It’s safe to say the supplement industry is booming. In fact, it just surpassed $120B and is projected to reach $230.7 billion by 2027, according to a new report by Grand View Research Inc. The main drivers of this massive growth are the ever-increasing global obesity rate and the considerable rise of fitness centers and gymnasiums – a growing health awareness worldwide.
As our daily lives only grow more complex and hectic, a rapidly growing number of consumers find themselves unhappy with the way they look and feel. This has led to a jump in sales of dietary and nutritional supplements in the form of powder, liquids, and capsules across the globe, but especially in major markets like the U.S., China, and Italy.
While supplements are the king of the supplement industry, diet books and fitness programs are selling fast too. Consumers simply can’t get enough of them. As fears of the global pandemic have grown this year, sales reached an all-time high for these products, with 49% of consumers saying they are buying supplements to not only be proactive but to also avoid disease.
High Reward = High Risk
The explosive growth of the industry has not been without its challenges, however. The supplement industry has long been considered “high risk” by traditional merchant service providers. Payment processors and gateways like Stripe, for example, dislike what they consider high-risk sales because they involve a lot of chargebacks and fraud claims.
As quickly as overnight, a supplement merchant can suddenly discover there account has been frozen, and there money and business is lost. PayPal is known for reserving their right to hold money for 180 days, and Stripe can hold it for even longer – even indefinitely. Of course, without their money, businesses can slip into cash flow problems and have to close their doors.
Scaling is also a big problem for supplement merchants. Stripe, PayPal and ClickBank all stop accepting payments after a few chargebacks come through. It can lead to even bigger problems like lawsuits and jail time. There is also the issue of supplements not being approved by the FDA, causing the industry to be watched like a hawk. All of these obstacles make it incredibly difficult for these merchants to scale their businesses and thrive, even in a booming market.
How to Prevent Processing Problems
If you’re concerned about running into payment processing problems, here are a few proven ways to protect your business from lawsuits and having your account unexpectedly shutdown:
- Provide transparent pricing. Be crystal clear when it comes to your payment terms. In addition to being upfront about subscriptions, you can also try offering bundled products (e.g. 3 to 6 months) to get bigger sales upfront and maybe even avoid subscriptions altogether.
- FDA compliance. To avoid lawsuits, make sure everything is FDA compliant – don’t leave any stone unturned. Ensure all ingredients on your site are clear, use proper dosage and directions and make sure disclaimers are easy to find on the bottle.
- Alternative payment models. One of your best options is to seek out a high-risk payment provider like EMerchantBroker.com. A high-risk merchant account gives you access to a team of specialists that understand the challenges you face and tools like chargeback protection and prevention programs and chargeback insurance.
The team at eMerchantbroker.com has created a system that helps you break the chargeback cycle and focus on running your business. By offering merchants both chargeback resolution networks, you can achieve the highest rate of chargeback resolution – allowing you to scale your business safely and efficiently.