Can I pick your business brains for a second?

[ggmopa]

I know we have some very smart and experienced business people unlike we with very little experienced.

So I just wondered whether you could help me answer this question that's been on my mind...

I have a keen interest in nutritional supplements for health and sports perfomance both for online marketing and a generaly hobby.

There are a number of supplements that have received very little publicity either generally or directly through the vendors own efforts beyond B2B channels despite passing essential safety conpliance and being formally launched, produced and commercialised.

I have done the research wuite rigorously, and some of these (food) supplements are one of a kind and would be potentially life changing for health or sport if they can reach the right consumer directly.

Instead I see only a few shady middle men manufacturers using them as part of their own nonsense end products diluting them in to nothing. Which would be ruining their reputation too surely.

My question is why wouldn't these manufacturers engage in more B2C activity and start selling directly to end consumers cuttong out all the middle men buyers that hijack their efficacy and mitigate their potential. Swear some of these companies would be rolling in it if they did. They've got the heavy lifting done as it is as they are the actual source with all the plantation, machinery and blueprints. So what might be stopping them?

 

[t2van]

I know we have some very smart and experienced business people unlike we with very little experienced.

So I just wondered whether you could help me answer this question that's been on my mind...

I have a keen interest in nutritional supplements for health and sports perfomance both for online marketing and a generaly hobby.

There are a number of supplements that have received very little publicity either generally or directly through the vendors own efforts beyond B2B channels despite passing essential safety conpliance and being formally launched, produced and commercialised.

I have done the research wuite rigorously, and some of these (food) supplements are one of a kind and would be potentially life changing for health or sport if they can reach the right consumer directly.

Instead I see only a few shady middle men manufacturers using them as part of their own nonsense end products diluting them in to nothing. Which would be ruining their reputation too surely.

My question is why wouldn't these manufacturers engage in more B2C activity and start selling directly to end consumers cuttong out all the middle men buyers that hijack their efficacy and mitigate their potential. Swear some of these companies would be rolling in it if they did. They've got the heavy lifting done as it is as they are the actual source with all the plantation, machinery and blueprints. So what might be stopping them?

Payment processors the main one.

They get touchy on self branded, fake and just false shit that has any kind of "benefit claim"

I've tried to get in that space twice and twice I been shut down hard.

No matter the information you give them, provide evidence and so on. Most places will only take you own if you float a heavy gurantee first (50-100k)

Things might have changed but that's what it was like for me anyway.

You tend to see small popups come around but they often disappear just as quick as methods for taking payments have vanished.

It's prone to charge backs due to claims and or users high or false impressions also.

 

[GoldenGlovez]

Many manufacturers don't want to deal with the headaches and logistics nightmares that B2C comes with on top of the production pipeline. B2B is far more streamlined when you can sell your product in bulk to a few hundred companies instead of tens of thousands of individual customers. Import/export control, shipping, food & safety regulations, trade regulations, customer service, different sales channels, marketing, and so on quickly become not worth the hassle for them. Do one thing and do it well.

The landscape is a lot different than 20+ years ago of course. Aliexpress/Alibaba helped significantly reduce friction between Chinese manufacturers and consumers direct purchasing. However, it is still very common for companies to send someone out to the factories for inspection and negotiation in person, then using a dedicated import/export company to ship those products back to your home country. All these extra layers of complexity involved are why the middlemen exist to handle and the manufacturers are fine not dealing with it.

 

[LegacyBuilder248]

big buyers buy mainly from china and some from india.Both are not interrested in B2C but only big customer deals.Very often there is a western middle men inbetween .
The main problem you will face is like mentioned earlier the payment gateway thats why so many work with cloaking today.
Also once you get to big you catch the interrest of established people and based on the readings from big players in that game they don't play fair to say it nicly .

 

[BlogPro]

I have a small stake into this space that I hope to increase over time. But I'll try and breakdown the big picture on why most manufacturers don't want to get their hands dirty, based on my experience.

The biggest pushback is being a manufacturer versus being B2C. These are two completely different business models.

The exact same business when dealing with businesses vs consumers faces two different set of challenges.

When you're used to loading containers and finishing off large POs, you don't really look forward to shipping 500 grams of your stuff to a small town.

You have to build a storefront, you have to ensure it is maintained and updated, you have to build a social media team, you have to build a performance marketing (PPC, Media buys et al) team, you have to work with logistic partners, retail warehousing partners. You have to handle RTO, returns, refunds, damaged shipments, lost shipments, customer complaints and feedbacks.

None of what you were doing. You spoke to a few executives before, received purchase orders, made the product, sent it to them. Over.

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Then you have to now position yourself as a competitor to the very people who are your buyers.

In the manufacturing end of things, people tend to trust wholesalers/manufacturers who have a retail presence a lot less than those who are pure supply only.

Copackers and middlemen are notorious for stealing brand ideas etc. So a lot of brands will jump ship overnight. It's considered a conflict of interest straight up.

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You just can't compete with the people who are selling your product.

These companies often are experts in skirting the regulatory line with bases and even manufacturers outside the country. Or if they produce locally they'll shield themselves very well legally and compliance wise.

They also work with high risk payment gateways as @t2van said and often keep cycling between several. They pay high TDR fee and get by on very low actual profits (despite crazy high margins). Theirs is always a volume game.

If you're a manufacturer, 90% of those don't apply to you. You're bound by laws of your state. Any facility certification can't be fakes.

One innocuous claim somewhere and you have the FDA breathing down your neck.

If someone using your product as an ingredient gets sued, nothing ever reaches you. You completed your end of the contract. And that was it.

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And then there's the fact that you cannot compete with your clients pricewise.

In the manufacturing world, there's a tactic called "pixie dusting" - this occurs when the seller adds miniscule often negligible amounts of something to their product and then used that to market that product.

So for instance, you're someone who manufactures the Ashwagandha herb in India, and you sell to a client in Minneapolis.

Now said client adds trace amount of your Ashwagandha to their pill with fillers and starts calling them a "Proprietary Ashwagandha Blend" and sells a bottle of 50 pills for $50

Now if you start selling concentrated Ashwagandha pills, you'll never be able to beat that price or market as aggressively as that client.

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Having said that, there's still scope for what you're asking about. But it won't be the manufacturer looking to pivot to retail. It will be a bunch of entrepreneur with the necessary capital and a desire to break the barrier.

The only two successful people who decided to sell the actual product that I know are DECIEM (Canada now Global with their brand "The Ordinary") and Minimalist (India)

These companies broke the paradigm by marketing the main active ingredient as the product name itself. No proprietory blend. No "also contains" or "powered by"

Straight up - Volufiline 92% + Pal-Isoleucine 1% OR Glycolic Acid 7% Exfoliating Toner... Go figure!

It wasn't easy for them. They banked on an educated userbase in the skincare consumer sector.

People who understood AHA and BHA were. What Glycolic Acid was useful for. What Niacinamide did etc.

They created a plethora of educational materials. Went hard on their very minimalistic product placement. And built a community.

They have done this. And it can be done in every other field that is just mixing two things together and calling a "blend".