According to AdWeek, the number of Americans purchasing from a direct-to-consumer (DTC) brand is predicted to grow nearly 20% over the next 5 years. More and more consumers are ditching traditional retail with a newfound loyalty towards DTC brands, especially in health, beauty, and wellness.
And it’s not just in the US alone. The rising trend in health, beauty, and wellness products sold by fast-growing DTC brands is a global phenomenon. If you’re thinking about starting a health, beauty, and wellness online store, or you’re looking to grow to the next level, here’s everything you need to know about the current industry and how to scale efficiently.
Direct-to-consumer health, beauty, and wellness brands are growing fast
DTC brands in the health, beauty, and wellness market are taking the ecommerce world by storm, and the market continues to grow worldwide.
Here are some surprising stats that showcase its tremendous growth:
US health, beauty, and wellness category is forecasted to reach $86 billion by 2022
This indicates that one of the fastest-growing markets in ecommerce is no doubt health, beauty, and wellness. That’s because they’re high-demand products — more than half of US consumers (53.9%) online said they are likely to try beauty and self-care products from DTC brands in the future.
By 2024, the global beauty market is predicted to reach $750 billion, up from $432.7 billion in 2016
This indicates that online cosmetic companies alone continue to be on the rise, and more DTC brands are staying competitive despite leading online retailers like Glossier. Many DTC brands have started out locally and have grown to sell products all over the world, thanks to the services and resources like partnering with a fulfillment partner, to make it happen.
CBD products alone are expected to reach $20 billion by 2024
CBD products fall under the health, beauty, and wellness category because of the health benefits they claim to provide like pain relief, better sleep, and more. Some ecommerce businesses have been hesitant to launch a CBD product online due to payment processing limitations (as CBD is considered a high-risk product), but fortunately there are many options available to carry out online CBD transactions and other tips to sell CBD online.
Are you ready to scale?
There’s no doubt that the idea of scaling a DTC health, beauty, and wellness business is possible. The demand is there and it’s global. But the biggest question is: How do you scale? Competition is higher than ever, so having a solid strategy in place to scale your business is important.
One of the biggest things to consider is how you’re going to fulfill and ship orders not only in a timely manner, but also at an affordable rate. If you’re currently self-fulfilling orders, there is one major sign that indicates it may be time to outsource fulfillment: A growing volume of orders that are coming in from across the US — or even the world.
“Once we could see the pitfalls in our old manual system of fulfilling orders, we just realized we need something else to scale with. To get where we were going, we would need more structure to support all of our growth — so we switched to ShipBob.“
Bethany Peterson, COO of FlutterHabit
Your orders are increasing
If your orders went from 50 a month to perhaps 100, 200, and now 400 orders a month, it may be a good time to professionally scale up your logistics and fulfillment. Self-fulfilling orders will become a challenge, and it will become harder to manage your inventory and get orders out the door in a timely manner.
Your customer base is expanding
At first, you may have been shipping to local customers or started small on one channel, but what if orders start coming in from across the country or even the world? If that’s the case, it’s time to get a closer look into where your customers are coming from, then deciding where to store your inventory. (Hint: Storing your inventory in one location may not be substantial in the long run.)
You’re having trouble keeping up
As your monthly order volume increases and orders are coming in from all over the country (or even the world), fulfilling orders in your home or office, or storing all your inventory in one warehouse can cause a lot of headaches.
Overall, if you’re having a hard time fulfilling orders and keeping shipping costs down, you’ll eventually lose out on more potential revenue by doing everything yourself. You miss out on scaling your business when you don’t focus your time on product development, building partnerships, and marketing your products.
The problem: A lack of modern fulfillment providers
As your monthly order volume increases and orders are coming in from all over the country (or even the world), fulfilling orders in your home or office, or storing all your inventory in one ecommerce warehouse can cause a lot of headaches.
If you’re looking to scale your ecommerce business, you need to work with a third-party logistics (3PL) company, who can handle order fulfillment and warehousing for you and not just an on-demand warehousing company that finds existing warehouses with excess space. However, not all 3PLs are created equal. Here are a couple issues you may run into with 3PLs and considerations you must think through.
Too few warehouses
One of the first things to consider is deciding the best location(s) to store ecommerce inventory. If you’re shipping a lot of orders to customers across the country (e.g., from New York to California) then having one warehouse in New York will make shipping expensive for you and keep your customers waiting.
If you’re shipping from one location, some customers may miss out on affordable and fast shipping options. A centrally located warehouse can be nice to get started, but be sure to partner with a 3PL that has locations in other regions so you can expand as you grow.
