Common pit falls in the wellness industry
[Insert Text] It all begins with an idea. Maybe you want to launch a business. Maybe you want to turn a hobby into something more. Or maybe you have a creative project to share with the world. Whatever it is, the way you tell your story online can make all the difference.
The global wellness market is on the rise. Despite the pandemic, this industry is still growing at an exponential rate. The market size is estimated to reach USD 7.7 trillion by 2030. Wellness practitioners, enthusiasts, entrepreneurs are all jumping into this space in hope to ride the tide.
Behind all these inspiration growth stories, we must not forget that 90% of startups fail, and the wellness scene is a particular difficult space for start-ups to flourish. We have seen the rise and fall of different start-ups in this space.
In general, the challenges faced by these businesses can be segmented into 2 parts.
Macro factors
Fragmented space – the number of wellness entrepreneurs that specialize in CBD oil, athleisure apparel, reusable baby diapers, bamboo toothbrush, clean beauty skincare products (and the list goes on!) is growing by the day, and it is almost impossible to pinpoint who is the market leader. This space is highly fragmented, where a single business would find it difficult to stand out due to information transparency and relatively homogenous nature of offerings other than branding and marketing approaches. Low entry barrier, contributed by accessible sourcing platforms, comprehensive logistics network and the power of social media, made it easier for aspiring wellness entrepreneurs to enter the market. The above results in a competitive landscape that pushes up customer acquisition costs while squeezing profit margins.
Funding – Unlike the tech or crypto space, where millions of dollars are flooding in (maybe not at the moment for crypto!), the wellness scene is much leaner. There are much less investments, mentorship programs and networking events due to push and pull factors like the relative lack of sectoral traction (only 7.8% of Unicorns fall under Health category, compared to 20.8% under Fintech), limited VCs with industry expertise as well as availability of institutional investors. The next question to ask is why there so little support in the wellness industry? We believe it has mostly to do with wellness industries rather opportunistic and trend-correlated nature, making it harder for them to consistently provide healthy return on investment for investors.
Micro factors
Insufficient planning – Contrary to most genesis of ‘traditional’ businesses i.e., filling a value gap or solving a problem, the majority of wellness entrepreneurs start off as advocates of or practitioners in their niche, with kind intentions to establish a business to ‘share’ their passion or talent to their audience, with little thought on business model, plan and strategy.
Talents – In Hong Kong where children are raised to develop aspirations of becoming a doctor, lawyer or bank, it is not difficult to envision how limited the wellness professionals’ talent pool and ecosystem are. We believe founding and growing a successful wellness business require a team with rare combination of skills, creativity and mentality.
Get in touch to learn how we have promising wellness business bridge the gap of growth, partnership and most importantly financial sustainability.
