The health and wellness segment of consumer packaged goods is a massive industry, and it contains an expansive array of different types of products. Everything from high-value electronic devices (such as electronic toothbrushes) to nutritional supplements is represented in the category. Many health and wellness companies experience challenges when adopting a more robust e-commerce solution, which is a critical component needed to meet the demands of increasingly savvy consumers.
Consumer Trends Outpacing Organizational Capability
Thanks to the internet and widespread mobile device usage, today’s consumer has the advantage of being able to evaluate multiple retail options in a matter of minutes. Often, they are comparing brick-and-mortar and e-commerce retailers simultaneously. It’s increasingly common for shoppers to be browsing websites on their mobile device while visiting physical retail stores to compare selection and pricing, as well as examine products up-close before making a purchase. Price and convenience often dictate which retailer gets the sale, and e-commerce sites are coming out on top more frequently as consumers become more accustomed to this method of shopping.
Due to this shift in consumer behavior, retailers are now being ushered down the e-commerce path, and often ill-prepared. While it’s true that these trends have been progressing for some time, not all organizations have felt the push to adopt an e-commerce platform as rapidly as others. For some businesses in the health and wellness category, it has been a slow build, and the necessity to adopt a powerful e-commerce model was simply not as essential as it has now become.
There are many reasons why some companies may have chosen a slow or gradual adoption of e-commerce into their sales strategy. Here, we will examine a few of the most common challenges that health and wellness companies have experienced in implementing an e-commerce solution.
E-Commerce Challenges for Health and Wellness Companies
In some health and wellness verticals, competition can be extremely fierce. As a result, many manufacturers, suppliers & distributors are faced with tight margins in order to succeed in their markets. For many of these brands, a profitable order is entirely dependent on achieving a certain basket size or average order value. This means that brands and retailers need to implement new promotional strategies online vs. in-store, in order to successfully increase average cart sizes and order values.
It can be difficult for companies to balance item price thresholds, as many shoppers have a budget they do not wish to exceed. Profit suffers if the threshold is set too low, however customers may become discouraged if the threshold is too high, resulting in reduced order volumes. To combat this, bundle offers and discounted, or free shipping deals are used to offer additional incentive to the customer while balancing profit margins. Finding the right balance takes time, but careful analysis of sales can create a market that appeals to a wide range of customers.
In Canada, the health & wellness category is further complicated by the regulations for Good Distribution Practices as set forth by Health Canada. As a country that is plagued by temperature extremes in both summer and winter months and long destinations traveled to the end consumer, a paradox exists in balancing costs to serve and regulatory compliance. This fine line requires expertise in knowing and adhering to these regulations by making intelligent decisions in outsourcing / in-sourcing activities.
Many health and wellness companies also deal with complications that arise from pursuing international markets. Health and wellness products are heavily regulated, and have many requirements surrounding regulatory compliance in order to be sold in other countries. These regulations can cover a wide range of concerns, including everything from specific ingredients that claim medical benefits, materials used in the construction of medical related electronics, to the standards that are followed during the manufacturing of health and wellness products.
If your business is considering international markets as a target for your e-commerce efforts, you’ll need to be sure that your products and processes all meet the necessary requirements of the country or countries that you are targeting. This could mean modifying products to include alternate labeling, different packaging, multi-language documentation, and more. In addition, for products such as electronics, they may need to be tested to ensure compliance with a different set of safety standards for the destination country.
The Importance of Expert Partners
The many challenges associated with e-commerce can easily become overwhelming, and often the best solution to simplify these processes is to partner with a third-party logistics and supply chain provider. Third-party logistics (3PL), providers can assist with order processing, warehousing, shipping, handling, packaging labeling and other aspects of your e-commerce business. Logistics experts, like SCI, have facilities and resources that can solve all the potential problems that health and wellness businesses may encounter as they begin implementing their ecommerce platform.
If your business currently distributes products through wholesalers, deploying an e-commerce solution will allow you to provide a faster and more effective response to the increased consumer demands in those individual markets. If you currently operate using a direct-to-consumer model, e-commerce will allow your business to reach a much broader range of customers in locations where you previously had little to no presence. Also, your customers will appreciate the added ease and convenience with which they can do business with you.
Even if your company is not currently set up to handle e-commerce to the scale that you need, the ecommerce experts at SCI can advise the best course of action for your business to capitalize on the e-commerce growth trend, and deliver a higher level of service to your customers. By investing in a strategic e-commerce approach with the right partners, the benefits to your company are significant. Higher sales, improved profit margins, better customer satisfaction, greater market share and faster implementation timelines are all results that have been achieved through effective e-commerce solutions.
If your business is considering or planning ecommerce distribution, contact the ecommerce experts at SCI and see how they can help your business meet the demands of your growing e-commerce marketplace.