The global wellness market is estimated to currently exceed $1.5 trillion with annual growth of 5-10%, according to a recent article published by McKinsey & Co. Research shows that consumers in every country spend the most money on products and services that promote better health.
With the trending hyper-focus on health predicted to continue, wellness brands must put their best foot forward to meet increased demand and win competitor’s shelf space.
This starts with mastering transportation and getting on the shelf.
Wellness Brands & Gross Profit Opportunity
As the retail industry has evolved throughout the last decade, most retailers have begun to institute strict compliance programs to encourage suppliers to deliver to distribution centers on time.
Continually failing to meet these standards can add up to significant costs for any brand. But even more costly is the fact that late deliveries can keep a vendor’s product off the shelves.
The table below demonstrates the gross profit opportunity available to wellness brands who can meet retailer’s expected delivery performance standards.
How On-Time Delivery Impacts Gross Profit*
| Annual Revenue | On-Time Delivery Performance | Gross Profit |
|---|---|---|
| $1M | 77% | 346,500 |
| $1M | 95% | 427,500 |
*This example assumes the $1M company operates at a 45% gross margin.
In this example, the difference between hitting retail suppliers’ average delivery performance (77% on time) and hitting the performance retail partners expect (95% on time or better) is $81,000 in pure margin.
In addition to tanking their gross profit, wellness brands that continually fail to meet on-time in-full standards are at risk of damaging their retail relationships and hurting their growth chances.
Value of a Specialized Logistics Partner
The most forward-thinking wellness brands are looking at their retail-optimized supply chains differently.
No longer is logistics an expense. Vendors that view logistics as an investment, on which they can eventually see a return, stand to fare better. They can expect to improve organizational performance and subsequently their retail relationships, which can be vital in unlocking untapped growth.
The best logistics providers typically take a consultative approach to service. This looks like locating improvement areas and making suggestions that can increase performance, lowering costs in the process. With a deep understanding of complex supply chain functions and specialized industry knowledge, the best providers can help enterprises better understand how their operation needs to perform to meet customer demand and cut costs in the process.
A logistics provider equipped with the latest shipping technology can make distribution network suggestions that can reduce overall spend and improve on-time percentages, like consolidation programs or warehouse reconfigurations.
See the Difference Zipline Can Make
Retail logistics solutions consultants at Zipline Logistics can help wellness brands master their most important customer relationships.
We believe in creating seamless partnerships with our customers. That means making your goals our goals and working to meet them. We help even multibillion-dollar companies lock in the right capacity partners to achieve the best possible freight outcomes and uncover new savings potential.
Interested in learning more about what we can do for you?
