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.
“We were shipping a dozen orders per day, and now we ship hundreds per day. ShipBob has allowed us to scale up and become successful — we have gone from $70,000 in sales in 2018 to over $7 million in sales.”
Andrew Hardy, COO of Nature’s Ultra
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.
“Having ShipBob as a partner is awesome. We can completely outsource storage and fulfillment for DTC channels with only having to spend a max of 4-5 hours per week on small tasks like canceling orders for customers. We’re already in two of their fulfillment centers on both coasts to reduce zones and keep our products closer to our customers. Moving into more locations over time will help us further optimize costs.”
Vincent Bradley, CEO & Co-Founder of Proper Wild
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.
“We want the customer experience of purchasing on our website to be similar to Amazon Prime. This is possible with ShipBob, without inflating the shipping cost to an insane level. To do this, we are storing inventory in three of ShipBob’s fulfillment centers. We find comfort in knowing we can scale and have orders fulfilled in a quick manner.”
Tim Fink, Co-Founder of EnduroSportEnduroSport
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 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.
“Unlike most 3PLs that lack sophisticated, intuitive tools, ShipBob’s technology is modern. Their software even makes it easy to bundle products made up of multiple SKUs from our inventory, so it is packaged exactly as the customer ordered it.”
Doug Kern, VP of Ecommerce at One Drop
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.
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 offers a 2-Day Express Program, which has been proven to bring in new customers and drive repeat purchases for health, beauty, and wellness merchants.
Here’s how it works: A customer enters their shipping destination at checkout and ShipBob’s technology checks the zip code and the ordered items against inventory available at the nearest fulfillment center in real time. If the shipping destination is within the zones of guaranteed 2-day ground coverage, the “2-Day Express” option will display as a shipping option to choose from.
“With ShipBob’s 2-Day Express Shipping Program, we’ve seen an 18% reduction in cart abandonment.”
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.
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 has fulfillment centers in the US, Canada, and EU 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 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
PiperWai: an all-natural deodorant brand
Partner with ShipBob and you instantly gain access to the infrastructure and resources you need to scale quickly. Deodorant company PiperWai took off after an appearance on Shark Tank and partnered with ShipBob to meet the demand. ShipBob already worked with PiperWai’s packaging and ecommerce solutions. With optimized cross-country shipping, PiperWai was able to manage their 6,000% growth.
“Working with partners like ShipBob has made scaling our business at such a rapid rate feasible and sustainable.”
Sarah Ribner, Co-Founder, PiperWai
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. f
To request fulfillment pricing from ShipBob, click the button below.