Online sales of vitamins, minerals, and supplements (VMS) rose to $2.4 billion in 2017 from $2 billion at this point last year, according to data released Wednesday by TABS Analytics, a research firm serving the consumer packaged goods industry. Brick-and-mortar retailers such as Wal-Mart, Stores Inc. (NYSE: WMT) that also sell VMS goods online accounted for about 19 points in the overall online sales gain.
Total sales of VMS goods rose 6% in all channels from last year to $13.5 billion.
TABS Analytics President and founder Kurt Jetta noted, “This is really a breakout year for Wal-Mart’s online sales of VMS which have helped propel the online sales for the VMS category to a ten-year high of 17 percent of all sales.”
According to TABS, Amazon.com Inc. (NASDAQ: AMZN) grew its transaction count by 15% but experienced a nine-point loss in market share as gains among brick-and-mortar retailers nearly tripled. In that regard, Jetta said:
[T]here is mounting evidence that brick-and-mortar retailers, particularly Wal-Mart, are carrying a larger load in bringing e-commerce retail to the masses. Prior TABS studies have shown a limited market for consumer packaged goods online, primarily focused on upscale consumers. We are now seeing brick and mortar gain share in e-commerce by expanding the demographic base and offering a broader assortment of mainstream brands to online shoppers.
Amazon and Wal-Mart are the top two VMS retailers with Amazon accounting for an estimated 4.5% and Wal-Mart accounting for an estimated 1.6% of all market transactions in the category.
The not-so-good news for Wal-Mart is Amazon is said to be considering a foray into the online pharmacy market. The U.S. market for prescription drugs reached an estimated $300 billion, dwarfing the VMS market, and one market participant told CNBC in May that the market opportunity for Amazon could run to as much as $50 billion annually. CVS Health Corp. (NYSE: CVS), for example, saw $10 billion in mail-order drug revenues in the first quarter of this year.
Another huge opportunity is the pharmacy benefits management (PBM) market, which hauled in more than $200 billion in 2016 revenue. Even the relatively slim margins (roughly 4% to 7%) in the PBM sector look fat to Amazon.
Wal-Mart grew total online sales by 63% last year and it is going to need to come as close to that number as it can for many more years in order to beat back the seemingly unending challenges to its business launched by Amazon.
TABS Analytics’ VMS study was conducted in May 2017 by Caravan, part of ORC International, and was developed to examine trends regarding what types of vitamins and nutritional supplements are purchased, how frequently they’re purchased and at which outlets they are bought. The survey panel included 1,010 geographically and demographically dispersed consumers. This was the 10th year that VMS survey was conducted.