A US based start-up has just raised $22.5 million in its first round of venture capital funding to market its Web site and consolidate its brand in the competitive online food supplements market.
Robert Haft, Vitamins.com's chief executive, invested $5 million to start a dietary supplement chain in 1997 and launched the Vitamins.com site in June this year. It sells herbs, vitamins and nutritional supplements, natural body care products, books and cosmetics.
But Haft now plans to rename his 10 Vitamin Superstores as Vitamins.com and intends to tie together the firm's catalogue and traditional retail sales channels with the site's ecommerce capabilities.
David Restrepo, an analyst at Jupiter Communications, warned however, that the firm could be pigeonholing itself by using such a restrictive domain name.
While the vitamins market is sizable, he explained, only customers with brand loyalty shop for food supplements alone. "If you're going to compete in the vitamin space, you have to offer products on an exclusive basis that you can't get elsewhere," he said.
According to industry research group, Packaged Foods, sales of vitamins, supplements and minerals totaled about $8.9 billion in 1998 and the market is projected to grow about 13 per cent year on year. But the Hartman Group, a natural products research firm, estimated that online sales accounted for only one per cent of this.
A study conducted in April by Jupiter Communications indicated, however, that, out of all drugstore products, customers were most willing to buy vitamins and nutritional supplements over the Internet.
Some 23.4 per cent of consumers said they would be prepared to buy dietary supplements online compared with only 10.9 per cent that would be willing to purchase over the counter drugs and 13.4 per cent who would consider acquiring prescription drugs.
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