“ShipBob has been a great ally as they have fulfillment centers all over the US, facilitating a 2-3 day delivery time for any customer in the US. This is helpful especially when weather challenges happen; being able to have different locations to ship from allows for a more seamless supply chain.”
Andrea Lisbona, Founder & CEO of Touchland
Lack of strategic partners
When DTC online stores reach next-level growth, a 3PL becomes an extension of their business. Partnering with a 3PL will not only take fulfillment tasks off your plate, but they also offer a network of ecommerce partners that provide services in ecommerce financing, custom branded packaging, marketing, and more.
Without the right partners on your side, it will be a challenge to scale your business and compete with other health, beauty, and wellness online stores.
“The fact that ShipBob is always scaling and expanding their footprint is very important to me. It’s difficult to scale, but ShipBob has figured it out. They’ve been a great partner in our growth.”
Dwight Lee, Co-founder and COO at Hero Cosmetics
The solution: fulfillment that provides 2-day shipping and an unforgettable “unboxing” experience
With so much competition in the health, beauty, and wellness industry, it’s important to consider your logistics strategy as a revenue driver and a way to build customer loyalty.
Offering fast and affordable shipping, along with an exceptional unboxing experience, has been proven to significantly reduce cart abandonment and keep customers coming back for more.
Here’s how a 3PL, like ShipBob, can solve these common growth issues:
A great unboxing experience
While a temporary moment, an unboxing experience is part of the product that customers are buying. The extra effort you put into packaging has the potential to increase the perceived value of your product. Psychologically, it feels good to open a package that’s aesthetically appealing.
Partnering with a 3PL doesn’t mean you have to lose control over your brand. ShipBob partners with you to help maintain superior brand quality, even when it’s done outside of your four walls. We offer several different packaging options and partners, so you can design a custom box or poly mailer with inserts that will keep your customers delighted and coming back for more.
Subscription order management
For most DTC brands, customer acquisition costs are high. That’s why it’s important to consider ways to keep customers hooked and coming back for more. The number one goal is to not only get your customers to convert, but also to lock in recurring revenue and increase their LTV.
By implementing a subscription box or recurring orders model, you can ship products to your customers on a regular, predetermined basis. Many health, beauty, and wellness brands offer products that customers are going to use, run out of, and need more — think foods and beverages, dental hygiene, acne treatment, deodorants, vitamins, and more.
Take One Drop, for whom ShipBob fulfills their Class 1 medical devices:
With ShipBob’s easy integrations, merchants can seamlessly connect their online store to ShipBob’s technology and leverage subscription apps (e.g., ReCharge, Bold Subscriptions, etc.), or use ShipBob’s Developer API to get subscription box orders fulfilled automatically and reliably.
2-day shipping
Almost half of online shoppers (48%) say the orders they place online are delivered within 2-3 days. The standards have never been so high. DTC brands are quickly changing their shipping strategy to meet with customer expectations. By offering 2-day shipping, you can reduce cart abandonment and build a loyal customer base.
ShipBob also offers a 2-Day Express Shipping Program, which has been proven to bring in new customers and drive repeat purchases for health, beauty, and wellness merchants.
“With ShipBob’s 2-Day Express Shipping Program, we’ve seen an 18% reduction in cart abandonment.”
My Calm Blanket
Distributed inventory
By partnering with a 3PL that offers a network of fulfillment centers, you have the option to split inventory across multiple locations, known as distributed inventory. Utilizing fulfillment centers in different regions can reduce transit times for customers and shipping costs for you.
With ShipBob’s robust fulfillment network, you can store inventory in the locations that make the most sense for your business. Our technology automatically routes each order to the fulfillment center that’s closest to the shipping destination for the most efficient delivery.
International shipping
Shipping across the country is one thing, but shipping across the globe can be a challenge. Scaling internationally can enable your business to grow at speeds faster than in your home market, and allow you to build a global customer base. ShipBob takes this into account, and can advise you on how logistics can help you scale faster overseas.
“As we’ve grown internationally and in our general order volume, we’ve seen satisfaction go up. ShipBob was a key player and significant partner in helping manage what became unmanageable when we were shipping orders out ourselves.”
Matt Dryfhout, Founder and CEO of BAKblade
ShipBob operates an international fulfillment network and can ship orders to all countries where the major shipping carriers deliver to, and we also negotiate bulk discount rates with carriers to provide simple and affordable international shipping capabilities, such as DDP shipping services to freight shipping.
Who has scaled their health, beauty, and wellness brands with ShipBob?
Health, beauty, and wellness businesses all over the world have seen the impact that partnering with a 3PL has made on their growth. From offering affordable 2-day shipping, to creating a memorable unboxing experience, ShipBob offers a wide range of retail fulfillment services, including the technology, fulfillment network, data and analytics, and partners needed to scale efficiently.
