Ecommerce and Retail • Neto
Top Ecommerce Industries: 4 Reasons Why Supplements and Nutrition is Taking Off
23 Jan 2018 • 8 min read
New Year, new you. Sound familiar?
Chances are that’s because it’s the marketing tagline used by almost every industry from finance and insurance to food and fitness promising to overhaul your last year’s self.
Let me paint the picture (which you may be all too familiar with). You had a ‘really good time’ in the lead up to Christmas; your days were peppered with festive treats brought in to work by generous colleagues, your evenings consisted of food and drink-heavy catch ups with friends, family and the like, and your weekends a combination of both.
Once Christmas actually rolled around, the indulgence continued. Extra pudding? Yes please! Would you like cream on that? Why not! Champagne? Well, it’d be rude not to.
So you wake up in the first or second week of January, carrying a couple of extra kilos and a few less dollars and decide you need to make a change. Maybe you even make some New Year’s Resolutions, the most common of which are—you guessed it—related to health; get fit, eat healthier, lose weight. Prime time for retailers in the health industry to cash in.
One industry that experiences increased demand during this time is the Nutrition and Supplements industry, as people look for assistance with their health goals via pills, powders and weight-loss and training products. In Australia, the Nutrition and Supplements industry is currently worth over four billion dollars and growing; particularly in the online space.
According to the Neto State of Ecommerce Report, which analysed consumer and merchant data across a range of industries in Australia, the online Supplements and Nutrition industry is performing well—customers are spending more and sales are growing steadily. Average basket value grew 6% over the year to $73.24, and average monthly sales grew by 17%. Of all the industries studied, Gifting topped the charts at 59% sales growth, followed by Sports & Recreation (39%) and Motor Parts (35%).
The report also revealed that ease, convenience and the search for unique products or those not available locally or in Australia are the primary factors that drive people to shop online rather than in bricks and mortar stores. And once they get online, price, free delivery and discounts will be what differentiate your store from others.
Ease, convenience and the search for unique products or those not available locally or in Australia are the primary factors that drive people to shop online
It’s not just the festive overdose and January hangover that drives demand in this industry. Following a worldwide trend, Australians on the whole are becoming increasingly more aware of and proactive about health. Gym memberships are on the increase, the popularity of yoga and pilates has exploded, as has the popularity of fitness bloggers and Instagram influencers (#fitspo), and health seekers are looking to complement these activities with vitamins and supplements. According to research from Commbank, Australian’s will spend $4.7 billion on health and fitness products in 2018 including memberships, activewear, fit-tech and equipment, equating to around $38 a month.
There is also a growing trend towards using ‘complementary’ or ‘natural’ medicines like supplements and herbal remedies to prevent sickness, resolve health problems or compensate for diets lacking in nutrients. A reported 7 out of 10 Aussies self-medicate in this way, with vitamin D, fish oil, probiotics and multivitamins topping the list as the most popular dietary supplements.
Additionally, the slow but steady shift away from eating meat and dairy is breeding a generation of vegetarians, vegans, pescetarians and flexitarians looking to supplements like iron and protein to replace animal products. According to research conducted by Roy Morgan, the number of Australians following a vegetarian diet grew from 1.7 million to 2.1 million from 2012 to 2016 and this shift is likely to accelerate.
The market is also driven by demand from Chinese consumers who have lost confidence in the quality of products manufactured in their homeland, according to market research company Euromonitor. Australian-made products are sought after because they are manufactured to some of the highest standards in the world and subject to tighter food safety and quarantine controls than Chinese-made products and many Chinese are purchasing large quantities to resell on Chinese marketplaces Tmall and JD.com.
We asked Neto retailer, Body 4 Life Nutrition, what the impact of these changes has been on their South Australian-based supplements business, how demand changed over the holiday season and what tactics they will be implementing to keep demand coming in 2018.
Owner, Tyson Matthews, agrees that the beginning of the year is prime time for retailers in his industry, and although the last two weeks of January produced strong sales, February is when they start to see the real jump.
Everyone is still busy partying in January, it’s not until February that they get back into their routine.
“There was also much heavier demand in October, November and right through into December, when people are focussed on getting themselves into shape for summer,” Matthews said.
In addition to the ecommerce store, which has been running just shy of two years, Body 4 Life Nutrition also has two bricks and mortar stores, and Matthews has learned quickly what works and what doesn’t when it comes to marketing. He shares some tips with us.
“Target the infrequent buyers who only purchase every few months, as they’re less price sensitive, they value and trust the expertise our business provides and they tend to be more loyal. Frequent buyers (i.e. fitness enthusiasts who buy religiously every fortnight), are more likely to price check and shop around.”
“Promotions like ‘20% off’ or ‘Buy 1 get 1 free’ tend to attract customers who are shopping around for the best deal (and will continue to do so once your prices return to normal). Leave these type of promotions for when you are trying to move high volumes of product, fast.”
“Marketing is about both reach and frequency, with reach being the more important of the two. It doesn’t matter it you’ve got a good sale, it’s simply about getting in front of people - particularly the less frequent buyers who make you more profit.”
It’s also about mental and physical availability, Matthews says. “We run regular tasting sessions at the store and the gym across the road, so different crowds see the brand. I make sure all of the personal trainers at the gym are aware of me and my store, so that they can recommend products when their clients need them.
“Many retailers think that one type of marketing (e.g. Facebook) is the be all and end all, but it’s most effective when used in combination with other channels. Test out new things and see what works for you.”
The online Supplements and Nutrition industry is growing and changing rapidly. Health consciousness is increasing as are attitudes towards natural health and we are seeing a shift towards meat and dairy, which will no doubt continue to increase demand. Competition from supermarkets and large pharmacy chains will mean that online retailers will need to focus on attracting new customers with an omnichannel strategy, creating seamless, personalised experiences for customers no matter which channel they are on, and achieving efficiencies through technology.
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