Supplement Sales Options

There are two basic approaches to selling supplements. Providers may sell them in-office or providers may refer patients online for purchase. Selling supplements in-office tends to result in more sales and better compliance, as patients are more likely to purchase supplements following an office visit. Like all compliance issues, the further the patient gets from the office visit, the lower the compliance rate becomes. Selling supplements in-office also tends to have a higher margin than most online sales–though the provider has to advance the cost of the supplement inventory. 

Referring patients online for supplement purchase may take several forms. The most common is when providers refers patients to a third-party website that requires either the provider to submit the order or the patient to have a provider access code. This allows the provider to use a wide-range of supplements from many vendors without having to stock all of the supplements in-house. The patient completes the supplement purchase with the third-party site and every so often–mostly weekly or monthly–the site operator sends the provider a commission check. Third-party sites may be specific to one company or offer access to more than one supplement line. 

Providers may also maintain and service their own website, which is essentially the same as carrying the supplements in-house except that orders can be placed online. Most supplement companies that work with providers want to make sure that providers are using the supplements with their patients and not just using their provider license to acquire supplements and sell them to the general public, so providers need to ensure that their websites are in compliance with their supplement vendor agreements. Providers also need to make sure that they have effectively addressed taxation issues for sales. 

There are also hybrid online sales arrangements where supplement companies vary the separate third-party example. This includes supplement companies contracting with providers to “host and manage” the provider’s website, (provided by the supplement company). These hybrid arraignments can create issues regarding refunds/charge backs, taxation, etc. In the third-party approach, a patient returning a product negate the supplement company’s sale and eliminate the provider’s commission. In a online hybrid model, the provider may have to refund the patient’s payment and still purchase the supplement sold from the supplement company, leaving the provider at a loss. 

One of the significant issues that providers face in selling supplements is “price integrity.” This means that the provider’s price is competitive with other vendors. Some supplements do not have price integrity because patients can go to pharmacies or specialty stores and buy the same supplements for less than the provider price. An even bigger problem is if the supplement line is readily available for a discount online. Most supplement companies that work with provider offices try to maintain price integrity by limiting or prohibiting discounts and prohibiting online sales to the general public. 

One way that a provider’s office can combat losing price integrity is to “private label” supplements. This entails working with participating supplement companies to create a unique brand for the company’s products exclusively for the provider’s office. Private labeling gives the provider control over the products recommended to patients because the private label products are only available through the provider’s office. (Technically, the private label products are the same as the supplement line, but patients only know the product through the private label name.) Private labeling typically requires a significant order volume to justify the additional work of “branding” the supplements. 

Supplement Vendor Agreement Considerations

  1. What is the retail margin? 
  2. Is a supplement company store available and, if so, what is the commission being paid to the provider? 
  3. What fees are being charged to the provider? 
  4. How are returns/charge backs handled?
  5. Is taxation addressed? 
  6. Is pricing set by the supplement company? 
  7. Is the provider prevented from selling online? 
  8. Is private labeling offered? What is the minimum order?

Special Consideration: Is there a hold harmless/indemnification clause? (CLICK HERE)