In April, Amazon introduced a new policy for dietary supplements that applies to three categories: weight management, sexual enhancement and sports nutrition. Under the policy, brands and sellers of these products must test with three approved third-party testing, inspection and certification organizations, or TICs. TICs include Eurofins, UL and NSF.
“Instead of the manufacturer being able to use their independent lab, see the testings and supply that to the brand owner, the brand owner at that point needs to send in testing to an independent lab, either Eurofins, [UL] or NSF, and they're in charge of testing that product,” explained Kami Butcher, senior sales manager at Vox Nutrition.
“Then at that point, the lab will submit that to Amazon and get their listing up and approved. But it's come with a lot of roadblocks for some of our customers. Some of the challenges that the customers have faced are time and money. So it's very costly for these customers to do independent testing on their own. And then also looking into different strategies like being an NSF-certified brand comes with a lot of time and different submission processes as well.”
Vox, NSF team up
In order to offset the high costs and hoop jumping, Vox has partnered with NSF to introduce a program for its customers that fast-tracks the Amazon approval and NSF-certification processes. The program has been so well received that Sarah Bega, director of sales at Vox Nutrition, said it has attracted new customers.
“Vox is making a sizable investment, anywhere from $250,000 to $300,000 this year alone, to get our products private label-certified for our customers with the NSF program," Bega said.
“But unfortunately, this year we're not going to be able to NSF-certify all of our private label products—we have over 140 of them—because of the financial investment. So that $250,000 to $300,000 is covering about 48 products only. Our hope next year is to continue to add to our NSF-certified products and formulas. But again, that's going to depend on if we have to make any other changes to the program or to the regulations to support Amazon sellers.”
However, Bega said getting a product NSF certified can take over two months and as the old saying goes, time is money.
“It is frustrating because to get your product NSF-certified, it's about 75 days,” she said. “So a lot of them [sellers] are running at risk of getting their products kicked out of Amazon and their listings completely deactivated.
"So we've been rushing as much as we can and again NSF has been helping us through that process to get these ones done as fast as possible. I think as the system smooths out and as we get more products going through the process we're going to see a change where it's going to be much more of a relief. But right now, there's still that level of urgency with customers as we're approaching that 65-day mark.”
Smaller businesses at risk
As with anything new, the program has its share of growing pains, and Bega acknowledges that it is all a work in progress. And it’s no wonder, Vox boasts more than 1600 active accounts per month, each with 3 to 12 brands and about 150 private label products. One area that Vox has always prided itself on is the smaller companies it works with, many of whom sell on Amazon. That group of sellers is now at a disadvantage.
“We do cater to smaller customers—we have a minimum as low as 50 bottles,” Bega said. “So a customer that's spending about $650 for a product to sell on Amazon would now have to come up with $2,000 to $2,500 at a minimum to sell it on Amazon.
"So that return on investment would take away their purchasing power even if they were able to afford it. It would limit their ability to continue to scale. That has resulted in the fallout of several of our smaller customers wanting to sell on the Amazon platform and just choosing to back out of the industry as a whole.”
She added that she has seen several mom-and-pop brands succeed in building successful businesses but are now struggling to raise the necessary funds to complete the required testing. Because of this, the more successful brands with stronger financial backing have been able to complete their testing and are now operational, while smaller brands that have had difficulty raising the funds for testing are seeing their listings removed, making it all the more challenging to offset the high price of testing.
“It is a little bit much. I think they want to be safe, but I also feel like there's an open market in supplements and it's really difficult for smaller companies to even compete with what Amazon is asking of them,” said Scott Urban, R&D quality scientist at Vox Nutrition. “So it’s going to push a lot of smaller companies out of the market where they could have innovative ideas. I don't know, for me that's kind of sad.”
And while many of Vox Nutrition's customers appreciate Amazon's commitment to quality, the impact the TIC program is having on small businesses is devastating.
“It would be very hard for a small mom-and-pop to survive [Amazon’s new TIC program] for several reasons," Bega said. "The first one is that when a listing is pulled down, visibility is gone. If you are a small mom-and-pop and you have a loyal base of customers, all of a sudden they see your brand disappear. End users, they're not necessarily aware of the new regulations and what Amazon is doing to enforce it. They just see that the listing is now gone on Amazon, so they could think that that mom-and-pop store went out of business and order from a different brand that is still listed.”
She added that another challenge small businesses selling on Amazon are running into is just being able to afford the testing, which gets more complicated and costly with each ingredient.
“We always want to help brands support and grow, but there is the reality of challenges for the smaller brands and additional investment,” she said.
More to come
The reality appears dire for small businesses. Despite this, Amazon's testing policy is moving full steam ahead with more categories expected to go into effect. Bega said it is only a matter of time before the program is applied to all categories.
“Ultimately this program is designed to cover all supplements that are sold on the Amazon platform and it should be, because every supplement should have transparency built into it,” she added.
Coming up, we're told to expect about three new category roll outs per year. Sources close to the situation say soft gels and fish oil supplements will be under the microscope next. Amazon did not respond to our request for comment.
