The supplement category has experienced significant growth over the years, with the pandemic only further igniting demand for health and wellness products. According to market intelligence firm Mintel, more than 60% of Americans report taking one or more supplements and the category is expected to continue to grow at a compound annual growth rate (CAGR) of 9.1% from 2023 to 2024. As demand increases and new products enter the space, brands are adjusting their strategies to stay competitive. Many have increased focus on DTC ecommerce marketplaces to build customer relationships and capitalize on higher margin sales.
In a recent analysis of year-over-year changes in sales metrics throughout the Decile ecommerce ecosystem, this positive shift in supplements was uniquely apparent. Of the five categories analyzed (Fashion & Apparel, Food & Beverage, Health & Beauty, Home Goods, and Supplements), the supplement category experienced the most positive momentum. The analysis included three key ecommerce metrics with a post-acquisition window over 3 months:
- Repurchase Rate: How often customers buy from a business again after their initial purchase.
- Purchase Frequency: How often a customer buys something from a business within a specified time period.
- Retention Rate: Identifies the percentage of users who continue using your product or service over a given time period.
The findings of the report were as follows:
| SUPPLEMENTS | Q1 2023 | Q1 2024 | +/– |
|---|---|---|---|
| Repurchase Rate | 33.15% | 37.67% | + 14% |
| Purchase Frequency | 1.47 | 1.58 | + 7% |
| Retention Rate | 19.07% | 23.42% | + 23% |
There are numerous factors that could have led to such positive changes, but one thing is for certain, supplement brands are getting better at encouraging repeat purchases and building brand loyalty among their customers.
Potential factors that positively impacted sales metrics within the supplement category
Subscriptions + Loyalty = Increased Retention, Purchase Frequency, and Long-Term Value
Many brands are expanding their adoption of subscription programs which could result in an uptick in retention and repurchase rates. Subscriptions have gained popularity in recent years and are a strong supporter of increasing repurchase rates and overall lifetime value of customers, as they are a great source of recurring monthly revenue. They are widely used in the health & beauty industry, supplements industry, or anywhere that a customer may be repurchasing products regularly. Brands looking to implement a subscription model should consider metrics such as purchase frequency, repurchase rates, product preferences, and segments of customers who are most likely to subscribe.
Loyalty programs continue to be another way brands are increasing customer retention, frequency, and customer lifetime value. While loyalty programs have been around for a while, personalizing the experience with customized offerings continues to grow in popularity among marketers. 37% of brand owners report having personalized rewards or offers as a part of their programs, with an additional 53% indicating they plan to offer more personalization in their loyalty programs over the next three years. By better understanding what groups make up your loyalty program and what influences their buying behavior – such as discounts or early access to products – brands can help improve these important metrics and boost the effectiveness of your programs.
Product Bundling & Cross-Selling
Utilizing data to optimize product bundling and cross-selling is also a key marketing tactic among ecommerce brands. By identifying which products are frequently purchased together, brands can adjust their bundling strategies, or include them as an add-on in the checkout process. You’ll see bundling particularly prominent with supplement brands, with complimentary products grouped together at a discounted rate. Focusing efforts on products that customers are statistically more likely to purchase together can improve metrics like average order value and lifetime value.
Personalized Marketing
It is becoming commonplace for brands to create personalized marketing programs based on their data and analytics. While some marketers are moving toward broad based targeting and letting platform algorithms do the heavy lifting, personalized audience targeting and campaign messaging is significantly more effective in terms of ROI. According to a McKinsey study, 40% more revenue was earned from personalized marketing actions or tactics. Advanced analytics provide valuable insights into customer demographics and purchasing behavior, allowing brands to reach their ideal customers when they’re ready to purchase.
Decile is here to help those supplement brands who want to embrace these next-gen marketing strategies and improve their metrics as they start to scale their D2C ecommerce channel! For more information on how to convert your brand’s first-party data into actionable insights, speak with a Decile expert today!