January 30, 2018 by Ashwini Murthy

The nutraceutical industry boom is happening. Everyone knows about it. When you sip on a protein powder shake after your gym workout or take your daily dose of vitamin pills, that’s the nutraceutical boom happening right there. Why is this boom happening? We talked about that in our Nutraceutical industry report 2017. Consumers want to stay healthy and not spend on expensive medical treatments. Consumer preference has experienced a paradigm shift from synthetic ingredients to organic and natural ingredients. This is what is making the nutraceutical industry a $200 billion Industry.

By 2021, the nutraceutical industry is expected to hit $279 billion.

According to Tracxn’s nutraceuticals report, the CAGR of funding amount in nutraceutical industry is a colossal 58%! US’s market share by 2021 is expected to be 31.65% ($88.29B). However, within the US, the regulatory laws for nutraceuticals is not as stringent as pharmaceuticals, yet. Till new plans and policies for the regulation come in place, the safety and the integrity of the products lie in the hands of the manufacturer and the third-party logistics company if any.

The nature of the products that are being dealt with makes nutraceutical fulfillment a fundamental competitive lever in this industry. Here are the reasons why nutraceutical fulfillment is important:

  1. Warehousing comes with unique constraints
    The products being dealt with are perishable in nature. When not stored in ideal temperature and atmosphere, they expire. They need the same storage facilities like any other consumable product. Climate controlled warehouses are a necessity.
  2. Packaging and labeling
    There comes a need to attract customers since nutraceuticals aren’t really pharma products as much as they are lifestyle products. Visual branding becomes a key differentiator at the store shelves.
  3. Cost reduction with shipping
    It’s not uncommon for the same formulation to be manufactured and branded by multiple different players. In that sense, commoditization is rampant. When you deal with any commodity, cost savings are the key to protect bottom line.

If you are an MLM firm in the nutraceutical space or getting into it, the best approach would be to find companies that both contract manufacture for you as well as package, store, and ship. Places like Utah are well suited to find such players, given the legacy of MLM players from the region and the cataloging/fulfillment industry that was built around them.

If you are a manufacturer with your own brand but are looking for nutraceutical fulfillment partners to store, pack and ship, at the very beginning stages when you expect the volumes to be low, you could engage with a carrier rate reseller, who could negotiate and get better rates for USPS or one of the other carriers.

However, as you grow, you may have to look for a nation-wide network of nutraceutical fulfillment options. At this stage, a 3PL starts making sense. A good 3PL will have their own national network or at least work with a consortium of distribution centers across the coasts. Besides they would have relationships with carriers and freight companies that could help nutraceutical companies lower the total cost of delivery.

One other variable that’s worth pondering about is ‘handling returns’. Nutraceuticals as a category is subject to higher than average levels of returns. The 3PL you choose should also be offering you a ‘returns management’ service. You may even need a call-center where customers could call in to manage returns and refunds (if you are still small enough not to set up one of your own).

As a part of our effort to map the global nutraceutical industry, PipeCandy is building a catalog of brand owners/agencies, contract manufacturers and fulfillment companies that handle nutraceuticals.

If you are an agency or a nutraceutical fulfillment company and want to get started with partnership conversations with manufacturers or other agencies or even nutraceutical brands, we have a  curated list of nutraceutical companies with the contacts of the decision makers. You can download the sample list from here.

With sophisticated natural language processing algorithms, PipeCandy sifts through thousands of nutraceutical brands to discover the ones that have their own manufacturing facility and the ones that work with contract manufacturers. Using ‘look-alike’ modeling, PipeCandy discovers and recommends nutraceutical companies that are ideal prospects for your marketing or fulfillment businesses.

Go beyond cookie-cutter methods of outreach. Assign predictive lead scores based on the propensity of a nutraceutical company to work with you.

Schedule a demo on our website to see how PipeCandy can help you size up the nutraceutical industry and help navigate through it to identify partners and customers.

 

 

 

Ashwini Murthy

Content marketer @ PipeCandy

A writer by day. Illustrator by night. Currently trying to conquer the B2B marketing world one baby step at a time. Loves everything outside her comfort zone.