The deal, announced this week, will use the company’s comprehensive network of stores to its best advantage by using them to some degree as surrogate fulfillment centers. The plan covers all corporate-owned stores as well as franchise outlets that opt in.
Store footprint to help fuel delivery improvement
“Based on the geography of the destination of the orders we will source from the closest store,” Chadwick Hamby, GNC’s senior director of ecommerce operations told NutraIngredients-USA.
The companies say the deal comes at a fortuitous time as a way to help consumers maintain their New Years resolutions toward living a healthier lifestyle. Consumer research shows this is the time of year when many of those goals start to fall by the wayside, said Rina Hurst, Shipt’s chief business officer.
"Our vision at Shipt is to continuously identify new, innovative ways to simplify lives and give customers valuable time back to focus on what matters most," Hurst said. "The partnership with GNC allows us to serve more people in more ways – we're able to deliver on a need when many are struggling on how to deal with stress, weight management, sleepless nights and more. We're in the midst of an exciting evolution to a multi-vertical, multi-retailer delivery service and are thrilled to have GNC as part of the Shipt family."
Shipt was founded by entrepreneur Bill Smith in Alabama in 2014, and initially focused on delivery of groceries. It was acquired by Target Corp. in 2017 for $550 million. Veteran Target executive Kelly Caruso replaced Smith at the head of the unit in 2019.
The deal also addressed another issue GNC had been dealing with even before its bankruptcy declaration and subsequent sale to Harbin. The company had been struggling with an overextended store footprint that included many outlets located in withering shopping malls, some of which were closed for weeks at a time during the pandemic. Now at least some of those locations can help fuel the company’s ecommerce growth. The deal will also help improve service on orders from the company’s own website, Hamby said.
“This is a go forward plan with the expansion of SHIPT Driven within the next month or so - (same day service originating off GNC.COM)," he said.
Consultant: GNC’s move is on trend
Josh Schall, principal in the firm JSchall Consulting, has seen the growth of ecommerce for supplements from the inside. As a former corporate strategy officer at MusclePharm, he saw how ecommerce transformed the sports nutrition category. Products sold off the shelves at retailers like GNC were a big part of that story early on, and then a flood of online brands capitalized on that trend. The online brands offered convenience (no having to make a trip to a store) and now, increasingly, online purchases are associated with speed.
“Two recent trends have converged to create a need to sustain marketplace relevance. Firstly, consumer desire for instant gratification is only growing as all retailers are coming up against the ‘Amazon Effect’ where shipping expectations have diminished from two days to same-day/on-demand in most major metro areas. Secondly, merchandising choices of specialty supplement retailers like GNC have been converging with grocery or convenience stores. With more emphasis placed on ready-to-eat and ready-to-drink offerings, customers default to wanting similar ecommerce fulfillment options as retailers that stock fast-moving consumer goods,” he said.
Is GNC chasing the market?
Schall said even more could be done to leverage GNC’s store footprint. He noted that sporting goods chain Dick’s Sporting Goods has found a way to fulfill 70% of its online orders from its local stores, improving delivery times by 10% overall while shaving costs at the same time. And he wonders if GNC might still be chasing the market, as it was during its pre bankruptcy days when it was preoccupied with trying to close underperforming stores while competitors were figuring out how to improve their ecommerce shopping experience and delivery performance.
“GNC made a sound strategic decision by offering their customers on-demand shipping as a fulfillment option. The problem lies in the fact that GNC continues to ‘innovate to parity’ with its competition. This announcement was six months after The Vitamin Shoppe and Instacart partnership,” Schall commented.
“Yes, this is a great move, but I can't fully overlook the fact that the timing left a lot of money on the table by creating friction for customers, especially during the height of the restrictive living situation,” he added.