How to Start an Online Health Supplement Biz
How to Start an Online Health Supplement Biz
Today’s post is a long and exciting guest post from one of our more inactive members of the jungle. He’s been inactive because he’s been executing (and partying).
Once you read it, you’ll realize that I don’t have to give much of an introduction/explanation because it’s complete in it’s current form.
Without further ado, here’s BowTiedPelosi.
My family and friends thought I was completely insane when I quit my lucrative private equity job in the beginning of July to travel the world and start an.. online health supplement biz?
Setting the Table
First off, a big thank you to BowTiedOpossum for allowing me to document my journey so far in the health supplement space. I’ve been a long-time Jungle lurker, and the WiFi Money Substack was among the first resources I discovered when I first started becoming interested in the wild world of e-commerce.
I invested significant upfront time to read and study the entire thing from front to back – this honestly has proven to be the single most important educational investment I’ve made in the last few years. It has served as a critical foundation for starting my own online health supplement biz and continues to pay dividends on a nearly everyday basis.
This thing is filled with digital gold and honestly should be required reading for anyone serious about pursuing WiFi money – to this day, I have friends and strangers alike reaching out to me, asking how I got started with my company.
Without fail, I point them to Opossum’s content and tell them to read the entire thing / follow up with me in a month once finished, before spending the time on mentoring them. If you’re serious about liberating yourself from the corporate rat race, I’d advise you to read the entire Substack as well, Anon!
Secondly, a quick disclaimer / caveat: the path I elected (i.e. throwing caution to the wind, quitting my finance job to go all-in and embracing the life of a digital nomad entrepreneur) is NOT what is conventionally recommended by Opossum, Tetra, Bull, etc.
In fact, I’d say it is prudent NOT to follow this path UNLESS you’re able to de-risk it significantly. (several years of living expenses saved up, passive income streams, relevant skills & experience, etc.)
The reality is that my own experiment is still ongoing, with its fair share of successes & failures (although as I write this, it is showing the right signs). That all being said, I truly hope the experience I lay out here is both instructive and inspirational for anyone pursuing an e-comm biz today (and / or considering a departure from the rat race).
Quick Intro to Me & Some Context
Okay, now let’s dig into the fun stuff. As I write this, I am on a mediocre, WiFi-less budget-airline flight from one Western Europe capital city to another.
I am a late 20s American male. I went to a decent, non-prestigious state university, worked in healthcare investment banking in NYC for a couple years, transitioned to a healthcare private equity firm for a few years, and then quit my job in July 2022.
Over the last 4 months since quitting my job, I’ve grown my health supplement biz, Avenir Nutrition, from low-4 figures to a low-6 figures of annualized revenue, traveled to 20 countries (extremely aggressive in retrospect), lost my U.S. passport (replaced), and went on insane (mildly concerning) multi-week benders (Gentse Feesten, Tomorrowland, Mykonos, Sziget Budapest, Croatia Yacht Week, etc.) – all of this while working 30-60 minutes per day on the biz from my iPhone up until about mid-September (when I slowed down the travel & partying and went full-time on Avenir).
Despite sounding unrealistic, this is all 100% truthful, and I assure you it will all make sense after reading further..
Intro to Avenir Nutrition & The U.S. Health Supplement Industry
Here is the yawn-worthy description of Avenir Nutrition and what the brand stands for: “a nutraceutical company helping people unlock longer, healthier, and happier lives”. Avenir (ave-uh-near) is French for “future”.
I have been super passionate about health, health supplements, longevity, human augmentation, transhumanism, etc. for over a decade now. For me, Avenir is a vehicle for helping people:
Extend lifespan (quantity of years), but more importantly
Extend health span (quality of years).
In the US, the average lifespan is ~77 years, but the average health span is only ~63 years. This is a stunning statistic meaning that the average American retires, has a few “blissful” years after retiring, and then proceeds to spend the last 14 years of their life in poor, sub-optimal health.
I don’t know about you, but to me that is pretty depressing. On a brighter note, Americans in general are becoming increasingly health conscious, taking their health into their own hands, researching their own solutions, focusing more on PROACTIVE rather than REACTIVE health, and spending WAY more on health supplements – in industry jargon, this is dubbed, the “Consumerization of Healthcare”.
This is a MASSIVE trend that is disrupting the entire $4tn+ U.S. healthcare system, and it is here to stay / accelerate.
