Problems of selling supplements online (or anywhere)
Supps #102. Every platform has their own rules defined for supplement brands. Brands operate in grey area with "no" regulation. Advertising and sale channels make it difficult to sell. What else?
👋 Hola! Welcome to Out of Singapore. I am Shan and I write about building business in Singapore. I have scaled a supplements brand to half a million mark in 12 months. We will hit a few more millions this year. All from one single country - Singapore. Each weekend, I sit down and share learnings on this blog post. If you like them, please share with your friends and family.
Let’s dig in.
The start of the brand was a non-starter. In March 2023, the hero product was put under the regulated ingredient list by the FDA (only for US market). They changed the classification from “non-regulated” to “investigational drug”. This meant brands could no longer sell this product over the counter. Amazon removed all listings with “NMN” keyword. Google did the same. For the next 6 months, we were struggling to sell the rest of our product line up. And yes, we drastically failed in that.
Platforms have their own weird regulation on supplements. Google at one point, asked us to get pharmaceutical manufacturing license to sell our products online. Why is the environment so twisted for supplements sales? Let’s find out.
We will cover
The genesis of problems - the industry itself.
What blockers brands face?
How can brands survive?
#1 This industry creates it own problems
Let me share a simple flowchart of how the supplement supply chain works. Next when I tell you the problems, you will understand.
Here is where the problems are created:
The supplement supply chain
The journey of an ingredient (a vitamin or mineral) starts in scientific papers. Once the evidence is established, ingredient manufacturers start making them in large quantities. They market it to brands. Brands either sell them as single ingredients or make their own blends. Few things break here
Ingredient manufacturers make variations of the ingredient and sponsor (fund) scientific studies to prove that they are the best. This means bulk of the research studies are potentially biased. For example, ashwagandha has 4 different variations in the market.
Traditional medicines are researched (sponsored by manufacturers) to establish their credibility. TCM and Ayurvedic products would be the case in point. Again, sponsored studies.
Race to launch new ingredients to market. Ingredient market is competitive. Within a few months of a successful ingredient launch, the space becomes crowded and commoditised. This means manufacturers have to keep searching for new ingredients.
Now, with the perspective in mind, here are the problems that crop up.
Multiple ingredients with similar claims - Look for sleep supplements and you will find glycine, magnesium glycinate, melatonin, GABA, L-theanine and CBD oil. Each works differently and there are sufficient scientific proof that they work. Same for other causes like brain health, cognition, menstruation, menopause, and skin health. This industry behaves similar to skincare (too many ingredients to sell to consumers). So, which one do you trust? That needs education, which no one is doing.
Proprietary blends - To differentiate and win the market, brands create their proprietary blends. One great example is the green drink by AG1. The claims are however based on studies done on the single ingredients in separate studies. First, the product has now changed, but the supporting studies are the same. Second, venture-funded companies like AG1, sponsor research for their proprietary blends. How do you trust those studies?
There would be further concerns on bioavailability and interaction between compounds (I am skipping this now).Each country’s own regulation - NMN is banned for OTC sales in USA by FDA, however, HSA in Singapore does not ban it. In China, any white powder supplement is considered prohibited.
Direct response ads for supplements- These ads aim to convert a prospective user to a customer fast. They do it by “exaggerating” the pain points and benefits at the same time. Add to this, a limited time promotion. This ensures customers looking for solution or slightly aware buy in. This is made worse by ChatGPT based scripts, “UGC” created without trying products and growing biohacking communities.
Global advertising and sale platforms - While regulations are local to a country, the platforms are global - Google, Meta, TikTok, Shopify and Amazon. They tend to apply rules from their home country to the entire world. So, rules by FDA are also applied to brands in Singapore, where the regulation are different.
Now let’s move to the problems that these create for brands.
#2 Brands are walking on thin ice
Brands are walking on thin ice due to concerns on safety, marketing and regulations. Here is how platforms make it difficult to operate -
Self regulation by platforms - Google has it’s list of prohibited and restricted substances while Facebook has it’s own. On Facebook, you may be able to “claim more” than on Google. These policies often are stricter than government bodies.
Enforcement is done by AI - Enforcement by AI is fast. They catch anything remotely wrong and shut down the ad or the store. Appeals are slow (mostly rejected). Human review takes weeks and sometimes months. We spent 3 months with Google compliance team to convince them that we are not violating local laws. On TikTok, saying “100%” is not accepted. TikTok gives you violation point if you say “metabolism”.
Policy change every few months - Policies can change depending on new risk assessment by the platforms. For example, NMN was banned from advertising on Google much before FDA officially banned it.
Punitive actions by platforms - Brands are at the mercy of the platforms to survive. Our TikTok shop, built over 6 months, was suddenly closed forever due to policy violations. No amount of appeal helped us. Shopify has shut down stores that violates its policies. Shopify can also disable payments for a store.
Payment processors - In the initial days, we struggled to find a payment gateway that will support payments for a new supplements brand. Initially, we managed to get started using Shopline platform (Shopify’s clone for South East Asia, from China). When we wanted to move to other platforms, all payment providers refused to work with a supplement brand. We were lucky to use Stripe. We still realise that Stripe can create problems later on (has happened to us on one occasion).
These make running a supplement brand highly unreliable - you do not know when a major sales channel will be shut down. Every month is a new firefight to adhere to a new policy by one of the platforms.
#3 How to survive as a brand?
Here are some quick ways and some non-quick ways to survive.
Adhere to strong product safety precautions - This is self regulation and keeping one’s practices to the highest levels. This translates into high quality manufacturing (GMP and cGMP), safe product handling (temperature and storage conditions), and frequent testing for purity and safety.
Listen and understand the platform policies - You cannot fight the platforms. They are governments in their own right. The best is to read and understand their policies and get clarity from account managers (or support team) to resolve specific instances. When our TikTok shop closed down and we started a new shop, we spent the first 5 weeks in ensuring all violations are taken care of - images, description and livestream keywords - before we started scaling advertising on the shop.
Trust science, dig deeper into studies - As a brand, we should question science more and understand the scientific studies better. (yes this is a preaching).
Audit of marketing campaigns - Advertising is one place where a lot of mistakes can happen. Copy, images and claims need to be checked regularly to ensure unsubstantiated magical claims are not being made. This is marketing discipline.
Bolster customer confidence - To bolster customer confidence, brands need to focus on two aspects. First, highlight its safety protocols. Second, educate consumers on the science and evidence of the products. Finally, customer feedback loop must be consistent to understand any pain points arising from the products.
Human trials or customer reviews - Two entirely different points but these help in driving customer confidence. Human trials are expensive, so larger established brands invest on it. For smaller brands, detailed customer feedback can do the trick. This would involve being part of customer’s journey with the product and the measuring the benefits over time.
Build alternative platforms and channels - As a brand, if you put all your eggs into one basket, you will be doomed. While DTC seems to our own channel that we control, it is actually controlled by Shopify, Meta and Google. They can decide to shut you down any day. Hence build alternative strong sale channels on marketplaces and social media.
Okay, this is it for this week! Good luck if you are building a supplements brand.
Thanks for reading. Please like and share 😍
Today’s writing seemed complicated to me. I went into too many details and the crisp points have not come across. Will plan next week’s writing better.
You may also noticed that I have started a lot of series.
DTC series
Google series
SG series
Supplement series
It is an attempt to categorise my writings. I would pick up these specific series whenever I have more points to share. For Google, I have the writing list, but am unsure if I will do justice. Will see how it goes.
Jisoo judging your life choices 😂
Thank you so much for reading again! Have a great week ahead. 😀