Back in the day, GNC was the place to get supplements. Not only did they stock major brands, but whether or not a brand was in GNC was actually considered an indication of the status of a brand itself. Then came the rise of the internet which gave way to specialty retailers like Bodybuilding.com. Although Bodybuilding.com is arguably the most successful online retailer of supplements, it’s just another unnecessary specialty business being crushed by the real 800 pound Gorilla of e-commerce, Amazon.
Amazon offers a platform upon which pretty much anyone (whether a company or individual person) can start selling just about anything. While dietary supplements are the only business that Bodybuilding.com is in, it’s just another category for Amazon, making up just a tiny fraction of the company’s overall revenue, which was $107 billion in 2015.
So why is it that Amazon, without trying, has become the largest retailer of supplements. Well, for the same reasons it’s become the largest retailer of everything!
It’s Insanely Convenient
Amazon prides itself first and foremost on not only meeting the needs of the everyday consumer, but going above and beyond what we expect when shopping online. Traditionally, shopping online was kind of annoying, but Amazon has implemented several things which make it super easy for anyone to buy anything.
Features like 1-Click and Amazon’s algorithms that track your behavior and predict what you might also like have made it ridiculously easy to find the right product and buy it with no hassle.
The Ultimate Loyalty Program
Amazon Prime is the largest e-commerce loyalty program there is. For around $10 a month (or less if you pay annually) Amazon offers free 2 day shipping on as many things as you can buy, not to mention an ever-growing list of features including movie streaming.
Prices Are Generally Low
Amazon actually mandates in its terms and conditions that all sellers at least match the lowest price available elsewhere. While the company doesn’t actually enforce this rule (because they make more money if they don’t), it does cause most Amazon sellers to compete on price, so prices are typically low.
Regardless of whether Amazon actually has the lowest prices or not, it certainly has a reputation for having the lowest prices, which has led to the phenomenon of people not even shopping around and just going straight to Amazon for everything.
The Largest Selection
Amazon will always have the largest selection of products in pretty much every category. In warehouse space, Amazon has more sq ft. than all GNC locations combined and it doesn’t pay anywhere near what GNC pays to maintain those spaces.
While other supplement retailers pick and choose which products they carry, Amazon lets literally anyone sell products. This has given rise to many “would be” small brands achieving millions of dollars in sales on Amazon alone.
There’s No Secret Agenda
This is probably the single most important thing to be aware of when dealing with any retailer, online or brick and mortar. There’s always going to be a “favorite” product or band that they try to push on you. Bodybuilding.com pushes RSP Nutrition and JYM products. Tiger Fitness pushes MTS to the point that it’s just annoying. GNC pushes several brands that are complete trash.
To understands why this is, you need to understand the retail business a little. Imagine you carry a bunch of different products in your store and you make 30% on average. If you’re trying to grow a business as fast as possible, you’ll need to do a little better than 30%. So you decide to create your own brand or partner with a brand that you already carry in a way that allows you to maximize your cut. Now you make 50-60% percent on that brand. So which brand are you going to push?
See, it may take a little while, but all retailers eventually develop their own brands or, if the price is right, they push a certain brand more so than others. It all comes down to what they make the highest margin on. So, next time you visit your favorite retail store or log on their website, ask yourself: “Which brand are they pushing on me?”. It’s usually fairly obvious. Take Tiger Fitness for example: Is it coincidence that MTS Nutrtion, the brand owner by Tiger Fitness CMO Mark Lobliner, has numerous spots on the “Top Selling Products” list? No, of course not. He’s pushing it on you.
Amazon, on the other hand, doesn’t care even a little bit what brand you buy. On Amazon, the best products will eventually gain the top spots, but Amazon makes the same flat 15% whether you buy MTS Machine Whey or Optimum Gold Standard. One might argue that it’s easy to manipulate reviews on Amazon—and there is some definite truth to that—but do you really think your favorite retailer isn’t manipulating you one way or the other?
The Bottom Line On Amazon
If you’re an internet retailer of any kind, you should be concerned about Amazon. Due to its focus on the basic principles governing e-commerce and customer satisfaction, it has quickly become the world’s largest retailer in just about every category, including supplements.
Amazon is the ultimate case study in the laws of economics. When it’s all said and done, the free market will continue to dictate which businesses thrive and which one’s fail. If you take a step back and look at Amazon in an objective light, it’s pretty clear that it will crush pretty much all supplement retailers by simply offering things that can’t be offered by the smaller players.
The only hope? Specialization. As a retailer, you must educate your customers and provide a knowledge-base (for free) that can’t be matched by Amazon due to its scale.