As with many brands, Avenir (and my flagship product, Liver Shield) started with solving one of my own real-life problems & pain points. When I was a young lad on the hedonic treadmill in university, I admittedly consumed an eye-watering amount of alcohol and was in every sense an alcoholic.
After getting routine bloodwork done and uncovering slightly elevated liver enzymes at a concerningly young age, I started researching plant compounds & supplements that can:
Repair your liver from past damage and
Protect your liver from future damage
I quickly landed on Milk Thistle, took it for a little while, got my liver enzyme count back in a healthy range, and have been taking it intermittently in various forms ever since (now daily via Liver Shield).
Over the years, I convinced countless friends & family to incorporate Milk Thistle into their daily supplement routine, particularly if they regularly expose themselves to liver toxins such as alcohol, painkillers, cigarettes, processed & fried food, etc.
Overall, when I decided to plant my flag in the health supplement space, it was obvious to me that creating my own liver cleanse supplement was the “lowest hanging fruit” product that I could initially pursue – I knew the product and science well, but more importantly, how to sell it to people.
My product, Liver Shield, contains a unique, 21-ingredient blend of different plant compounds that have been routinely demonstrated in studies to help cleanse, repair, and protect your liver. More detail is contained on my website and Amazon product page, but some of the key ingredients are: Milk Thistle, Artichoke, Dandelion Root, Beetroot, Turmeric, etc.
I’ll return to Liver Shield and how I’m branding it later on in the post.
Choosing Your Product Category & Unique Marketing Angle
If you want to start a health supplement business, I would encourage you to start by choosing a unique pain point that you would like to address: Obesity, brain fog, low energy, depression & anxiety, low sex drive, chronic pain, insomnia, [insert organ] issues, the list goes on…
Ideally this is something that you are intimately familiar with already (perhaps previously or currently experiencing yourself), but that is of course not required and can be solved by extensive desktop research.
From there, you need decide on specifically what kind of product you would like to pursue. Here are some tips that I followed myself:
Amazon is your best friend here. Do extensive competitive research to see how saturated the niche is. How many reviews do the top products have? Read through the reviews. What are the common themes of negative feedback in the incumbents’ products? That may spell opportunity for you. At a minimum, you can use negative reviews from close competitors as ammunition for ads and handling inevitable customer objections in the future.
Go on Helium10 and do some keyword research (it’s somewhat pricey, but it is worth every penny in my opinion). Look up some videos on YouTube to learn the platform if you’re unfamiliar.
Create an excel grid of the top 5-10 products and break them down: price per bottle, per serving, per capsule. List of all ingredients and their respective milligram count, etc.
This will inform your decision-making on bottle size, product pricing, ingredient selection, etc.
Make an effort to select products that have 4-5x+ revenue multiples (relative to COGS). I.e., if your desired selling price $40, try to aim for $8-10 COGS (or do the reverse and back into the selling price based on the COGS, assuming the market can support it) – this is just a rule of thumb, but it has not led me astray so far
Don’t be afraid of saturated niches (within reason) – have an abundance rather than zero-sum, scarcity mindset… If it is saturated, that means that it is large and is a massive pain point for Americans.
Success (in oversimplified terms) boils down to identifying a unique marketing angle and putting a unique, creative spin on something that is old and unoriginal.. this is (hopefully) what I accomplished for Liver Shield (i.e. “the world’s first liver condom”, “your liver’s best friend”, “take it on a preventive basis to help defend from toxins such as alcohol & painkillers BEFORE rather than AFTER your liver health becomes a serious health concern”, “etc”.)Average Order Value (AOV) and subscriptions are key in the health supplement space – prioritize launching a product that sits at the intersection of them if possible
Private Labeling vs. Unique, Custom Formulations
After selecting your niche and product category, as well as a rough sense of which ingredients you would like in your ideal product, you need to choose between private labeling and unique, custom formulations:
Private labeling (aka “white labeling”) – fancy way of saying you buy an off-the-shelf product / capsule formulation from a manufacturer that is already mass produced / sold by them
Pros: lower MOQ, lower capital intensity, sometimes drop-shipping compatible (depending on manufacturer), easier / more convenient, faster time to market, well-researched professional formulations, perhaps a better option for first-time / early health supplement entrepreneurs
Cons: limited creative control (formulation, branding, packaging, etc.), your competitors can have the same ingredient blend (commoditization / race to the bottom risk), harder to differentiate
Custom Formulations – more self-explanatory and what most people think they need to do to get started. Involves creating your own unique blend of ingredients
Pros: more creative control, easier to differentiate & sell, ability to create something truly new & unique
Cons: higher MOQ, more expensive, unable to dropship, lengthier development process / go-to-market, requires extensive research / scientific collaboration, risk of messing up the formulation if you don’t do proper research & due diligence
I won’t address specific questions here on Liver Shield, so please don’t ask
The option you elect will be highly dependent on your situation, what niche and pain point you are pursuing, the manufacturers you’ve identified, your own capital availability, etc. There’s no right or wrong answer here, and I’ve heard industry experts pound the table for each path.
