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Boosted by a general shift towards e-commerce during the pandemic, Amazon has become a serious challenger within Germany’s consumer healthcare retail market, which remains dominated by the bricks-and-mortar pharmacy channel.
OTC companies considering whether to seize this opportunity should look to the top-selling German dietary supplement brands, suggests Sempora Consulting in a new report.
A mixture of Amazon-exclusive and hybrid (Amazon and pharmacy) selling strategies have delivered notable sales in recent years, Sempora explains, suggesting some ways forward for others.
According to Sempora's analysis, Amazon generated €16m worth of Omega 3 sales in 2020 – almost a quarter of the €70m ($83m) delivered by the pharmacy channel.
The omega 3 category on Amazon.de – the German version of the Amazon marketplace – is highly competitive with the largest brand, Natural Elements Omega 3, commanding 11% of sales in 2020 with €1.7m.
Testa Omega 3, the next on the list, grabbed only 4% of market share in 2020 with €0.6m, chased by many others with similar sales levels.
Probiotic supplements are also a very popular category of Amazon-listed consumer health products with German consumers.
With total sales of €10m last year, Amazon sales of probiotic products are still far behind those of German pharmacy, which continues to dominate this growing market with €139m in 2020.
Nevertheless, the turnover of the best-selling probiotics are “at a level that should not be underestimated,” Sempora pointed out.
Unlike the Omega 3 category, the probiotic category has clear leaders such as Natural Elements Flora-21 Cultures Complex and Nature Love Probiona Complex with total sales of €2.5m and €2.4m respectively last year, together making up about half the market.
It’s interesting to note also that the two market leaders have far more Amazon reviews than their competitors. Natural Elements has over 4000 reviews, while Nature Love Probiona has racked up well over 3000. The third best-selling probiotic, Feel Natural Florapur Cultures Complex, has so far only attracted 1668 reviews.
The final wellness category analyzed by Sempora in its latest Value Scope report is vitamin B supplements, the top-selling of the three categories with total sales of around €20m in 2020.
Somewhere in between the other two categories in terms of competitiveness, the top-five products account for roughly 50% of sales.
The bestseller, with sales of €3m and a market share of 15%, is the high-dose biotin product from Vitamaze, a Heidelberg-based supplier which also sells lifestyle and sport brands, Sempora notes.
In general, this is also a much more frequently reviewed category, with most of the top 10 bestselling products generating over 2000 views each.
Many of the more successful manufacturers analysed by Sempora offer Amazon exclusive dietary supplement lines.
For example, the 66 products marketed by top-selling brand Natural Elements are all Amazon exclusive and made the eponymous company from Monheim am Rhein a total of €59m in 2020.
The next two on the list – Nature Love and Feel Natural – are both supplied by Natsana Group – which makes about €120m a year from selling dietary supplements on Amazon, according to Sempora.
Natsana uses a mixture of strategies, it seems, with Feel Natural an Amazon exclusive brand, while Nature Love is also available in pharmacy.
Another aspect of Amazon strategy highlighted by Sempora’s report is whether companies should be Amazon “sellers” or “vendors.”
Vendors are manufacturers that sell products to Amazon, which then takes care of the rest. Sellers, on the other hand, have full control of the listing,
A key advantage of the latter approach, according to Sam Wandi, World Product’s senior operations manager, speaking at the recent PAGB Digital Week event is the ability to bundle products, enabling sellers to offer lower prices and “control the buying box,” while covering costs to achieve as close to the recommended retail price as possible.
Being a seller also allows pharmaceutical manufacturers to have complete control of customer service, he added, “giving you end-to-end traceability of batch control,” for pharmacovigilance purposes, for example. (PAGB Digital Week Day 1 Google On COVID Trends How To Capitalize On The ECommerce Boom)
While nine out of the top-12 Amazon dietary supplement brands are listed by sellers, Sempora’s report shows that only one of the top four are.
For manufacturers, Amazon will play an increasingly important role as an OTC product retail channel in the future, Sempora concluded.
According to a recent Sempora survey, an overwhelming majority of OTC manufacturers (87%) think that Amazon will “increasingly offer pharmacy-exclusive products and thus establish itself as the dominant player in the healthcare market in the near future,” the firm reported.
“The coronavirus crisis has made it clear how quickly purchasing behavior, touch points and the need for certain product categories can change,” it continued. “Now it is important to optimize your own sales actively and in tune with the times.”
To do this, Sempora advised companies to review their channel strategies with a view to adapting them to “new market conditions and dynamics.”
Firstly, firms should consider developing and establishing a hybrid online sales strategy for Amazon, tailored to their OTC portfolios, Sempora said.
If firms already have an Amazon presence, they should try to optimize their listings as much as possible, it advised, and also think about internationalizing brands by also selling on Amazon UK, for example.
Finally, companies should look into building new brands to be exclusively listed on Amazon, Sempora said.
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