Starting a supplement line is more work than it seems. The reason why? Because putting the product in the bottle is the easiest part of the process.
The hard part is turning a good product idea into a good business, which calls for a much larger set of skills. Distribution, marketing, legal matters, customer service, financial planning and your sales process all have to be in sync for the project to work.
Getting all of these variables to line up isn’t an easy task, but it can be done. Let’s walk through the process of how to go about building a dietary supplement line from the ground up.
6 Steps for Starting a Successful Dietary Supplement Line
Step 1: Define Your Target Customer
When I talk to new entrepreneurs, one of the most common oversights they have is an inability to link their product idea to an actual consumer (or consumers) who would be interested in buying it.
When it comes to determining your market segment, these are the biggest mistakes new entrepreneurs tend to make:
- They have no target customer.
- They do have a target customer, but the target is still too vague (e.g.: “health conscious woman” is not a viable consumer group).
- They don’t establish their target customer until after the product has been made (which is a big mistake).
If you’ve properly defined your target market, you should be able to answer the following questions:
- Who are they? If you answer this question correctly, ‘they’ should be a group of people that are either united by (at least one) common activity, profession, or health issue.
- Where are needs waiting to be filled? Working backwards from the constraints customers face when making a decision is a great way to answer this question. A great example: Are vegans lacking for adequate choices of joint health products (most glucosamine is derived from crustaceans, ya know)?
- Where do they buy their products? Typical answers here often include specific retail outlets, healthcare practitioners, distributors, websites, catalogues, and events.
- Where do they obtain their information? This will allow you to identify where you should advertise. Answers to this question should be specific websites, blogs, magazines, trade publications for professionals, or classes of professionals.
- Will it be possible for me to solve my target customer’s problem? Unfortunately, some problems exist because there is no reasonable or affordable way to solve them. Don’t put yourself or your product into that category.
Gathering the information necessary for answering these questions might seem like a tall task, but there are plenty of tools to help you do it. A great place to start is by asking people you know in your market segment. You can also use tools like Survata to conduct a consumer survey to fill in the blanks. Spending a few months and a few hundred bucks to get these answers right will save you a lot of heartache later on.
When all is said and done, you should be able to answer each of these questions in a sentence or less.
Step 2: Decide On Your Customer Acquisition Model
When it comes to finding customers there’s no right or wrong way, but there is a golden rule for choosing the method that’s best for you and your product: Pick the one you can do/work with best.
Here’s a brief overview of some of the most popular options:
- Media Buying
- Direct Sales
- Direct Selling
- Working Events
I advise a zen-like approach (and some more research) when it comes to choosing the method that’s best for you. It sounds a bit corny, but chances are there’s one particular path that’ll speak to you if you look inside yourself. What instinctively feels “right” is probably your sub-conscious leading you to hone in on your comparative advantage.
So sit back, relax, have a meditative moment, and let your intuition guide you on what’s best for your situation.
Step 3: Do A Competitor Analysis
Competitor analysis is an important piece of the puzzle. Simply put: Even the best product won’t sell if doesn’t stand out from the pack. Being good all by itself isn’t enough.
It’s time open a spreadsheet in Excel and start recording the following information about your competitors and their products:
- What price are they selling at?
- What channels are they using to reach customers?
- What are their key label claims?
- What’s their price per ounce/pill/capsule?
- What customers do they target?
After you’ve filled out your spreadsheet sufficiently, here are a few ways that you can start to separate your product from the rest:
- Price. Tricky to do right, but tried and true. Large volumes often go to the lowest bidder, even if the difference is marginal. Just be prepared for paper thin margins. (Possibly less than $1/bottle when all is said and done).
- Find a new customer segment. There might be a class of customers that overlook a particular type of product because it’s never been marketed to them in ways they relate to. Athletes, seniors and people with restrictive diets are all good examples of this.
- Find a new certification. Is the world waiting for an organic version of something that’s not currently out there? A type of product that vegans can eat for the first time? Finding a new certification is a great way to instantly distance yourself from the pack. NOTE: Expect this to be much harder than you think! Usually, the reason these certifications don’t exist is because it’s either very hard or very expensive to create ingredients in this way.
- Find an ingredient to delete. Oftentimes an undesirable (or less popular) ingredient has to be used in order to make a particular product (usually because it has to come from a certain source). NOTE: The previous note also applies to this category.
The key here is to find a detail within the product development process that other companies decide to avoid or cut out (which they may have good reasons for doing — you’ll have to do research to find out). This is your opportunity, wily entrepreneur, to go all-in — demonstrating your commitment to your product and your target customer.
Step 4: Formulate
It’s not uncommon for people (especially industry newcomers) to think that formulation ought to be the first step. The reality is, formulation should happen right before you’re ready to bring your product to a manufacturer — but only after you have an understanding of what people are looking for, what they’re willing to spend, and what exists already can you comfortably start the formulation process.
Here are some additional points to keep in mind:
- Start with the key features you want to advertise and then work backwards.
- It’s okay to borrow some of the best ideas from your competitors but don’t go too far…it’s always best to start with your vision first.
- If you have rough ideas in mind most manufacturers will have a product development staff to that can help fill in the blanks.
Step 5: Find A Manufacturer
With a well-rounded product idea in hand and your basic business model developed, you can now start approaching manufacturers.
For industry newcomers, the process of actually getting a product manufactured can seem daunting and, at times, unaccommodating. You should learn everything you can before you start this step, as well as making sure that you’ve developed some kind of business plan to accompany your product.
With all of this in mind, here are a few more important tips for evaluating a manufacturer:
- Price is important, but it’s not everything. You’ll often see prices cluster around a certain point for a product, which is normal. Golden Rule of Pricing: If it seems too good to be true, then it probably is.
- Check for NSF Compliance. Working with manufacturers/facilities that are (at the very least) NSF compliant is a must.
- First impressions matter. Simple things like timely responses and openness from the start are usually positive indicators of what working with a manufacturer will be like.
Step 6: Build Out the Rest of Your Business Plan
Here are some of the components that every supplement business needs to get off the ground:
- Fulfillment. Your manufacturer will often be able to provide it, if not there are plenty of other options to choose from.
- Legal Formation. Establishing the groundwork for legal protection and structure is a must. Be sure to set aside a portion of your budget for this task.
- Label Design. Working with a professional label designer is a must. Whether you choose your manufacturer’s in-house designer or one out-of-house — a label is not something you want to pay for more than once.
- Setup Your Website. Some of the most popular e-commerce platforms include Shopify and Woo Commerce. No matter how you want to set up your store (be it selling focused or selling and content focused), the right e-commerce platform is out there.
- Begin your initial advertising. You’ve already decided on your method of customer acquisition, right? Now’s the time to begin planting your seeds, either by blogging, buying up ad space, collecting e-mails, or negotiation deals with your advertising partners.
Truthfully, it isn’t a bad idea to start working on these components before you choose your manufacturer. Either way, you should have addressed all of these components by the time your product has made it through manufacturing.
Go Forth into the Supplement Industry!
Congratulations! If you’re reading this, then you’ve made it to the end of the post! Now it’s time for you to get to work! Go forth and start your journey toward your very own (successful) dietary supplement line. Remember: Do your homework, weigh all the options, and above all else — be prepared!
About the Author
Jonathan Bechtel has been the owner of Health Kismet, a nutrition company that manufactures and markets nutrient powders to aid digestion, cognition, and mood support since 2011. He studied nutritional biochemistry at The Ohio State University and loves basketball, the Pacific NW, and every aspect of the natural product industry.