Rapid product launches, better deals can help smaller firms compete with Amazon, expert says

Nick Saliba is CEO of A1 Supplements, a company that was born of a supplement selling business he founded in college. Saliba says he started selling supplements directly to consumers even before there was a supplement industry per se.

Long history in online sales

The category-founding legislation, the Dietary Supplement Health and Education Act (DSHEA), was signed into law in 1994, and Saliba founded his business in 1990.

So Saliba has a longer view of online sales than do most observers. While Amazon has increased revenue in spectacular fashion, profitability has been harder to come by. The company is now reliably profitable, but it had to top $100 billion in annual revenue to get there (the company reported about $233 billion in revenue in calendar 2018).

In a smaller company like A1 Supplements, which is based near Knoxville, TN, Saliba didn’t have the luxury of running deficits or barely breaking even for almost two decades as did Amazon. But he said the nimbleness of being directly involved with the suppliers of his products has enabled him to continue to compete effectively, even as Amazon sells ever more supplements. The effect of Amazon has been to turn supplements ever more into a commodity business, but that doesn’t always work to the giant’s advantage, Saliba said.

“One advantage​ of shopping on A1 Supplements along with other companies in the same space is that we are able to give the consumers BOGOs and other deals that Amazon simply cannot touch,”​ Saliba said.

Internet has helped educate consumers

Over the years, Saliba said he has seen consumers become more and more knowledgeable about the supplements they are buying. The kind of content offered on A1 Supplements and other online sites is one of the resources that has helped to make this happen, Saliba believes.

“When I started as a distributor of sports products in 1990, people couldn’t even spell carbohydrates,” ​Saliba said. “Since then the industry has seen enormous growth, and bodybuilding especially has been taken to the next level.”​

“Today’s consumer is more educated and I believe that is first and foremost because of the Internet. There is so much content—it’s incredible,” ​he said.

Despite concerns about various dodgy ingredients showing up in sports nutrition products, in the main Saliba said he believes the industry is getting better. More consumers know what they are looking for and also what they want to avoid.

“Manufacturers are answerable to the consumers and their concerns. Manufacturers used to hide 10 or 15 ingredients under one category of a proprietary blend on the label. That is no longer acceptable to consumer. Manufacturers are getting smarter about showing the customer what is going into the product,”​ he said.

The growing reach of online sales

Some supplement market watchers have opined that it is hard to capture the size and effect of online sales. Estimates range from a low of about 8% of overall supplement sales to as high as 20% or more. Even with his insider view, Saliba said it’s hard to quantify.

“I would have to say it has got to be close to 15% of the overall market,” ​he said.

Saliba also has a brick and mortar outlet that is more of a traditional health food store (he recently sold several others). For the retailing of supplements, as opposed to health foods, he believes companies will have to have a solid online strategy to compete in what he believes will be the growing end of the market in the future. The recent struggles of retailing giants like Vitamin Shoppe and GNC should serve as warnings for the entire industry, he said.

“They are saddled with a lot of stores, and some of them in dead malls specifically. They didn’t move online fast enough and when they did it was more out of fear as opposed to innovation,”​ he said.

“The supplement industry is such a trendy industry, and if you look at the big retailers, they are reactive to what happens in our sector. The new innovations start with A1 Supplements and other companies like us in the space. It doesn’t take much to educate the consumers that there are alternatives to buying their supplements off the shelf in a store,”​ he said.