News

Wellnex launches platform to fast-track profitability, ease inflation pressures

May 4, 2022

Wellnex launches platform to fast-track profitability, ease inflation pressures

Health and wellness brand company Wellnex Life is rolling out a new digital platform and marketplace that will deliver higher margins and offset some of the challenges posed by rising inflation.

Health and wellness brand company Wellnex Life is rolling out a new digital platform and marketplace that will deliver higher margins and offset some of the challenges posed by rising inflation.

The new venture will be wholly owned by Wellnex and feature its own exclusive brand under which the company will retail a complete set of health and wellness products, including vitamins, beauty serums, yoga mats and more.

Wellnex Life CEO George Karafotias said the platform will accelerate the business’s revenue growth and help bring the company to profitability faster.

“Currently, when you sell a brand or product to Chemist Warehouse, you’re making a 35-40% margin but so is the retailer – so in this new digital channel, you’re going to be keeping all that margin for yourself,” he said.

“The good thing about keeping all that margin is that it gives you the flexibility to promote it, to spend a bit more money on marketing because you’re getting a good return on every dollar you make from this platform.”

Mr Karafotias said every dollar spent through the new platform would be roughly equivalent to $2.00 spent in-store through Wellnex’s various distribution partners, including Chemist Warehouse, Woolworths and Coles.

Sales through this channel would net the company margins closer to 70%, he added.

Importantly, the roll-out of a new direct-to-consumer channel will also give the company a ‘powerful tool’ to negotiate higher inflation, Mr Karafotias said.

“Things are getting harder and tougher for businesses, and margins are getting squeezed – retailers aren’t allowing you to put your prices up in line with what the input costs are.

“Having this incredible tool where you can promote and market directly to the consumer and adjust your prices accordingly is very powerful.

“And because you’re starting off with a bigger margin, you’re able to absorb any one-off costs. This gives us a bit more flexibility.”

The launch of the online platform comes amid a busy period for the company, which has launched three new brands within the past nine months alone.

Two more brands – Pharmacy Own and Ocean Road Dairies (a joint venture with Australian Dairy Nutritionals Group) – are slated for release before the end of the year.

Mr Karafotias said the successful launch of these new brands has turbocharged the business’s revenue growth in the past quarter.

Receipts from customers for the three months ending 31st March hit $3.6 million, marking a 606% increase on the prior corresponding period, while net cash loss from operations fell 71% from the prior quarter to $840,000.

“We’ve had another good quarter, and a lot of that has been because we launched those three new brands,” he said.

“The current business we have is going to continue to grow as we keep growing awareness of the brands and their products, but the exciting part for me is Pharmacy Own will launch in the second half of this year.”

Pharmacy Own will be distributed by CH2, one of Australia’s largest medical supplies distributors, under a joint venture agreement that will see Wellnex retain full ownership of the brand while taking a 67% cut of the profits.

CH2 has a distribution network of more than 2500 pharmacies outside of the Chemist Warehouse franchise, Mr Karafotias said, and plans to sell Pharmacy Own into this network.

“The good thing about that is the more CH2 sells, the more money both of us make,” he said.

“But at all times the brand belongs to us; we haven’t entered a joint venture on the brand, we’ve entered a joint venture on the business.”

To stay up to date with the latest Wellnex Life news and announcements, register your details on the Wellnex Life investor centre.

Reach Corporate provides Corporate Advisory Services, including managing investor communications on behalf of Wellnex Life Limited and will receive fees for its services.

Sources


General Advice Warning

Any advice provided by Reach Markets including on its website and by its representatives is general advice only and does not consider your objectives, financial situation or needs, and you should consider whether it is appropriate for you. This might mean that you need to seek personal advice from a representative authorised to provide personal advice. If you are thinking about acquiring a financial product, you should consider our Financial Services Guide (FSG) including the Privacy Statement and any relevant Product Disclosure Statement or Prospectus (if one is available) to understand the features, risks and returns associated with the investment.

Please click here to read our full warning.

Receive up-to-date business news and industry announcements to your inbox

Leave a comment