The healthcare, beauty, and wellness logistics industry is undergoing a significant transformation, driven by a combination of technological advancements, changing consumer demands, and global events such as the pandemic. In North America, the healthcare logistics market is predicted to grow by $18.4 billion at a Compounded Annual Growth Rate (CAGR) of 9.34% between 2022-2027.
In order to meet patient and customer requirements and the specific demands of the industry, health, wellness, and beauty brands, medical device manufacturers, and healthcare providers are responding to these new trends by adjusting many of their core operating areas, one of which is their supply chain.
In this blog we delve into the latest healthcare, beauty, and wellness logistics industry trends, and look at how logistics providers must embrace innovation, sustainability, and automation to thrive in this new era.
1. Healthcare, Beauty, and Wellness E-commerce Integration
The rise of e-commerce continues to reshape the supply chain in the health, beauty, and wellness sector. The fusion of social media and e-commerce, known as social commerce, is gaining momentum. Platforms are integrating shopping features directly into social media apps, allowing users to discover and purchase health, beauty, and wellness products without leaving the platform.
Collaborations with influencers, beauty bloggers, and wellness experts also continue to be a powerful trend. Consumers often rely on recommendations from influencers, making strategic partnerships with them a key part of many e-commerce marketing strategies. These direct-to-consumer (DTC) models and online marketplaces have become increasingly popular, necessitating efficient and agile supply chain strategies to meet the demands of online shoppers.
E-commerce sales can also be highly variable, especially during peak seasons. 3PLs such as SCI are focusing on scalable solutions that allow them to adapt quickly to fluctuations in order volume. This includes flexible staffing arrangements, dynamic warehouse space allocation, and adaptable transportation and last-mile strategies. SCI has invested in advanced technologies such as warehouse management systems, distributed order management systems, and automated solutions that help with the pick-and-pack process to adapt to the changing industry landscape and demands.
2. Personalization and Customization
Consumers in the health, beauty, and wellness industry are seeking personalized and customized products. E-commerce platforms are leveraging data analytics and AI to offer personalized product recommendations based on individual preferences, skin types, or wellness goals.
Additionally, tailored subscription-based e-commerce models have gained popularity in this industry. Consumers can subscribe to regular deliveries of health supplements, beauty products, or wellness services, providing convenience and encouraging brand loyalty.
Flexible Kitting and Packaging for Health, Beauty, and Wellness Products
Supply chains are adapting to accommodate the complexities of producing and delivering personalized items, often leveraging advanced manufacturing technologies and agile production processes. To meet demands, SCI offers diverse order handling capabilities, and in-house kitting and packaging services including kit-to-stock and kit-to-order. These flexible services allow special inserts, tissue paper, holiday messaging, and more to be added to packaging to ensure a perfect un-boxing experience for the end consumer.
3. Localization and Cross-Border Fulfillment
In today’s borderless e-commerce market, a cross-border strategy is crucial. Direct-to-consumer brands can use a strategic combination of localization and southbound shipping using the Section 321 exemption to create a North American supply chain that creates efficiencies and saves money, without sacrificing the customer experience.
For U.S. based health, beauty, and wellness brands, adding inventory to fulfillment centers in Canada offers the opportunity to expand distribution into a new market of 40+ million Canadian consumers. This approach allows brands to test international growth in a new, geographically close market. Plus, by localizing in Canada your brand can deliver your products faster to Canadians with fewer shipping costs. Working with a Canadian 3PL also brings the advantage of working with a partner who intimately understands the unique rules, regulations, and processes of the Canadian wellness market. Once you have inventory situated in Canadian warehouses, you can ship eligible products southbound to U.S. e-commerce customers using the Section 321 exemption and save on duty and tariff costs.
Section 321 Fulfillment
Section 321 fulfillment is a cost-effective way for direct-to-consumer (DTC) companies to increase profit margins and save up to 20% in duty and tariff costs. Section 321 is an exemption in the Canada-U.S.-Mexico Agreement that allows small shipments valued under $800 USD to enter the U.S. duty-free. Depending on the regulation of each particular product, for DTC e-commerce retailers this offers an opportunity to reduce their cost per unit through waived or refunded import duties on items that enter Canada bound for U.S. recipients.
