The Amazon Effect: Will Supplement Retailing Ever Be the Same?
The biggest challenges and opportunities supplement retailers face today.
It’s Amazon’s world; the rest of us just live in it.
That may sound dramatic, but why else would drugstore giant CVS make a $69 billion bid for the insurance company Aetna? Stick with me here: Consider that the 10th TABS Analytics “Vitamins, Minerals and Supplements Study” found VMS sales growth of only 3% at brick-and-mortar outlets from 2016 to 2017 while online sales shot up 20% over the same period, from $2 billion to $2.4 billion.
And though the TABS report attributes much of that online growth to the ecommerce arms of real-world retailers like CVS, the researchers at Euromonitor note in their own 2017 “Vitamins and Dietary Supplements (VDS): Trends and Prospects” report that despite considerable investment in their online presence, CVS as well as Walgreens have yet to see web sales account for more than 1% of the total in any year since 2012.
Even as CVS bends backwards to make itself more relevant to contemporary shoppers-improving store layout, expanding product lines, and downplaying its “drugstore” identity in favor of being seen as a “healthcare company” complete with community clinics, lab testing and nurse practitioners beside the shampoo and holiday candy-there’s no guarantee that this strategy will better position the store to compete against the likes of Amazon. So why not merge with a major health insurer and see what kind of edge you can gain, right?
Whether the gambit will pay off remains an open question. But there’s no doubt that “an edge” is just what CVS, Walgreens, and even nutrition specialists like the Vitamin Shoppe and GNC will need as Amazon-and the brave new world of Internet purchasing in general-threaten to transform how consumers buy dietary supplements the same way they did how we buy books, music, food and just about everything else. Or, as Daniel Lohman, CPSA, a strategic advisor to the CPG and organic industries and founder of Category Management Solutions (CMS4CPG LLC; Littleton, CO), says, “There’s a seismic shift coming to retail.
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