Online sales an outlier to more than norms

May 29, 2019

An article appearing in NutraIngredients-USA last week unveiled the tip of a looming iceberg that we here at Trust Transparency Center (TTC) have been talking about for the last two years. The article covered the emerging retail marketplace and the fact that many new industry entrepreneurs are only using the online channel as a path to market, their brands never seeing the inside of a natural health food store—nor do they have brick and mortar as a goal. This easy, no barriers route to market is certainly boosting category sales, as the article points out, and is very difficult to quantify, so guesses abound for supplements and other CPG sales.

Here at TTC, we’ve been describing the online environment in general, and Amazon supplement phenomenon specifically where over 16,000 supplement brands representing over 150,000 SKUs are listed. While several of these novel brands represent innovation and well developed and substantiated products, many of these Amazon entrepreneurs know little to nothing about the dietary supplement market, some apparently thinking it’s no different from selling widgets. We in the industry know that not to be true, hence this ignorance represents a significant category risk.

The NutraIngredients-USA article notes that there has been no tidal wave of snake-oil salespersons, which is true – to an extent. With few to any barriers to entry in this free-wheeling environment, and pricing varying 10x for apparently similar products, the incentive to cut corners is certainly there, and work by TTC and the single ingredient associations we operate would seem to indicate one third to one half of products tested are not meeting label claim. So, one could argue that through willful behavior or ignorance, corners are being cut, a seriously disconcerting finding, since the contract manufacturers making these products should and do know better. In the new normal, not only do the traditional retail gatekeepers never see these products, the brand-holders themselves, accountable by law, often never take physical possession of these goods and never see them. While a few acknowledge the issue and took steps to remedy the situation, the majority of TTC and single ingredient trade association dialogue with these brands varies from the ‘chastised’ to the absurd. One brand-holder declared that they would simply cut the label claim in half and therefore be compliant.

The NutraIngredients-USA article points out that these online companies don’t engage with the industry as a whole, and don’t participate in trade associations. The article presumably could add that they largely don’t participate in educational events to enhance their knowledge, they don’t know what their accountabilities under the regulations are, and in many cases, the manufacturers they use aren’t helping them – or the industry. Quite simply, the rite of passage, the belief that quality and transparency are essential core attributes in all of our products are frequently not built into these brands either.

Early last year, Trust Transparency developed a checklist (see below) of the 17 quality and regulatory control elements that any brand-holder, and especially online only brands should have in place, no matter the skill set and certifications of their chosen contract manufacturer. Recognizing that many of the brands didn’t even know how to start this process we have initiated through our blog posts a series of follow on articles talking in depth about some of these critical operations and controls. Several of them are listed at the bottom of this post.

There is no question that the online-only channel of sale is compelling and lucrative. We at TTC would agree that by and large, many of these new companies are totally unconcerned about industry norms. Unfortunately, the norms are not the only things that several of these brands and sites appear to be unconcerned about.

Amazon got some of it right with their Elements line when they disclosed a lot of information about their manufacturing process and ingredient sources. Too bad Amazon didn’t do the same with their Solimo brand – maybe that would have made it more of a groundswell. We at TTC would like to see companies disclose their carefully selected supply chain partners like contract manufacturers and to be acclaimed for it. Industry is taking some steps like the new CVS “Tested to be Trusted” initiative which requires third-party testing of all vitamins and supplements sold in its stores and online and the Supplement OWL.

For emerging online brands, use the checklist, take the high road, choose your partners by their willingness not to take shortcuts. Read the modules; TTC stands ready to assist. We all need to work together to protect our industry.

General reference articles:

Modules:

Anthony Reyes
Author: Anthony Reyes

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Lori Diez

Lori Diez combines compassion and excellence to lead organizations to their next level. A small-town Texas childhood taught her the value of hard work and relationships, which she uses to foster teamwork that brings results that have transformed cultures and programs to their highest potential. Her successful career in pharmaceutical and nutraceutical sales leadership and event hosting has prepared her to deliver results as the COO of TrustTransparency, where she uses her industry knowledge to ensure that the company’s operations run smoothly as they support nutraceutical companies in their mission to help others. Lori’s passion for charity reflects her belief that individuals working together can change the world, no matter how small their contribution to the effort. This year, she looks forward to continuing over a decade of service at the Houston Livestock Show And Rodeo, where she will be the Chairman of the Livestock Committee.

