An aging and increasingly health-conscious population will drive demand for industry products
Los Angeles, CA (PRWEB) December 17, 2012
The Online Vitamin and Supplement Sales industry grew consistently each year for the past five years, with the exception of 2008. During the recession, consumers had less disposable income and cut back on discretionary vitamin purchases, hurting demand. As the economy worsened and people lost their jobs, however, they also lost access to health insurance. “Americans turned to vitamins to prevent illness and as an alternative to expensive prescription drugs, boosting demand and facilitating a quick recovery for the industry in 2009,” says IBISWorld industry analyst Olivia Tang. Additionally, consumers became more health-conscious over the past five years and increasingly watched their diets and took multivitamins, lifting revenue 3.6% in 2012. In particular, baby boomers, who wield strong purchasing power, depended on industry products to help prevent their physical conditions from weakening with age. The convenience of online shopping further benefited sales. As a result, revenue grew an annualized 0.7% to $5.9 billion in the five years to 2012. This anemic outcome stems from the dramatic 5.8% recessionary decline in 2008.
Although overall revenue growth was slow, firms in the Online Vitamin and Supplement Sales industry still experienced profit expansion over these years. “The industry relies mostly on labor to operate,” adds Tang. “But technological developments, such as computer programs, made stock purchases more efficient and inventory management more accurate, giving firms slight relief on labor costs.” Capital costs are low because firms are not required to lease storefronts; in fact, many firms operate out of the owner's residence. Additionally, as the economy recovered and consumers became more willing to pay higher prices for vitamins and supplements, firms were able to raise product prices. These factors combined to expand profit from 2007 from 2012. The industry has a low level of market share concentration, with no company generating a significant share of industry revenue. The industry is highly fragmented and growing, with 1,108 operators.
In the next five years, the industry is forecast to continue growing consistently as Americans become increasingly health-conscious and use vitamins to augment the nutritional value of their diets. Disposable incomes will also grow in line with economic recovery, allowing consumers to buy higher-priced items and a larger quantity of vitamins. As unemployment falls, however, more people will have access to health insurance through their jobs, slightly hampering demand. Nonetheless, the number of people older than 50 years of age will continue to be a major source of demand. As a result, revenue is projected to rise in the five years to 2017. For more information, visit IBISWorld’s Online Vitamin and Supplement Sales in the US industry report page.
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IBISWorld industry Report Key Topics
This industry sells vitamins, minerals, herbs and other dietary supplements on the internet. The industry excludes firms that primarily sell pharmaceutical drugs.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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