Assembling Your Product (LLC Formation, Identifying a Manufacturer, Sourcing the Components, etc.)
Next step is to choose a name for your business (don’t overthink this, there are plenty of successful 7-9+ figure health supplement brands with sub-par names) and form an LLC. I personally like the state of Wyoming, as it is a very business-friendly state, quick & cheap to file, and you can maintain anonymity if that is a priority for you (i.e., a law firm can be the name attached to the LLC, not your own name).
Identifying a manufacturer is the next step: the VMS (vitamin, mineral, supplement) industry has truly exploded over the last 5-10 years, and there are countless manufacturers available (they are a commodity, don’t forget that when negotiating pricing). I won’t reveal the name of my manufacturer(s), but trust me, it is not a difficult task to find one. Put together a list of 5-10 after some desktop research, hop on the phone with sales reps from each of the companies, play their pricing against each other, and then choose one.
Expected Capital Requirements
I am still early into my journey, but I can provide my own perspective and experience here.
There are some people in the space claiming that you need $100k+ to start a health supplement brand. I personally don’t subscribe to that advice, as I was able to do it with meaningfully less capital (however, please do keep in mind that Avenir is still a nascent brand and hasn’t quite “made it” yet.
I’d argue that you could start a drop-shipping health supplement business with as little as ~$10k, but I personally wouldn’t enter this space with less than $25k (ideally more available as cushion). Here is a non-exhaustive summary of the startup costs you can expect to incur (most of which are frontloaded BEFORE you are even revenue-positive):
Logo / brand design
Website design & creation
Brand trademark application (for Amazon Brand Registry purposes)
Product label design (many manufacturers will bake this into the price per bottle)
Bulk purchase of private labeled bottles / capsules OR (less expensive)
Bulk purchase of bottles containing your unique ingredient formulation (more expensive)
Co-packing of various components (i.e. the process of combining the capsules, bottles, lids, labels, etc. into a finished product)
Many manufacturers will offer this – you will likely only require a co-packer if you want to choose your own bottles & lids
3PL fees (initial onboarding fee + ongoing monthly fees + shipping fees)
3PL = third party logistics provider – the entity that will be fulfilling any customer purchases originating on your brand’s website (as opposed to Amazon)
Various subscriptions: Canva, Quickbooks, Slack, Trello, miscellaneous Shopify apps, etc.
Virtual assistants (if you elect to go down this route, more on this later)
Social ads (Meta, Google, TikTok, Snap, etc.)
Digital marketing agencies (to scale ad spend down the line)
I’m probably missing a few buckets of expenses here, but hopefully the message is clear: this certainly is not the least capital-intensive e-comm biz you can start, but you shouldn’t be dissuaded by people claiming you need $100k+ to start one.
Quick Funding Tip: Consider Utilizing Your 401k Money
I won’t dive into surgical detail on this funding path because it would require an entire post itself, but it is worth considering and researching further (if you have a reasonably-sized 401k, ~$50k+).
The structure is called a ROBS 401k – it is a pretty complex, time-intensive and somewhat expensive process, but it effectively allows you to use your personal 401k money from previous (NOT current) jobs that you’ve held in the past for your own business (whether starting from scratch, or funding additional capital to the balance sheet for an existing business).
There are an eye-watering number of technicalities here that you’ll need to spend time familiarizing yourself with – Google research and your lawyer / accountant will be your friends here!
That said, if you’re short on capital and want to get creative with your retirement money instead of having it sit in long-dated equity funds, this may be worthy of further investigation.
Laying the Foundation: Leveraging Virtual Assistants From The Beginning
This is another area where I won’t dive into too much detail (check out Opposum’s recent post on the subject, here). That said, I couldn’t tell the story of Avenir Nutrition without briefly touching on this subject.
