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Amazon jumps into supplement space with the launch of ‘Amazon Elements’ line

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Adi Menayang

By Adi Menayang

02-Mar-2017
Last updated on 03-Mar-2017 at 14:31 GMT2017-03-03T14:31:00Z

Amazon Elements poised to shake up the supplement space

Online retailing giant Amazon is dipping it’s toes in the waters with its own private label dietary supplement line. But the giant’s toes may cause waves instead of ripples and shake up the industry, experts predict.

Digitization has been building momentum in the supplement industry, from online-only startups like Ritual and Care/Of grabbing media attention, to the increased role of forums and reviews in supplement purchases as seen on Bodybuilding.com.

Amazon, the behemoth of online retailers, recently launched its own private label supplement line in stealth mode under its little known Amazon Elements brand. The only “Amazon Elements” press release that shows up in Amazon’s press room is from 2014 , announcing a new line of private label diapers and baby wipes that champions and promotes transparency of sourcing.

“Amazon Elements was initially a diaper brand, and it didn’t do very well, but they kept the wipes,” Matt Oster, head of consumer health research at Euromonitor , commenting on the surprise launch, told NutraIngredients-USA. But is there a logical connection here, expanding a line from baby wipes to dietary supplements?

“I’m not sure if it’s [because] they have a legacy brand that they feel still has some resonance, and they wanted to use these products underneath that brand, or if it’s a broader push to create a broader brand, like for instance Target, where you have a private label that goes across different categories,” he added. “But it’s still too early to tell.”

The initial Amazon launch consists of four products, Vitamin D2, Vitamin K2, Turmeric Root Extract and Calcium Complex. For now, the line is only available for purchase by invitation which Amazon Prime members can request.

'The private label sales will cannibalize existing brands sold online'

 

For now, the Amazon Elements brand consists of a line of baby wipes and the newly launched dietary supplements.

According to Dr Kurt Jetta, founder of CPG analytics company TABS Analytics, Amazon’s new initiative in the space is “well-placed.”

“Private label supplements carry extremely high margins, and Amazon needs to find ways to improve their margins in e-commerce,” he added. “Private label has major traction with vitamin customers already (over 20% of sales) and e-commerce is a significant and growing piece of the vitamin category (over 15% of dollars, with Amazon controlling about 35% of that).”

His sentiments mirrored that of Oster. “What Amazon can do better than a GNC or any other of these niche products is expand on their already-users base, and they can knock down the margins of the industry—the supplements industry has pretty high margins,” he said.

Though the effects can be critical in the online space, Dr Jetta doubted the impact would be great on brick-and mortar. “The most likely outcome is that Amazon will grow the market, overall. Secondarily the private label sales will cannibalize existing brands sold online,” he said. 

“We would project the impact to brick-and-mortar to be minimal, based on the fact that history has shown both e-commerce and brick-and-mortar can both grow concurrently in vitamins. Any brick-and-mortar impact (which will be small) will fall disproportionately on Specialty Channels,” he added.

Transparency promise, and a sprinkling of stardust from the Amazon name

Key to the Amazon Elements brand, at least from its website, is transparency. When shoppers click on the supplements, they are brought to a page filled with images and graphs explaining the ingredients, its origins, an FAQ section, and up top, a certificate of analysis and the analysis report. 

“Amazon has answered the call of transparency in a way unlike any before,” said Scott Steinford, CEO of Trust Transparency Consulting. “Using a QR code reader, available on the Amazon App, the consumer can scan the QR code on the front of their bottle’s label. Information ranging from date of manufacture to assay of each ingredient is displayed on the mobile device.”

“Analysis of microbes, pesticides and heavy metals is displayed through display of test identification. Country of origin of each ingredient is identified,” he added.

All these measures are boosted even more by the Amazon brand name, which Oster said is trusted among consumers. I think fundamentally, it’s about having the Amazon name on there,” he said. There were past attempts of going private label that the company has done, Oster added, but not all of them went swimmingly, and many of them didn’t even bare the Amazon name.

“Last year they went into the private label coffee category, and they competed immediately with Starbucks,” he said. “If Amazon is upfront and publicizes [Amazon Elements], then they have a great opportunity to be a very big market player in the supplement industry because it’s still devoid of that player. So they won’t really butt against established leaders like in other categories.”

He added: “A lot of consumers will respect and maybe trust the Amazon name more than if it were some random private label name that has no distinction that Amazon had anything to do with that brand in the first place.”

1 comment (Comments are now closed)

I Did That

I made Amazon start a line of supplements through a lot of words from my own mouth to a lot of people about how I buy my own supplements from Amazon...I just told again.

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Posted by Stephen Richards
03 March 2017 | 18h542017-03-03T18:54:49Z