MAYBE IT’S BECAUSE people are getting short shrift from HMOs. Or maybe patients are tired of hearing doctors tell them their conditions are hopeless, and want to try healing themselves. Whatever the reason, the market for vitamins and nutritional supplements is exploding for traditional catalogers and Web marketers alike.
The U.S. market for vitamins, minerals and herbal and other dietary supplements was pegged at about $10 billion last year and is growing at double-digit rates, according to market research- n Bellevue, WA. During the third quarter of 1998-the most recent figures available-a total of $300 million worth of vitamins was sold through direct mail and catalogs, representing 13% of the total. Internet transactions accounted for $5.5 million, less than 0.5%.
Hartman spokeswoman Laurie Demerritt says four factors account for the boom in these health-related items: the aging population; people who want healthy children; a rising number of individuals who’ve had a “transformative” life experience, like a severe illness; and a movement toward “lifestyle shopping” (looking for new ways to live).
She admits Hartman is a little behind on gathering historical data but has begun digging deeper into the past.
Onetime catalog marketer General Nutrition Corp., Pittsburgh, is plotting a Web marketing and manufacturing joint venture with drug store chain Rite Aid Corp. later this year and intends to make a $9 million advertising splash about it.
“We did have a catalog up until about 10 years ago but we discontinued it because of franchise conflict with our stores,” says vice president of marketing Peter Godfredson. (Of GNC’s 3,800 stores, about a third are franchised.)
Catalogs aside, GNC has, for about the past eight years, used its gold card loyalty club to help build a 3.4-million-name customer database, says spokesman Gregory Miller. Card users get store discounts and a monthly magazine, “Let’s Live,” which contains articles on health and vitamins. The company also publishes its BioNutritional Encyclopedia, available from store kiosks and online.
“I firmly believe that information is the engine that drives people to our stores,” Miller adds.
GNC and Rite Aid are now building fulfillment facilities and other infrastructure as they prepare for the October launch of the joint Web site. GNC is also quietly selling vitamins on its own site (www.gnc.com), although the company’s not actively publicizing it.
Along with the joint Web site, the two companies were planning to run a series of national TV commercials to promote the site, Miller claims. Because the target audience is so broad (people from about 35 to 55), the buy is going to be mostly on broadcast networks with a little cable, like CNBC, thrown in.
“We’re not going to be advertising on bodybuilding- type networks,” he quips.
Despite the boom in the vitamin market, consumers can be put off by the plethora of products and the need to know about them, argues Sharon Rice, vice president for marketing at Mothernature.com, a nearly 4-year-old Web-based vitamin marketer from Acton, MA, which recently redesigned its site.
Some may also be concerned that vitamins are unregulated by the Food & Drug Administration.
Mothernature.com’s overhaul consisted of simplifying the site and trying to give visitors a “positive retail experience” by furnishing them with a library and other information on specific products and health conditions provided by the Health Online information service.
The site gets about 10,000 hits per day, with a sales conversion rate of 1%. To hold onto its customers, the firm recently began segmenting its tiny customer database using a new system from Responsys that tracks purchase histories based on recency, frequency and monetary value, along with customer behavioral characteristics.
Mothernature.com regularly sends its customers promotional mailings and is toying with the idea of sending them promotional opt-in e-mails on the theory that customers are going to want to get health-related information, says Rice. Mothernature.com’s demographic profile is 35- to 54-year-olds, with women about 60% of the count.
Mothernature.com is growing at a rate of 30% a month, and projects a fivefold sales increase to $5 million this year. It’s planning to kick off a major advertising effort on radio and in general interest magazines such as People.
The growing popularity of vitamins and health-related direct marketing has also not escaped the notice of cataloger Foster & Gallagher, Peoria, IL.
Last August, the company started mailing its 24-page Healthful Secrets vitamin/mineral/nutritional supplements catalog to portions of its house file, says Sydney Klevatt, president of F&G’s children’s group.
So far, the catalog, which offers a mix of vitamins and herbs like ginseng and gingko biloba, has been able to pull in an average order of $34. Current plans call for mailings eight times a year to the Michigan Bulb house file and other drops to buyers from F&G’s children’s group and more upscale gift givers.
“Market research going on now indicates we can get one-and-a-half times the return per buyer on the average mail order buyer,” says Klevatt.
This year’s plans also call for outside acquisition mailings, through nothing was final at press time. In addition, F&G should have a Web site up and running this summer, notes Klevatt, adding that the company hasn’t been in vitamin direct marketing long enough to have instituted much in the way of database marketing.
“The good news is the vitamins, minerals and supplements market has become legitimized with One-a-Day and Centrum Silver,” Klevatt says. “The bad news is the field has gotten much more crowded.”
Even the more established players, such as the 30-year-old Puritan’s Pride catalog, are finding they must step up their marketing efforts. Between 1997 and 1998, the catalog’s parent firm, NBTY, saw its overall catalog printing promotion and postage costs rise from 27.9 million to $32.2 million , according to the NBTY’s 10K report filed with the Securities and Exchange Commission in late December.
NBTY marketing vice president Jim Flaherty says Puritan’s Pride- which he claims is the No. 1 mail-order brand- mails out its catalog slightly less often than once a month and has more than 2 million customers.
What’s more, Bohemia, NY-based NBTY is in the middle of a national rollout of a cable TV effort to promote its Web site (www.puritan.com), which it’s had for more than a year.
Other NBTY brands include Nature’s Bounty, American Health and Natural Wealth. The firm also operates in the United Kingdom.
As with the other companies, Puritan’s Pride customers tend to be people in their 40s, 50s and 60s, and Flaherty points out that it’s too early to tell if there’s a discernible difference between Web and catalog customers, though Web users may be younger. “You need a computer to shop on the Internet,” he says.
Ironically, or maybe, major HMO Prudential HealthCare just put together Vitamin Advantage-SM, a vitamin catalog developed with Rexall Sundown as a value-added service for the plan’s more than 5 million members. Other such services include pregnancy and prenatal care information, says spokeswoman Marlene Baltar. The service will be advertised in the organization’s quarterly newsletter and on its Web site (www.prudential.com.healthcare).
One wonders if any of these vitamins will ever pass muster with Prudential’s medical formulary.
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