Finding & training virtual assistants before I started traveling was perhaps the single most important & fruitful decision and investment I have made so far. I decided to do it before Avenir was even revenue positive. Building automated, repeatable, less “me-intensive” systems, executed on a daily basis by 2 VAs (initially one, then expanded to 2 later on), allowed me to be very hands off while I was traveling & partying throughout the summer.
From mid-July to mid-September, the extent of my work involved regular iPhone communication with my VAs over Slack, reviewing & offering feedback on operating / KPI reports, and routinely checking my financials. By mid-Sept, when I was ready to get involved with Avenir on a more full-time basis, I was handed the keys to a business that was already hitting 6-figures of annualized revenue.
Here are some areas where VAs can be helpful for you:
Customer support (email)
Graphic design
Writing blogs / written content
Social media content creation (static images, caption writing, video editing for Reels / TikTok / YT Shorts, etc.)
Engaging with new commenters / followers / customers across social media
Influencer marketing (database creation, reach-outs, package updates, etc.)
Running social ads (depending on the qualifications of the VA)
SEO (again, depending on the qualifications of the VA)
When it comes to virtual assistants, you are limited only by your imagination and ability to train / systematize a process.
They are not without cost of course, but I personally think they are a no-brainer investment in freeing up your own time and capacity for more impactful, strategic decisions for the business as the founder & CEO (it is really a fundamental question of the $ value you place on your own time and energy).
It also forces you to create efficient, automated systems for your business, which is never a bad thing.
Pros and Cons of Selling on Shopify vs. Amazon
This is an important, controversial topic in the world of health supplements (and across e-comm broadly), and I am by no means expert on the subject, but I will offer my 2 cents:
Selling on Amazon:
Pros: scale & convenience, >50% US online health supplement market, many customers won’t buy health supps outside of Amazon, easy to manage (once you’re ramped up), buy now button / subscribe & save features, etc.
Cons: no “ownership” of the customer (minimal access to customer info), generally lower customer LTV, extremely competitive, high barriers to entry for competitive niches (reviews are everything and take time to accumulate), expensive (convenience comes with a cost), risk of arbitrary suspension / listing removal, etc.
Selling on Shopify:
Pros: you “own” your customer (ongoing email & SMS communication) = higher LTV, generally better margins / economics, oftentimes higher exit multiple (in the context of a business sale), better attribution for social ads, more creative control over product landing page, up / cross-sells much easier, less competitive (no competitor ads on your landing page), etc.
Cons: harder to scale / manage, a meaningful % of consumers won’t buy health supps from a Shopify store, no risk of arbitrary seller account suspension / product removal
My view: as a health supplement business, you are well-advised to be selling through both channels to cater to as many current / prospective customers as you can. Overtime, it is generally advisable to try and convert your Amazon customers into Shopify customers wherever possible.
Scaling Your Health Supplement Business
This is yet another topic that could easily be expanded into an entire post, but I will try to hit on the key points here (along with my key successes & misses for Avenir):
Influencer Seeding – from day 1, I had my virtual assistants start daily reach-outs to large numbers of small-mid-sized Instagram influencers across various relevant niches (call it 10-50k follower size)
We offer influencer packages (containing Liver Shield and a couple other small educational & playful / humorous gifts) on a no strings attached basis (i.e., have it for free and ignore us for eternity if you want)
This is largely a numbers game (i.e. reach out to X influencers a day, X respond, X packages are sent out)
VA maintains a comprehensive database of influencers, dates of reach-out, current status, delivery date of package, scheduled follow up date on how they are liking it, etc.