Here’s what several of our health, beauty, and wellness customers have to say about partnering with ShipBob:
Synchro: a nutrition and wellness company
Health and wellness brand Synchro started out fulfilling with ShipBob, but as they grew, they decided to test out other digital fulfillment solutions. They found that only ShipBob could follow through on promises to bring down shipping costs and transit times. Synchro now ships over 3,000 orders per month and offers 2-day shipping to 80% of their customers.
“We now save a lot of money and ship faster based on distributed inventory. So far, we are shipping out of two of ShipBob’s fulfillment centers. We use the locations that optimize and reduce the distance traveled to get our products into our customers’ hands faster.”
Lindsay Louise, Fulfillment & Retail Manager at Synchro
Natures Ultra: a fast-growing CBD company
CBD company Nature’s Ultra experienced a surge in orders in 2018 with the beginning of the CBD boom. The logistics became too much to handle, so they started searching for a 3PL that could scale rapidly and optimize their shipping to provide an Amazon-like experience. They now offer 2-day shipping for all US customers and effortlessly manage their 9,900% year over year growth.
“We place considerable expectations and pressure on shipping so we can get close to what Amazon does. With ShipBob, 100% of our orders are going out via 2-day shipping. We see that people are far more likely to order and keep ordering from us when 2-Day Express Shipping is an option.”
Andrew Hardy, COO of Nature’s Ultra
Touchland: a stylish and natural hand sanitizer
Touchland is a fast-growing brand that has successfully upgraded the hand sanitizing experience to a whole new level. Touchland launched in 2018 and grew quickly after a successful Kickstarter campaign, and then grew even faster after the COVID-19 pandemic hit.
“We were already growing quickly when COVID began, then we completely sold out the first week of the pandemic. In three weeks, more than 34,000 customers were waitlisted on Touchland.com. We even did pre-orders to try and meet demand. Between March and May 2020, we had up to 700 orders per day and sold 10,000 dispensers to industry-leading brands in those three months.
COVID changed the mentality of hand sanitation for most businesses, and this won’t go away after the pandemic.”
Andrea Lisbona, Founder & CEO of Touchland
Hero Cosmetics: an innovative skin care brand
Hero started with one SKU: their Mighty Patches. Over time, they have scaled to offer almost 30 products – all aimed at helping during different stages in the breakout lifecycle. As they’ve grown, they’ve trusted ShipBob as a fulfillment partner.
“Scaling is important to us. We’ve had many days when our sales will skyrocket because of press or influencers and it’s reassuring to know that orders will all just go out on time. That’s crucial to growth. It allows every team in our company to push the limits.
The fact that ShipBob is always scaling and expanding their footprint is very important to me. It’s difficult to scale, but ShipBob has figured it out. They’ve been a great partner in our growth.”
Dwight Lee, Co-founder and COO at Hero Cosmetics
Outlaw Soaps: western-inspired body care
With scents like rich leather, spicy cinnamon, campfire smoke, and more, Outlaw Soaps has perfectly captured the smells of the Wild West. Outlaw creates their soaps in-house and wanted to bring their fulfillment in-house too. They were able to do just that with ShipBob’s Merchant Plus solution.
“We’ve not only been able to reduce our error rate significantly, but the time it takes us to launch items has gone from weeks to days. We even have a lot more flexibility to add extra touches like special thank you notes.
Knowing we can still lean on ShipBob’s fulfillment center(s) if we need to and have the ability to scale up to meet demand quickly is quite reassuring. ShipBob has completely won me over with Merchant Plus.”
Jacob Skidmore, VP of Operations at Outlaw Soaps
Bathorium: a luxury bath brand
Bathorium, a Canadian-based company, was looking to break into the US while keeping shipping costs down. By partnering with a tech-enabled 3PL like ShipBob, they are able to ship to US at an affordable rate.
“We’ve seen a reduction of 70% on shipping costs in the US, which helps keep conversions high. When we joined ShipBob, only 20% of our customers were in the US. By the end of the year, that number will be around 40%.”
CEO of Bathorium and Customer Success Manager at Shopify Plus
When you’re ready to scale, ShipBob can help
The right 3PL will set you up for next-level growth by providing the resources and fulfillment expertise to compete with leading DTC brands.
If you’re looking to outsource fulfillment, ShipBob has partnered with thousands of merchants that have significantly grown their health, beauty, and wellness businesses.
To request fulfillment pricing from ShipBob, click the button below.
Sources
https://www.inkwoodresearch.com/reports/beauty-personal-care-products-market/
