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Monday, Apr 22, 2024

Special Report: Retail & Manufacturing – Supplemental Power

After dipping its toes into the brick-and-mortar space, Natals Inc., doing business as Ritual, is ready to take a real plunge. The digitally native brand, which debuted in 2016 as a subscription-based supplements maker and opened its first store on Venice’s Abbot Kinney Boulevard in May, is venturing into wholesale.

“We do have a plan to be an omnichannel brand through locations beyond our own store, very soon, within the coming months,” said Katerina Schneider, founder and chief executive. “We have a major retail partnership in the works.”

Ritual’s Venice store.

While Schneider kept the name of the chain store under wraps, she said the deal would definitely make a lot of sense.”
“It’s a really big chapter for us,” she added. “We are going from being one of the largest direct-to-consumer players, online only, to kind of expanding our wings and our footprint. It feels like there’s like no better time to do that. We’ve hired really strong players who have track record in relevant areas to do that — they know the playbook.”

Schneider was referring to Nathan Underwood, a former head of sales at hydration tablet maker Nuun & Co. Inc., who will be responsible for “building out our footprint when it comes to wholesale retail,” and Chief Marketing Officer Federico Troiani, who served in a similar role at Bulletproof 360 and Pharmavite, both makers of clean supplements. Lindsay Dahl, former Beautycounter executive, joined the team in March as chief impact officer.

 

Growth

Culver City-based Ritual has nearly 140 employees, up from about 90 last year. It surpassed $100 million in revenue last year, making it profitable.
“The business is still incredibly high-growth, especially given the macro environment, and we’re really excited about the future with a lot of potential to be where our customers are,” Schneider said.

The idea for Ritual came about when Schneider was pregnant with her first child and struggled to find a prenatal vitamin brand that was both scientifically backed and had a traceable supply chain. She used most of Ritual’s $1.3 million in seed money for research and development of vitamins that are made with “forms of ingredients that all of our bodies can use,” she said in an earlier interview, adding that they are formulated to help fill gaps in the diet and have no artificial flavors or synthetic fillers.

The company’s first product, a nine-ingredient multivitamin for women 18 and over, launched in October 2016, followed by a prenatal vitamin two years later. A similar supplement designed for women over 50 debuted in 2019, and a men’s daily multivitamin was introduced in 2020.

Ritual’s latest product is Synbiotic+, a gut-health supplement that quickly became the company’s most successful launch to date.

“It contains pre-, pro-, and post-biotics with two of the world’s most clinically studied strains,” Schneider said, adding that an in vitro study showed that the Synbiotic+ breaks down in the colon, as opposed to in the stomach, where it could be destroyed and rendered ineffective.

 

Brick-and-mortar

Ritual’s store in Venice was preceded by a pop-up on Melrose a few years back, which served as a test to see if the company’s vision of traceability could resonate offline.

“It worked, and we had a lot of conviction that if we opened a (regular store) the same thing would happen,” Schneider said. “We chose Abbot Kinney for a lot of reasons — it’s kind of the wild west capital of the U.S. in many ways, (it has) higher foot traffic and we really wanted to help build a community there around our mission.”

Schneider said that while the number of customers that walk in the store and end up buying something “is really high,” Ritual is not focusing on adding more doors just yet.

“We’re waiting to hit a certain threshold on the sales and profitability side to open a second store,” she said. “A lot of (direct-to-consumer) companies get torn apart for not being profitable. We have been profitable recently, and that’s something we’re continuing to focus on… Our goal is to create profitable stores that are also our billboards, and once we feel that we have achieved that, we will replicate this as much as we can.”

 

Setting up shop

Ritual is not alone: many digital brands plan to enter the physical space this year, according to the State of the Direct-to-Consumer Industry 2022 report published by PipeCandy, a market intelligence platform that tracks insights on 5.4 million online retailers. The move is fueled by shopping cart abandonment rates, as well as an increase in customer acquisition costs and uncertainties associated with consumer online data privacy.

About 30% of mid-market firms — those generating between $5 million and $100 million in annual revenue — that focus on selling vitamins and dietary supplements online have a presence in one or more retail stores, either their own or via wholesale.

The same cohort also gets a higher volume of monthly visitors on their websites.
“We are definitely an interesting company for retailers since we have a very large prenatal business, and as retailers are trying to consolidate their (stock keeping unit) count …we have a limited amount of SKUs that generate significant volume in this space,” Schneider said.

Schneider

Ritual’s strategy also includes selling on Amazon.com Inc., a venture that kicked off about six weeks ago and has since generated more than $1 million.

“Most people are on Amazon, our customer is an Amazon shopper, and can subscribe to our product and have a relationship with us on our (ecommerce website),” she said. “We wanted our products to be available to everybody and not miss out on the quality and the high standards that we have as a brand. Our prenatal vitamin is leading prenatals online and our vision is to be the number one prenatal in the U.S. quickly. So being in the other channel is important for us to get there.”

Schneider added that the Ritual team has done a lot of work as a brand, investing in human clinical studies, certifications, true traceability of the supply chain patents.

“Having this incredible executive team that is so seasoned will also help knit everything together, and what gets me excited every morning is just knowing that … everyone really understands what we stand for and why on a deeper level.”

Mediha DiMartino
Mediha DiMartino
Mediha DiMartino covers retail, manufacturing and the ports. She can be emailed here.

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