4. Regulatory Compliance and Stringent Quality Standards
One of the biggest challenges is keeping up with the ever-changing regulatory landscape. Regulatory compliance is one of the top concerns among healthcare organizations and is one of the vital tasks for the supply chain professionals managing healthcare products. Each type of product, from pharmaceuticals to NHPs, vitamins, supplements, cosmetics, and medical devices, adheres to specific rules for storage, handling, and transportation.
Health Canada Regulatory Amendments
Regulatory agencies like Health Canada regularly update and modify their regulations to adapt to new scientific evidence, emerging health concerns, and changes in the industry. Health Canada has recently proposed a series of newly developed targeted regulatory amendments and provisions to both the Food and Drug Regulations and Medical Device Regulations as part of the regulatory modernization agenda. The new proposed regulations are intended to smooth regulatory processes and clear pathways to innovation.
This why it’s important for brands to partner with an experienced 3PL who can provide end-to-end Health Canada compliant fulfillment operations. Qualified 3PLs should have GMP compliant facilities, and structured Quality Management Systems in place that encompass processes, procedures, and responsibilities for continuously delivering high-quality services that meet regulatory and customer requirements.
SCI provides in-house, best-in-class Quality Assurance. We also have relationships with Regulatory Compliance companies who are well-versed in Health Canada policies, processes, and language to help your company meet Health Canada requirements. Additionally, SCI has GMP compliant facilities, robust quality management systems and inbound inspections, as well as segregated returns and quarantine areas to guarantee your operations are fully compliant in Canada.
5. Sustainability Initiatives
Sustainability is at the forefront of logistics trends in Canada. Consumers are increasingly conscious of environmental and social sustainability. This awareness has influenced what they buy, leading to a rise in demand for sustainable and eco-friendly products. The healthcare industry is recognizing the environmental impact of logistics operations. E-commerce retailers are responding by offering a broader range of sustainable options, promoting ethical sourcing and production practices, and providing transparent information about their products’ environmental impact.
With a growing emphasis on environmental responsibility, healthcare logistics providers are implementing eco-friendly practices, such as green packaging materials and energy-efficient transportation, to reduce the industry’s ecological footprint, and contribute to a more environmentally conscious industry. At SCI, we’re making important sustainability investments in our company by focusing on energy efficiency and process improvements to help reduce emissions.
6. Data-Driven Decision Making
Leveraging data analytics is becoming a game-changer in healthcare logistics. By harnessing the power of predictive analytics and data, 3PLs can anticipate demand, optimize routes and inventory levels, and enhance overall supply chain efficiency. This data-driven approach is instrumental in addressing the specific needs of the Canadian healthcare system. By analyzing historical data and patterns, logistics providers can forecast trends, enabling better resource allocation and reducing the risk of stockouts or overstock situations. The integration of data across the supply chain enhances visibility, reduces errors, and improves decision-making processes.
Smart Systems & Integrations
SCI has invested in new warehouse management systems (WMS) and inventory management systems (OMS) to support our clients’ growth. Our WMS manages multiple DTC channels, and enables B2B wholesale fulfillment, while also providing forecasting, order planning, and seamless returns.
Our clients can see dynamic, up-to-date reports of their business metrics with SCI’s business intelligence tool. The reporting from this tool includes on-hand inventory, order status, percentage of fulfilled orders, and shipment tracking. We’re always looking for ways to continuously improve our operations. SCI uses automation technology to improve efficiency and increase productivity where possible.
The healthcare, beauty, and wellness logistics industry is at a critical juncture, navigating significant changes and challenges. Embracing innovation, sustainability, and automation is essential for logistics providers to thrive in this evolving landscape. By leveraging technologies, diversifying supply chains, prioritizing sustainability, and providing quality data, the healthcare industry can build a future-forward logistics ecosystem that ensures the timely and reliable delivery of health and wellness products and services.
As the healthcare logistics industry continues to evolve, companies like SCI are at the forefront of innovation and are committed to providing cutting-edge logistics solutions. With expertise in e-commerce fulfillment for healthcare, beauty, and wellness products and a robust third-party logistics (3PL) network, SCI is well-positioned to meet the unique challenges of the health and wellness industry. By leveraging our extensive capabilities and advanced technology, SCI helps healthcare, beauty, and wellness organizations navigate the complexities of their supply chain and deliver exceptional customer service.