iHerbs - How To Win In A Competitive Online Health Niche By Copying An Idea But Doing It Much Better
In the online natural health shops industry dominated by big names like GNC and Walgreens, Walmart, and Amazon, one company stands out and even thrives: iHerbs, or خصم اي هيرب 2020.
It grew from a one-herb shop in 1996, to 18,000 products in 2009, and to 35,000 by end of 2012.
In the process, it moved its warehouse from a "parking lot", to a 2 football-fields large warehousing system in sunny California, which deploys state-of-the-art inventory and distribution system that is comparable to Walmart or Amazon.
One bright idea made it happen.
In 2009, iHerbs whippped up a marketing plan based on the discount coupon strategy. They took the best of what the MLM model offers, created their own hybrid monster, at the same time, creating profits for the Company.
That was the huge challenge.
How do you squeeze out profits from selling highly-discounted products, while giving customers enough incentives to become loyal, repeat buyers, and still be competitive?
I have studied iHerb since 2006 and saw how it evolved its marketing from a "same-same" company in 2009, to the "company-to-beat" in 2012.
The Untold Story - How iHerb Did It
The following is fictionalized narrative of how the managers at iHerb discussed their Loyalty Program marketing strategy. They later called it iHerb Rewards.
First Item:
The discount or promo or gift code model. What's a good, catchy, short-term offer?
Resolution:
How about giving an instant cash discount of $5 to the buyer which shows at check-out?" (They now raised it to $10 because the competition has started to copy it).
Second Item:
How do you make it "viral"?
Resolution:
"How about giving your buyers an iHerb referral code which can they give to their friends so that they can enjoy the same discount?"
Third Item:
What's "in it" for the giver of the promo code?
Resolution:
"How about giving the giver a small sales commission (1-4 percent) on the purchases made by his referral?"
Fourth Item:
If the commissions are that small, how do we further sweeten the deal?
Resolution:
"How about making the sales commission be made effective for the LIFE of the referral?"
Meaning the giver gets his commission not only for the current purchase, but also for FUTURE purchases WITHOUT the giver of the code buying anything anymore to enjoy the commission!
Fifth Item:
What more can we give to the giver of his iHerb referral code?
"How about taking learning from how the multi-level companies incentivize their members?"
"How about giving the giver of the code more sales commission from the referrals of his own referrals?"
"Yeah, that would be nice, but... how do we do it without bankrupting the company?"
"Well, just limit the benefits to up to a certain level, say up only to the 4th generation."
Sixth Item:
How do we distance our Loyally Program from the bad publicity generated by unscrupulous MLM companies?
"Well, 2 main points. Sell our products competitively with Walmart or Amazon. Then, do not require a monthly purchase volume before the original referrer gets his commissions... as this is a common complaint amongst ordinary MLM members."
Seventh Item:
How do we still make a profit?
"Encourage repeat sales by creating a good hands-on management and operations team. Effect savings by investing in available technologies to streamline operations كود خصم اي هيرب 2020. Pass on the excess savings the buying public so that they'll keep on coming back for more sales!"
Eighth Item:
How do we differentiate our Company?
"Let us be known as The Company that gives the Best Total Value when it comes to natural health products, and earn the reputation of 'very good buying experience' from our customers."
The rest as they say is history.
iHerbs went on to grow bigger year after year, since they implemented the "coupon idea" which so many companies before them, have done before.
The iHerb referral code metamorphosed to the iHerb Rewards Program and by word-of-mouth advertising, become very popular amongst the health-conscious, online, buying crowd. It also made iHerb a leader in the highly-competitive online retailing health niche.
It grew from a one-herb shop in 1996, to 18,000 products in 2009, and to 35,000 by end of 2012.
In the process, it moved its warehouse from a "parking lot", to a 2 football-fields large warehousing system in sunny California, which deploys state-of-the-art inventory and distribution system that is comparable to Walmart or Amazon.
One bright idea made it happen.
In 2009, iHerbs whippped up a marketing plan based on the discount coupon strategy. They took the best of what the MLM model offers, created their own hybrid monster, at the same time, creating profits for the Company.
That was the huge challenge.
How do you squeeze out profits from selling highly-discounted products, while giving customers enough incentives to become loyal, repeat buyers, and still be competitive?
I have studied iHerb since 2006 and saw how it evolved its marketing from a "same-same" company in 2009, to the "company-to-beat" in 2012.
The Untold Story - How iHerb Did It
The following is fictionalized narrative of how the managers at iHerb discussed their Loyalty Program marketing strategy. They later called it iHerb Rewards.
First Item:
The discount or promo or gift code model. What's a good, catchy, short-term offer?
Resolution:
How about giving an instant cash discount of $5 to the buyer which shows at check-out?" (They now raised it to $10 because the competition has started to copy it).
Second Item:
How do you make it "viral"?
Resolution:
"How about giving your buyers an iHerb referral code which can they give to their friends so that they can enjoy the same discount?"
Third Item:
What's "in it" for the giver of the promo code?
Resolution:
"How about giving the giver a small sales commission (1-4 percent) on the purchases made by his referral?"
Fourth Item:
If the commissions are that small, how do we further sweeten the deal?
Resolution:
"How about making the sales commission be made effective for the LIFE of the referral?"
Meaning the giver gets his commission not only for the current purchase, but also for FUTURE purchases WITHOUT the giver of the code buying anything anymore to enjoy the commission!
Fifth Item:
What more can we give to the giver of his iHerb referral code?
"How about taking learning from how the multi-level companies incentivize their members?"
"How about giving the giver of the code more sales commission from the referrals of his own referrals?"
"Yeah, that would be nice, but... how do we do it without bankrupting the company?"
"Well, just limit the benefits to up to a certain level, say up only to the 4th generation."
Sixth Item:
How do we distance our Loyally Program from the bad publicity generated by unscrupulous MLM companies?
"Well, 2 main points. Sell our products competitively with Walmart or Amazon. Then, do not require a monthly purchase volume before the original referrer gets his commissions... as this is a common complaint amongst ordinary MLM members."
Seventh Item:
How do we still make a profit?
"Encourage repeat sales by creating a good hands-on management and operations team. Effect savings by investing in available technologies to streamline operations كود خصم اي هيرب 2020. Pass on the excess savings the buying public so that they'll keep on coming back for more sales!"
Eighth Item:
How do we differentiate our Company?
"Let us be known as The Company that gives the Best Total Value when it comes to natural health products, and earn the reputation of 'very good buying experience' from our customers."
The rest as they say is history.
iHerbs went on to grow bigger year after year, since they implemented the "coupon idea" which so many companies before them, have done before.
The iHerb referral code metamorphosed to the iHerb Rewards Program and by word-of-mouth advertising, become very popular amongst the health-conscious, online, buying crowd. It also made iHerb a leader in the highly-competitive online retailing health niche.
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