As the “beauty from the inside out” opportunity continues to swell, ingestible wellness companies, which sell vitamin packs, mineral-rich tonics, and probiotic and prebiotic pills, are betting big on subscription models.
On Tuesday, supplement brand The Nue Co, which sells probiotic protein milk, magnesium sprays, and valerian root and passionflower sleep drops, unveiled its new program. The monthly subscription model takes users through a customized consultation via quiz designed by The Nue Co medical advisers; subsequently, the questionnaire offers customers product recommendations based on concern areas or desired goals, like skin, stress or gut health. Consumers can opt in to purchase the suggested products at a 20-percent-off loyalty rate — The Nue Co’s lineup ranges in price from $50 to $85 for single products or up to $200 for packages.
“We wanted to simplify and stress the shopping experience within supplements,” said The Nue Co founder Jules Miller.
The beauty supplement market has grown 7.1 percent from 2012 to 2017, to $89.6 million in sales in the U.S., according to market research firm Euromonitor International, and more ingestible health products are popping up in Nordstrom, Bluemercury and Sephora. The play for wellness brands to flex a subscription model isn’t just about owning the customer relationship but also increasing recurring revenue. According to McKinsey & Company, the subscription e-commerce market has grown by more than 100 percent a year over the past five years — the largest retailers generated more than $2.6 billion in sales in 2016, up from $57 million in 2011.
Many within the beauty space have this model baked into their DNA, like Birchbox, which still sees 65 percent of its revenue come from subscriptions — 2017 was its biggest year ever for subscriber acquisition – and Ipsy. DTC acne brands like Curology and MDacne are also seeing success with this model. Curology, which launched in 2014, reported in July that new monthly members had grown 500 percent in the prior 12 months and total membership had tripled in the last year. Clearly, the next frontier for subscriptions is wellness.
The Nue Co, which launched in 2017 and exceeded $1 million in revenue in its first year, sees 70 percent of sales from its own e-commerce site, 20 percent from wholesale partners like The Apartment by the Line and 10 percent from its permanent Soho retail location. Quarter-on-quarter, The Nue Co has seen its direct-to-consumer business grow by 110 percent. Fittingly, Miller wanted to amplify that online experience. Through the personalized program, the company not only advises customers on which products to subscribe to upon consultation (with the help of a medical adviser and nutritionist) but also what time of day to use them and how to use them (e.g., with or without food). After the program’s launch, The Nue Co will engage in monthly check-ins via email survey and online chatbot based on how the suggested products are working to prevent stockpiling. “The constant communication is about making it easy for customers to cancel and for us to understand why,” she said.
The Nue Co already saw that its customers’ average order value was $150 for multiple products, with a 40 percent repeat purchase rate, so Miller expects the personalized program option to better target customer goals. “It’s really about suggesting a more holistic approach with our products and tailoring a customer’s experience month by month based on what is happening in their lives,” she said. With the implementation of the personalized program, which offers “hundreds” of combinations of the brand’s 12 products, The Nue Co. aims to grow revenue by 400 percent in 2018.
Miller is not the only one to attempt to put her stamp on the wellness subscription opportunity. Women’s health-care company Binto, which sells 14 different prenatal, iron and zinc vitamins, not only has its personalized subscription option for customers but also offers a specialized probiotic subscription for customers struggling with gut health, a fertility subscription and a hormonal subscription. Binto, which advises customers via a quiz and a nurse practitioner, also recently partnered with Urban Outfitters in May to sell starter kits (which include its Bare Essentials multi-vitamin and a probiotic) in physical stores that drive customers back to MyBinto.com for replenishment.
“We’re trying to stop the cycle of women trying and buying, and then ultimately having to turn to prescriptions instead of using supplements as the first line of defense,” Binto CEO and founder Suzie Welsh said. “The starter kits are about getting women to try something and then understand there is a more personalized option or plan for them online.”
Ninety-two percent of Binto’s business is subscription-based, while the other 8 percent of sales come from Urban Outfitters and Amazon. “Wholesale is really looked at as an advertising channel for us,” said Welsh, who is hoping to increase brand awareness with Urban Outfitters. Direct-to-consumer toothbrush brand Quip recently implemented a similar starter kit-to-replenishment strategy with Target. So far, it’s working, as Binto’s return rate is less than 8 percent, according to Welsh.
Likewise, personalized subscription packs are at the heart of vitamin company Care/of, which launched in November 2016 and raised $29 million in Series B funding led by Goldman Sachs Investment Partners in August. As of now, Care/of is 100 percent direct-to-consumer and is trying to increase engagement and retention among users. According to Care/of’s co-founder Akash Shah, more than 1.5 million people have taken its online quiz. It is now driving customers to its online app, so customers can track their vitamin usage and, in turn, receive “Carrots” — Care/of’s version of a loyalty program. After achieving a “Carrot streak,” customers can redeem discounts, gift cards or referral credits. Care/of is even planning on releasing its own merchandise, including an upcoming sweatshirt and zipper pouch, to be featured in the Carrot marketplace.
“Essentially, the idea is to reward people for taking their vitamins and continuing with the subscription,” said Shah. He also said the app has fueled more interaction with its customers, calling out that more than 20 percent of Care/of consumers use it on a daily basis. “It makes for a sticky experience, because it’s a testament to people wanting to be kept on track and be responsible for their wellness in more impactful ways.”
That also seems to be the case with Miller’s The Nue Co personalized program proposition: “When people are more invested in their health and more willing to make a commitment, it’s not just good business, it’s better for the customer in the long run.”