E-commerce Market Share Report: Protein Supplements
1010data’s Ecom Insights team recently analyzed online sales in the health supplement industry for the past 12 months ending June 2015. The data was gathered from purchases anonymously tracked by 1010data’s consumer online shopping panel consisting of millions of consumers in the U.S.
What we found is that online shoppers love protein. We estimate that consumers spend about $1.4 billion per year online on health supplements in the U.S. and has grown by over 30% in the past 18 months. In the past 12 months, we estimate that consumers purchased 55 million units of over 34,000 distinct health supplement items at an average price of $25.
Health Supplement Spending Breakdown
We estimate $340M, or 25% of spending, was on protein supplements in the form of powder and bars, with powder making up $250M.
Over 10 million units of protein powder and bars were purchased at an average price of $34 per unit. The clear market leader in online sales of protein, with a dominating 42% market share, is Optimum Nutrition (ON). ON has 3 times the share of its next closest competitor, Quest Nutrition, who makes Quest Bars, and has 13% market share. Over 670 brands make up the remaining 45% of this fragmented market with no single company having more than 4% share.
So how is Optimum Nutrition dominating the protein market with 42% share? Since almost all of their volume is coming from Amazon, we need to look there to find out. With Amazon Marketplace included, Amazon does a staggering 98% of the dollar volume of protein supplement sales online in the U.S.
When analyzing how a brand is winning online, the first place to look is where they are selling so much. We just mentioned above, it’s on Amazon. Then we look at the “4 Ps” as they are often called in retail: pricing, placement, promotion, and product.
By process of elimination, we can figure out what’s going on. It’s not low pricing that’s causing success. At a $57 price point, Optimum Nutrition costs more than any of the other top 10 protein products. It’s not aggressive promotion (i.e. ad dollars). A search on Google or the banner ad tracker Moat reveals no advertising being done by Optimum Nutrition.
It’s probably not the product being far superior. I’m sure it’s a great product, but it doesn’t appear to be drastically different in quality or consumer rating than the other top competitors. Of the top 10 ranked protein supplements, they all have 4 or 4.5 star ratings and hundreds or thousands of reviews.
Also, see the image below. Both products are chocolate flavored, protein powder, 5 pounds, with a 4.5 star rating, and both have “Best Seller” flags. But, ON costs $9 more and outsells BSN by 8 times in unit volume
So that leaves placement. When you search for “protein” on Amazon, Optimum Nutrition is the #1 result with, as of July 30, 2015, over 10,000 reviews and a 4.5 star rating. As mentioned, they are also marked with the highly coveted (by sellers) orange Amazon “Best Seller” tag for the Sports Nutrition Whey Protein Powders category. That tag surely helps increase their conversion rates.
While a great product and a competitive price are important, the single greatest factor causing Optimum Nutrition’s success appears to their #1 rank in searches for protein. That #1 rank, combined with a “best seller” flag from Amazon, along with over 10,000 reviews, appears to be causing consumers to pick that product, further entrenching them as the top ranking product in the search results. From personal experience, anecdotal for this analysis of course, I often pick the best seller if I’m unsure which product to pick as long as it has a 4.5+ star review, so ON’s success from great placement isn’t that surprising to me.
What this analysis tells me is that for protein supplements (probably many retail categories), consumers overwhelmingly choose the product that already appears to be the most popular. Makes sense to me. Must be really good if so many people are buying it.
I wish I had a more profound recommendation to ON’s competitors on how to compete with them. But in this case, if Optimum Nutrition’s competitors want to unseat the undisputed market leader, the data tells us that it’s simply a matter of figuring out a way to bump ON from that top spot.
It would probably cost millions of dollars in promotion to generate the volume to do that, but then you could coast on the organic sales from being in the #1 spot with the “best seller” flag. (At least until someone else tries the same approach to unseat you.)
In summary, it appears that being the #1 ranking product on Amazon searches for protein or protein powder is helping Optimum Nutrition totally dominate the market. Of course they probably got there by having a great product with great reviews combined with effective marketing. We have seen this in other cases too, such as dog food, where Taste of the Wild, having the #1 spot on Amazon searches for dog food, enjoys 15% market share in dollars for dog food. More on the dog and cat food space in a separate blog post.
A Few More Interesting Observations
It surprised us that the #2 search result, BSN SYNTHA-6 Protein Powder, also with a “Best Seller” tag, does 10 times less than Optimum Nutrition in dollar sales volume online according to our data. With a 4.5 star review and over 4,000 ratings, you’d think that they might be closer to Optimum Nutrition, but as our data and experience shows, review count does not always linearly relate to sales volume.
The best selling single item in the protein category in terms of unit and dollar volume is Optimum Nutrition 100% Whey Gold Standard, Double Rich Chocolate, 5 Pound followed by Quest Nutrition Protein Bar Chocolate Chip Cookie Dough Flavor, 12 Count, 25.4 Ounce.
The average selling price of the Optimum Nutrition Whey Protein is $57, while it’s only $25 for the Quest Bar. So in gross unit volume, the ON item outsells the QN item by double, but by revenue, the ON top item is selling more than 4-times as much as the top selling case of QN.
We’ll end on an interesting bit of trivia. The item name for the best selling health supplement doesn’t even have the keywords “protein” or “powder” in the item name: Optimum Nutrition 100% Whey Gold Standard, Double Rich Chocolate, 5 Pound. But they rank #1 for a search for “protein.” In fact, almost none of their products have the word protein in them, and almost all their competition do.
1010data’s Ecom Insights panel consists of millions of online shoppers in the U.S. who allow 1010data to anonymously track their online behavior for market research purposes, including e-commerce activity. Over 65,000 health supplement purchases were observed in the panel during the 12 months ending June 2015.1010data applies advanced, proprietary statistical modeling, machine learning, and data science techniques to ensure that its panel is representative of the Internet Browsing Population in the U.S. and suitable to extrapolate observations to the broader population. Retailers measured include the top 100 online mass retailers in the United States that – according to 1010data’s estimates – make up over 95% of hard line goods ordered online the U.S. Specialty retailers such as gnc.com and vitaminshoppe.com were not included in the study.