fitness providers and participants. There are also more than 100 people actively booking classes on Classium.

“Encouragingly, we are already seeing providers direct their current clients to book through the site.  In this way our fitness providers are helping us to promote the site through their own networks,” says Au.

Much of this growth has been attributed to social media promotion and word-of-mouth referrals. LinkedIn has been the most effective tool for acquiring fitness providers – though Au admits that the ‘chicken and egg’ paradox presents a significant challenge for the startup.

“Classium needs to secure one end of the market (providers) in order to attract fitness users, and vice-versa,” says Au. “We are conscious that the benefits for providers are very different to those offered to participants.”

To address this challenge, Classium is offering fitness providers a three-month membership for free, and is also set to launch campaigns that encourage users to refer other fitness providers. The plan is to grow the number of classes offered on Classium, so that consumers have a wider range to choose from.

Given Classium is still in its infancy, Au says the focus for him at the moment is to grow the user base, prior to developing an app. There are also a number of new features and tweaks already in the pipeline based on early customer feedback. Au says global expansion is not on the cards, at least not until Classium is operating on a proven, sustainable business model.

More information is available via www.classium.com.au.