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If you have ever thought about starting your own supplement brand, you are at the right place!
That ‘s because in this article we are going to review some real examples from real supplement brands to help you get started.
How to start your own supplement brand
You can start your own supplement brand by: 1) Carefully defining your target market, 2) Identifying the market opportunity, 3) Distributing an existing product or manufacturing your own brand, 4) Pay attention to the FDA and regulators, 5) Make it easy for your target market to purchase, 6) Advertise where your customers are located.
We're going to explore three common questions about how to start your own supplement brand here.
Let’s get started.
Entering the supplement manufacturing business requires careful planning and excellent data.
That’s because modern food suppliers are often not up to providing optimal nutrition to the consumer, they are usually more focused on market trends. And, as you probably know, there is a huge difference between market trends and giving your customer the best nutrition possible. For an example of this from the biggest food companies in the world, just go here:
As a food supplier, often, they simply just deliver to the consumer what is handed to them.
This is good and bad news for the supplement industry.
It's good news for demand, it's bad news for those suffering from poor nutrition.
For example, the phenomenon of the "food desert" shouldn't exist, but it does.
A food desert is when notable populations live in areas where there's no decent access to healthy food. Maybe there's a "bodega" on the corner (a small grocery store), or a gas station with snacks. Outside that, the nearest grocery store might be sixty miles away.
This is exactly what happened in Macon, Georgia when the Kroger grocery store closed their doors -- instantly creating a food desert -- leaving about 2,000,000 people and 500,000 kids without access to affordable fruits, vegetables, whole grains, dairy products, and other foods that make up the full range of a healthy diet.
But on the flip side, this can be an opportunity for the right supplement brand. For example, if you take advantage of the eCommerce strategies found at StrategicMarketingPartner.com and if your financial metrics make sense, you could position your supplement brand to provide nutrition to underserved markets such as this.
Here are two resources that can help you do this right now:
Your supplementation brand can provide an affordable and convenient solution for such populations as a food desert, and because there are quite a few food deserts in the United States (roughly 10% of all communities according to the FDA), your brand, depending upon your target market, could really help people.
But a food desert certainly is not the only target audience, far from it.
Before we address some of those markets and examples, let’s narrow in on some supplement basics.
There are a lot of supplement options on the market that match this description.
The type of supplements - from broad multivitamins for men or women to specific vitamins, minerals and nutrients - on the market are virtually endless, representing an enormous amount of opportunity for market entry, product improvements, target market identification, pricing optimization, branding upgrades, on and on.
Others seek to fill a nutrition gap beyond traditional vitamin supplementation. The following questions are commonly asked by those entering this market, and answering them helps you find qualitative, affordable, feasible supplement options:
Let’s address each of these questions now.
HowToStartAnLLC.com puts the cost at $5k to $10k, but the real answer to how much it costs to start your own supplement line is: it depends.
Additionally, a higher quality product with more ingredients focused on the needs of a more affluent customer target market will cost more than a one-ingredient supplement adhering to the most basic supplement requirements.
For example, if you simply sell one ingredient, ashwagandha, you will need to be prepared to compete on price in a very competitive market. In order for you to make enough gross profit per unit sold, you will have to purchase a huge amount of inventory in order to drop the cost per unit low enough. NOW Foods has a strong market position and knows they can acquire customers, sometimes even at a loss because they have such a wide set of products and can efficiently cross sell, bundle and keep customers for a long time.
Alternatively, if you can create a blend using ashwagandha and position your supplement brand to solve a problem, you may be able to charge more per unit.
While this may raise the manufacturing cost, this market positioning for you supplement brand strategy may be an option for you to increase your gross profit margin. That is exactly how Zhou positions their ashwagandha blend and is selling in the Walmart online store.
But this doesn’t mean one is a better business opportunity than another.
The "Goldilocks Zone" here depends on you, your supplement, where you get it from, who you send it to, and how much those unique costs are.
Here's how to figure it all out:
Let’s review another couple real world examples.
Notice this supplement formula is very simple.
The supplement brand has a clear target market: mature men.
The formula is not complicated…
But each ingredient is obviously well researched, and has the seed of a wonderful story to support the supplement brand: a natural ingredient that has been used in traditional health for 1,000 years.
Now, after the solution that this product provides to the intended target market and is well defined, it's time to match the marketing message to the target market. This is called ‘finding fit’ and is Job #1 in marketing. That was what we did for this supplement brand but marketing your supplement is not the focus of this article (here’s tons of articles already addressing this topic).