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Glynnda Steinford

Glynnda Steinford, Trust Transparency Consulting’s Director of Customer Relations, brings over four decades of healthcare experience to her vital role in client engagement and relationship building. Her diverse background spans from administering medical groups to impactful stints in pharmaceutical and nutraceutical sales, all underlined by her degree in Healthcare Administration.

At the heart of Glynnda’s work is her talent for nurturing long-term connections, a skill she leverages to enhance client experiences and partnerships within the consultancy. Beyond her professional commitments, she enjoys life’s simple pleasures, whether it’s her love for cats and cooking or her ventures into golf, always prioritizing cherished moments with family and friends. Her personal interests echo the dedication and warmth she extends in her professional network, making her an invaluable asset to the team.

Caiti Dowden

Caiti Dowden stands as a crucial pillar at Trust Transparency Consulting, bringing invaluable insight and expertise to her role as Senior Executive Assistant’ since her start in 2018. With an academic background from Sam Houston University and a career shift from education to the nutraceutical sphere in 2010, Caiti has cultivated a sharp acumen for dissecting industry trends and bolstering strategic decision-making.

Her transition from Data Analyst reflects her growth and deep understanding of the business landscape. Caiti’s commitment goes beyond professional excellence; she thrives on balance, drawing from her rich life outside of work to enhance her organizational contributions. Whether it’s family time, volunteering, or rooting for Houston’s sports teams, she believes in embracing experiences to fuel her professional creativity and insight.

In her current role, Caiti’s dedication to dynamic business analysis and operational support proves her to be an irreplaceable asset to our team, embodying the synergy of personal enrichment and professional success.

Pam Hilpert

Pam Hilpert, Chief of Staff at Trust Transparency Consulting, has been instrumental in the firm since its inception, leveraging her 17 years of accounting experience, including a significant tenure in the nutrition sector. Her collaboration with Scott Steinford spans various successful ventures, emphasizing her integral role in the company’s financial and strategic initiatives.

An alumnus of Sam Houston State University, Pam holds degrees in both Business Administration and Accounting, as well as an MBA, adding academic heft to her practical industry insights. Beyond her professional prowess, Pam is passionate about family, enjoys live music, delves into quilting, and volunteers at her church, reflecting her well-rounded life.

Her multifaceted expertise and longstanding dedication make Pam a cornerstone of Trust Transparency Consulting’s operational strength and team unity.

Scott Steinford

Scott Steinford, a trailblazer in strategic leadership, boasts a certified M&A background, having navigated companies from their genesis to industry prominence. His brainchild, Trust Transparency Consulting, born in 2007, stands as a testament to his dedication to ethical business practices and strategic foresight, offering industry stakeholders invaluable guidance.

Beyond founding and steering companies, Scott has enriched the business landscape with his insightful keynotes and prolific written contributions, emphasizing his commitment to elevating industry standards. His executive tenure shines in roles as CEO or President of for-profits like ZMC-USA and Doctor’s Best, extending to significant contributions in non-profit sectors.

Notably, Scott’s influence is a driving force in the CoQ10 market, where his leadership has significantly bolstered the ingredient’s global presence. His roles in various capacities, including as a New Hope Ambassador, keep the community informed, providing in-depth industry reports and insights.

An active advocate within professional associations and an Editorial Advisor for leading industry publications, Scott’s expertise is both recognized and sought after. With academic roots in Pre-Law and a Master’s in Law, his journey transcends textbooks, embodying real-world business acumen and transformative leadership.

Scott Steinford merges visionary entrepreneurship with principled leadership, creating a legacy of innovation, growth, and unwavering commitment to industry excellence.