Selling supplements and vitamins in the United States: e-commerce and physical stores

Rae Wellness: why the digitally native supplement brand entered the U.S. retail market

Transitioning from an online presence to an omnichannel approach to scale the U.S. market in the supplements sector

Rae Wellness is a direct-to-consumer brand that has been present in the U.S. market since 2019. Despite its short history, the company’s products can already be found in thousands of physical stores across the United States. When a digitally native "direct-to-consumer" brand establishes itself in the U.S. market, expanding into physical retail becomes a critical step to reach more consumers. This strategy has been successfully employed by brands like AllBirds, Harry's, and Warby Parker. Currently, DTC startups face higher customer acquisition costs, and while the pandemic has boosted e-commerce sales globally, physical stores still account for over 85% of U.S. retail sales.

Rae Wellness: from a digitally native brand to a presence in U.S. retail chains

Rae Wellness’s dietary supplements and vitamins are now sold in 7,500 physical stores across the United States. Just months after its launch, the brand established an exclusive partnership with Target, and as of this month, Rae products—including daily cleanse supplements, stress relievers, and sleep aids—are available in Walmart’s retail stores and on Walmart.com. Rae Wellness is also distributed through other online platforms like Amazon and Thrive Market, in addition to its official website.

Rae Wellness was co-founded by Angie Tebbe, a former Target employee who held several senior roles in private label development. Tebbe noted that entering physical retail has always been a critical growth milestone for the brand. This move enables Rae to become more accessible and generate new demand among U.S. consumers who shop at large retail chains. She added that digital and physical channels each account for 50% of Rae’s sales in the United States. “I knew that over 80% of retail commerce happens in physical stores in the U.S.,” Tebbe said, concluding, “About 40% of Americans shop at a physical store at least once a week.” The company acquired two million unique customers within its first two years, with each customer purchasing more than one product. While Rae has not disclosed its revenue, it raised $9.5 million in a Series A funding round announced last year. Rae’s products are also available in major U.S. retail chains like Whole Foods, CVS Pharmacy, and Anthropologie.

“Our partnership with Walmart will have a major impact on Rae’s sales in the U.S. market, given the massive physical network of Walmart stores across the country,” Tebbe remarked. Walmart is the world’s largest retail chain. Currently, Rae offers a range of 22 products, including supplements and vitamins tailored to meet diverse U.S. consumer needs, particularly stress relief, digestion, and skincare. Their formulations come in capsules and drops, and one unique selling point is the affordability: no product costs more than $14.99.

Digitally native brands and U.S. retail chains unite to attract new consumer segments

Several wellness-focused DTC brands have successfully entered U.S. physical retail. Target, for instance, has added DTC brands like Care/of vitamins, Sugarbreak gummies, and H-proof dissolvable vitamins designed to mix with cocktails. Meanwhile, Walmart has partnered with women’s reproductive health supplement brands like Lola and Modern Fertility. According to Dan McCarthy, assistant professor at Emory University’s Business School, alternative distribution channels like physical stores allow brands to acquire more consumers. “Even though many Americans can be reached through e-commerce, Facebook ads, and other paid media,” McCarthy stated, “stores remain an effective way to build awareness among potential customers who might not have otherwise discovered the brand.”

Physical retailers, in turn, benefit from collaborating with DTC brands by adding innovation and freshness to their shelves, said Ethan Chernofsky, vice president of marketing at Placer.ai. “Major U.S. retail chains can generate renewed interest and excitement among their regular customers,” Chernofsky noted. He added that digitally native brands often appeal to different demographics, attracting them into physical stores.

While building a physical presence offers significant business opportunities, experts caution DTC brands about the costs associated with multi-channel distribution. Moreover, the skills required to excel as a digital brand are not the same as those needed to manage physical stores, which come with new challenges, such as staff management. As Rae Wellness continues to grow, Tebbe acknowledged that “it’s hard to predict whether retail sales through e-commerce and physical stores will maintain their current balance.” However, with Rae’s products soon to be available in 4,000 Walmart stores, the business landscape could shift significantly.