Desiring eco-friendly packaging. Scrutinizing ingredients. Preferring the virtual marketplace. We’re in an era of rapidly-changing consumer habits, especially in the way people choose their wellness products. While giants like SC Johnson and Unilever scramble to catch-up to new consumer behaviours, a relatively obscure e-commerce wellness company, Melaleuca, seems to be staying ahead of and embracing the changes in consumer behaviour.
Ingredients over Brand
More than ever, people are scrutinizing ingredient names over brand names—especially when it comes to wellness products. In today’s digital age where anyone can Google Monosodium Glutamate and Sodium Benzoate, customers are more savvy and informed, and as a result more intentional regarding what they put in their bodies.
According to a survey of 3,000 consumers cited in a September 2018 Foodnavigator.com article, “ . . . consumers are paying more attention to what goes into their food, motivated by the desire to make healthier dietary decisions.” The survey discovered that when customers weigh the decision to purchase, the three most important factors they look for, in order of importance, are (1) ingredient list, (2) product description, and in last place, (3) brand name.
Focusing on quality ingredients isn’t new to Melaleuca. It’s been fundamental to the Idaho-based company since its founding in 1985. “Our philosophy is simple: naturally safe ingredients are THE priority, and we always look to nature for inspiration and solutions.”
It may surprise some readers to learn that Melaleuca, based in rural eastern Idaho, ranks as one of the top 75 e-commerce companies in North America.
Connecting shoppers with products in a virtual marketplace is more than simply responding to a changing technology landscape. It is also a nod to the growing number of shoppers steering clear of brick-and-mortar stores opting instead for the convenience of at-home shopping. Although the company maintains a handful of traditional stores, 95% of its customers shop online or through a catalog.
In its simplest definition, referral marketing is marketing through word-of-mouth. In today’s social media-saturated world, never before has referral marketing been so alive. More and more consumers are turning to friends instead of turning to TVs. . . (if they even have a TV) for product recommendations. Yet, wellness titans such as Proctor & Gamble which spent over $4 billion on TV ads last year, continue to dump immense resources into traditional advertising.
Melaleuca has chosen to play in a different arena, spending $0 on traditional ads and relying 100% on customer referrals to drive sales. It is an act of faith that is clearly working: The Company experiences predictable, explosive growth year-to-year and maintains a 96% customer retention rate month-to-month.
All around us is the vibe to subscribe. Netflix, StitchFix, Dollar Shave Club, and the list goes on. The wisdom of tapping into the subscription model isn’t lost on wellness heavyweight Unilever which snatched up Dollar Shave Club for a $1 billion in 2015.
Consumers are drawn to the subscription model because it takes the thinking out of repeat purchases. Subscriptions can automate the process. Businesses are drawn to the subscription model because it builds predictable revenue and strengthens customer retention.
The subscription trend took flight when Netflix entered the stage and completely disrupted the home entertainment industry. What began as disruptive innovation quickly evolved into common practice. Now, almost anything can be purchased through a subscription: air filters, light bulbs, clothing, food, personal care products, etc.
Melaleuca is the world’s largest wellness subscription shopping club with over 800,000 monthly subscribers. Members commit to a regular minimum order which keeps their homes stocked with wellness products.
Though in vogue now, Melaleuca’s choice to build itself using a subscription model is inextricably-connected to its founding strategy of being both the manufacturer and the retailer. The subscription model completely supports that paradigm as it removes retail outlets from the equation.