VA has access to 3PL platform so can schedule the package deliveries and update influencers when they are delivered
I have found that the majority of influencers that receive a package will end up posting at least an IG story featuring Liver Shield (sometimes several posts / feed posts)
When you consider the cost of the influencer package components + VAs time, relative to an expensive pay-for-post arrangement for an influencer, the ROI is vastly superior (in my experience and opinion)
In addition, by organically seeding influencers (as opposed to paying for content), they will actually use their own words for posts vs. words you have force-fed to them. This is much more natural and will be noticed by their audience
For Avenir – this was a key early success / strategy for Avenir before I started ramping up social ads. It allowed us to get significant early momentum and start accumulating all-important Amazon reviews (I wanted to get above 100 reviews on Amazon before scaling ad spend). Now that we have reached out to thousands of influencers at this point, we are de-prioritizing this strategy because of diminishing marginal returns (and starting to pursue generous affiliate deals with the dozens of influencers we have formed relationships with)
Organic Content – VA creates static images and short-form videos to be posted ~every other day on IG. At any given time, we have 30-45+ days of future posts pre-scheduled
For Avenir – so far, this hasn’t been a needle mover for the business – there is admittedly plenty of room for improvement in our content. Emphasis to be placed going forward on organic TikTok and IG Reels strategy, which should move the needle more on the organic strategy
Social Ads – I started running social ads about 2 months after launching the Liver Shield product (once approaching 100 Amazon reviews)
Google Ads – my VA is quite talented and ran social ads previously for another health supplement business, so I gave him the opportunity and autonomy to run with this himself. It is still early innings, but the results are encouraging
TikTok Spark Ads – working with a digital agency for this. The agency handles the ongoing creation of short-form video UGC by using creators across their network and turn the UGC into ads that can be deployed across TikTok, Facebook / IG Reels, and Youtube Shorts (the agency handles the ad deployment, management, and optimization as well). Very early innings on this, but I am planning to invest meaningful time and capital here to scale the strategy. Experiencing some very compelling early success
FB Ads – same digital agency that is running my TT ads. Meaningful improvement in ad performance after switching to UGC-focused ad strategy (static images were not performing very well)
SEO – critically important investment in the long-term searchability of your website. I dragged by feet starting to invest time here, but am about 1.5 months into the process. SEO is a long-term game (check out BowTiedTetra’s Substack, he is the Jungle’s in-house expert on all things SEO)
My VA is running with this, as this is one of his key specialties. Promising early results in search rank evolution across various keywords and phrases
VA creates SEO-optimized written content (blogs, etc.), I review quickly, and they are posted across various platforms
Ultimately, if customers are able to find your products organically by searching their pain points on Google & Amazon (as opposed to expensive social ads), this will significantly enhance the growth and profitability of your brand
Email Marketing – this is an area that I have admittedly been neglecting, as the majority of my customers have been Amazon-based
Investing significant time and effort here to migrate Amazon customers over to Shopify
Getting creative with gamified email collection on our Shopify page
Working with a couple buddies that are email marketing experts to stand up the strategy and start launching campaigns
Email marketing is debatably the most reliable way to increase customer LTV over time
Partnering With a Physician – this is one of the holy grails for a health supplement business. If you can co-found the brand with a physician (ideally one that is an influencer and able to create compelling short-form video content), this is going to add meaningful legitimacy and credibility to your supplement business. At the end of the day, great marketing results (particularly in the world of health supplements) comes down to trust and entertaining educational content. The right physician can revolutionize your marketing strategy
I am in the final stages of negotiation with a prominent physician influencer to take a minority equity stake in Avenir (on a vested basis), in exchange for becoming the co-founder, chief medical officer, and chief brand ambassador / evangelist
Responsibilities will include regular video & static image posts across his social channels, used in various ads & VSLs, used across the website for credibility purposes, etc.
New Product Pipeline – additional complementary product to Liver Shield will be launched in December. I’ll hold off on providing much detail here, but the idea is to meaningfully increase the AOV across the business via a higher-priced, premium product that will also facilitate bundling / up-sells. More updates to come here!
With all of these objectives and moving pieces in motion, my goal and expectation is to reach 7-figures of annualized revenue within the next 1-2 quarters. Undoubtedly an ambitious goal – let’s see how it goes!
Concluding Thoughts:
Hopefully this post was instructive and motivational for you guys. As you can probably tell, I am still very early in my e-comm entrepreneurial journey, so please take what I’ve said here with a sizeable grain of salt.
Feel free to shoot over questions in the comments section, and I will do my best to address them as I have the time and opportunity to (I won’t dive into much specific detail on Avenir beyond what I’ve shared here though).
At some point in the future, I may launch a Substack / twitter account specifically on the health supplement industry & tips for starting a health supplement business. Stay tuned!
Thanks,
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Disclaimer: Nothing written here should be construed as legal for financial advice of any kind. These are opinions and observations, written by an anonymous cartoon Opossum, built up over years working in e-commerce & affiliate marketing.
@bowtiedpelosi do you mind sharing the agency you're working with?
Any thoughts on product liability insurance / insurance providers when starting a dietary supplement e-com brand (product is a natural herb, nothing else)?