But before we sell supplements and deliver products to customers, we have to get the product sourced and ensure the financial metrics work out.
Here’s what that means.
A good goal to strive for when developing your supplement brand is a cost structure of 10 to 1.
That is, for example, if you can sell the product for $30 per unit, the ideal cost to purchase one unit is $3.
In many cases a cost structure of 5 to 1 can be ok, too -- in this case the cost per unit would be $6 per unit and the sales price is still $30 -- but it is suggested that you do not go below 5 to 1 because it will affect your gross profit margin, and reduce your options for customer acquisition, further limiting your growth marketing options.
The reason behind this is clear and simple:
Here’s a real world example from a leading supplement brand that has a great gross profit margin:
In this example of a real company’s sales report for the week, the cost of each unit is $5 (COGS = Cost of Goods Sold) and the cost to ship each product is $5. This company offers free shipping (which you should do as well).
In this example, this supplement brand has a very good gross profit margin of 85% because of these two factors:
Now, when you look at how to optimize your inventory and do some sales forecasting, you will find that part of this is dependent upon purchasing sufficient inventory.
This also means buying enough so the cost per unit drops in order to have a solid gross profit margin, as in the example. You are encouraged to read this article for more on this topic:
So, for your first batch of inventory, expect to invest about $2,000 to $5,000, which should get you, as a ballpark, anywhere from about 200 - 1,000 units.
If you are a new supplement brand, ordering an inventory of 200 - 1,000 units is a good number of supplement units to help you:
To set up these systems, again, as a ballpark, should cost anywhere from $1,000 to about $3,000 to get started. After all, a website can be built very cost effectively as there are many quality eCommerce solutions ranging from Shopify to Ultracart to many options in Wordpress.
Now, you will need a marketing budget of about $1,000 - $3,000 to get started. A good place to start is with some PPC test ads, the shopping network of your choice such as Walmart, Amazon, Ebay, Etsy and others, and some social media ad placements based on your audience. All of this depends upon, of course, who your target market is, where they shop and what the competitive landscape looks like.
So far, you have some inventory to sell on your own website with some element of customer support, for about $11,000. These are broad estimates with many variables.
But it's a starting point. And you have to start somewhere.
Let’s find a supplement manufacturer for your brand.
That is the question, isn't it?
Well, you'll have to be savvy. Read reviews and ask around. Try some samples.
Explore supplements provided by or facilitated by organizations you trust.
There are plenty of options.
Many of the manufacturers provide several options that can help you get started. For example, they will help you with labeling, shipping solutions and even customer management.
But, finding a trustworthy company that has strong moral, legal and ethical options is not always easy, and definately half the battle.
So, here are some options and an excellent reputable company we have worked with for about 10 years on a variety of supplement manufacturing projects. Whether you choose them or not, the point is that you can use the company to measure other potential suppliers against.
Here’s nine of the most important topics when finding and choosing the best supplement manufacturer for your supplement brand:
We have worked with Z Natural Foods for many years on a variety of supplement and natural foods projects. Not just because they have an excellent customer support team, have over 500 natural foods and a very efficient supply chain and logistics team, but we really like that they are a family owned business and highly value providing excellent service.
We have worked with nearly 10 supplement manufacturers over the years, and Z Natural Foods has by far provided the best experience. They either meet or exceed each item on our list of criteria when choosing a supplement manufacturer. And if they can’t provide a product or a solution, they simply tell us and we go elsewhere. But we have always come back to Z Natural Foods.
I might suggest that you try one of their products first for yourself and test them out while getting a great product. I regularly buy their Bone Broth powder, Incan Trail Mix, Whey Protein Concentrate, MCT Oil Powder, Matcha Green Tea and Black Seed Oil.
So as you get started to look for a supplement manufacturer that you like, we suggest you do your research and find three potential suppliers. Call all of them and start the conversation. You may need to interview 10, but start with three. Call Z Natural Foods as well to simply establish some baselines, they may not be able to help you but they can help educate you on the process.
There's a lot to think about here, and you want to be sure the supplement you are looking to supply the market is properly demanded, and you can get it in front of people to buy.
At the end of the day, the seed money (and how it's managed) represents one of the most important features of starting your own supplement company. It can be done, and well, but you'll want to take the time to do the research; and you'll want to pinch every penny you can.