Bodybuilding.com Adds Third-Party Marketplace Retail Strategy

Bodybuilding.com Launches Third-Party Marketplace Retail Strategy

When you think about buying an innovative fitness-related product, which internet retailer comes to mind first?

In my opinion, the consumer collective mindshare for innovative fitness-related products should be owned by Bodybuilding.com. The commerce-side of the Bodybuilding.com site should be synonymous with fitness-related product innovation. Fact is, my opinion isn’t exactly the current market reality, but it should be…

Bodybuilding.com Recap

In you haven’t followed Bodybuilding.com closely over the last half-decade, here is a quick update:

  • Bodybuilding.com has been in a woulda coulda shouda phase for the back-half of the 2010s
  • Bodybuilding.com became lost and began financial performance free-fall when they tried to fight a battle that wasn’t winnable with Amazon, with a pricing and promotional strategy that only created more circular challenges to the supplement internet retailer
  • Bodybuilding.com didn’t need to fight that battle solely (or even primarily) on pricing and promotions against Amazon

This resulted in Bodybuilding.com becoming lost…

Lost But Not Gone

To be honest, it’s a different kind of lost than physical supplement retailers like GNC and The Vitamin Shoppe.

[If you’ve followed my content for a few years now you have heard me say this many times and in many different ways over the years…] Bodybuilding.com has parts of its business that are valuable in today’s business environment. The problem with those “valuable” parts are that they were “left on an island” and not linked appropriately to create a sticky commerce experience. Because of that, the success of those parts showed on the surface to have no value alone or to create an effective platform ecosystem.

Reset Button

It is no secret that Bodybuilding.com lacked a plan, but in late 2017, something happened…

Bodybuilding.com All Access was introduced and it essentially was the much needed reset button for the business.

Yes, financial performance has continued to be weak these last 18 months, but have you ever tried to press the reset button on a $300M business? It isn’t easy! It takes a thoughtful strategic plan, aggressive execution, and patience for that plan to start showing positive indicators.

The Positive Indicator

In 2019Q1, Bodybuilding.com reported that revenue from their All Access paid content showed a YoY growth. How big? That is a metric that isn’t currently being given by the public holding company that owns Bodybuilding.com, but even the smallest indicators can bring momentum in the future.

So, what is next in the strategic transformation plan?

Time to Connect the Parts

The Bodybuilding.com brand is more than supplements. It has been for many years, but they have never fully monetized that fact. Site visitors are heading to Bodybuilding.com to educate themselves on nutrition, supplementation, and fitness. There reasons in the micro are varied, but in the macro they all seek to change their health and wellness. Currently, Bodybuilding.com’s revenue and merchandising strategy is very skewed towards sports nutrition supplements. That means, on the commerce-side, they are only serving a segmented niche of the site visitors.

What happens when you don’t serve your site visitors with what they are interested in purchasing at the time of peak motivation that you created with your content? They go elsewhere online to purchase (and primarily to Amazon).

Third-Party Marketplace

I got confirmation from the Jas Krdzalic (CEO of Bodybuilding.com) that they are adding a third-party marketplace to fill those merchandising gaps quicker. For those that might not be familiar with online marketplaces, they essentially allows for third-party sellers to list goods on consignment to the retailer and the retailer gets to charge those third-party sellers a fee (or fees) based on transactions. This is the primary business structure for retailers like Amazon, Ebay and Walmart.com.

So, you’re saying that Bodybuilding.com is trying to battle Amazon at its game again? Yes and No…

Bodybuilding.com marketplace will have a curated selection of fitness-related product sellers. This will be a focused marketplace, which is very different than the open pure-play Amazon strategy. Bodybuilding.com does not have the resources to run an open marketplace and a more effective strategy is to stay focused on its core site visitor’s interests. The third-party brands/sellers will still be vetted by Bodybuilding.com for compliance, category fit, and to ensure that the third-party brands/sellers are well-versed in drop shipping (or direct to consumer sales).

In a dropshipping environment, Bodybuilding.com will be trusting a key part of the customer experience to these third-party brands/sellers. That is why they will still have a corporate employee gatekeeper in this process and guidelines to ensure this strategy does not backfire in the customer experience area (that is paramount for Bodybuilding.com).

Let’s take a look at the marketplace though the lens of a few stakeholders…

Bodybuilding.com POV

  • Helps with speed and lowering the costs associated with discovery of product innovations
  • Adds a broader selection of fitness-related products, that will better link site visitors’ content consumed and commerce
  • Creates a market vetting process to elevate potential vendors, products, suppliers, and product categories into a wholesale buying relationship
  • Allows usage of cash to be deployed in other areas of the business instead of on inventory

Third-Party Sellers/Brands POV

  • Creates opportunity for smaller brands to gain awareness and exposure from Bodybuilding.com’s huge site traffic
  • Provides a less competitive/noisy environment than Amazon and the buyers are more likely to be interested in sellers/brands fitness-related product offerings
  • Provides an interesting ability to test products and brand elements

Bodybuilding.com Customer POV

  • Provides a broader selection of products
  • Creates a competitive brand/product environment that could provide better pricing

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