In "What Level Playing Field?" from the May 1999 issue, Inc. staff writer Marc Ballon looks at two Internet-based providers of wellness products--everything from vitamins to vegetable washes--with two very different business philosophies. The Concord, Ma.-based MotherNature.com has built a virtual store of 30,000 products in just a year's time as it seeks to become the Amazon.com of the wellness industry. GreenTree Nutrition, however, wants to be a resource first and a retailer second. The San Francisco-based company has invested millions of dollars to create a content-rich site and a virtual "community" of health enthusiasts it hopes will become loyal customers for the long term.
Who will triumph in this battle between commerce and content? Inc. Exclusive asked Ballon for his diagnosis.
Inc. Exclusive: You've spent time at both GreenTree and MotherNature.com. You've talked extensively with both CEOs. Which one would be a better stock pick?
Ballon: I don't mean to waffle here, but I think both will be successful. GreenTree's content is extremely rich, and they are great at drawing people back to their site for repeat visits. MotherNature.com has a tremendous product selection that GreenTree lacks. Both companies have fantastic management and motivated employees.
Inc. Exclusive: But if you had to pick, which one will make it in the long run?
Ballon: The key here is marketing, and I think MotherNature.com has a better strategy. They've been very strategic with offline advertising, placing ads in cities that have both high concentrations of Internet users and lots of people who use natural products. Plus, they've got a pretty hip radio ad campaign starring Gwyneth Paltrow's mom, Blythe Danner. GreenTree, meanwhile, has spent a ton of money on banner ads, which in my opinion still aren't effective for most Internet companies. And the exclusive agreements they've negotiated with portals like Yahoo! haven't done a whole lot to increase traffic to their site.
Inc. Exclusive: Do you think GreenTree's strategy, to be informative first and to sell products second, could hinder its E-commerce efforts?
Ballon: I don't think so. GreenTree's got great content--articles, chat, bulletin boards, links to other sites--all things that educate potential customers. People are still jittery about ordering products online, especially products they're going to put in their body, so keeping them informed is a way to keep them coming back. MotherNature.com, on the other hand, bombards people with its huge product inventory, and that can be intimidating. Do you really need to know about 300 different kinds of vitamin C when 50 will do? I would say no.
Inc. Exclusive: MotherNature.com recently started offering its own line of vitamins. Do you think this is a good idea? Or will their label get lost in their huge inventory of other products?
Ballon: I think that MotherNature.com rolling out its own label is a great way to increase brand awareness and sales. If you take vitamins out of a bottle every morning, and the bottle says "MotherNature.com" on it, you'll likely go back to their Web site when it's time to reorder. GreenTree, however, doesn't make "GreenTree" vitamins because they're afraid it will impede expansion into other areas, like pharmaceuticals. They don't want to be pigeonholed as vitamin sellers. I don't think that's wise.
Inc. Exclusive: Another thing GreenTree is doing differently than MotherNature.com is selling "Acumins," or specialty vitamin supplements visitors customize for themselves by taking an online survey. MotherNature.com isn't doing this presently. Who's the wiser?
Ballon: GreenTree, definitely. Mass customization--the tailoring of products to a specific individual's needs--is where the Internet is headed. Vitamins are a great place to do it because everyone's body is different. But again, the fact that GreenTree doesn't sell Acumins as a GreenTree brand could keep it from holding a significant share of the customized-vitamins market once competitors like MotherNature.com move in.
Inc. Exclusive: It's clear that these two companies have completely different Web strategies but sell to the same target audience. Do you think they will merge at some point?
Ballon: I think as time goes by these sites will become more and more alike. MotherNature.com, for example, is adding bulletin boards and other interactive features to become more the "community" that GreenTree already is. GreenTree is adding more products to compete with MotherNature.com's huge selection. With the increasing similarities, I would say a merger is not out of the question. But if it does happen, I believe it's more likely MotherNature.com will acquire GreenTree. They've got the cash and marketing muscle to do it.
Shane McLaughlin is a producer for inc.com.