Health supplements promise to do just about everything these days except boost sinking dot-coms. Northridge-based ENutrition, a dot-com that provides both nutritional content and e-commerce sales of vitamins and supplements, is among those flailing to survive. It has undertaken cost-cutting measures, including laying off 12 people from its 47-person staff in June, and is even pursuing a survival-through-merger strategy. On June 22, L.A.-based Omni Nutraceuticals Inc. announced it had signed a letter of intent to acquire ENutrition. ENutrition spokeswoman Stacey Johnes said the company actually has been in merger talks with various health-related Web sites, and it is keeping its options open. “We’re trying to do whatever we can not to fall victim to the changes happening to others (in the dot-com world),” she said. ENutrition does have some muscle that other similar sites are lacking. It grew out of Internet efforts by Weider Health and Fitness Inc., which still provides content and financial backing for the site. That Weider connection helped ENutrition attract more than $20 million in two rounds of venture funding in late 1999. But like other dot-coms, many health supplement and vitamin retailers spent millions in 1999 on marketing to get their name out. Low on cash, many are looking at partnerships and mergers to stay afloat or cutting employees and slashing expenses to become profitable sooner and more appealing to investors. “Investors don’t have confidence (in dot-coms) anymore,” said Jupiter Communications health analyst Rachel Terrace. “It’s not surprising that companies are cutting employees and spending.” The health-and-supplement marketplace, like other sectors of the dot-com world, has seen a number of consolidations and downsizings over the past few months. In March, HealthCentral, a medical content site, bought retailer Vitamins.com in a stock deal valued at $103.5 million. In April, Mothernature.com tightened its belt by leaving its ad agency and requiring customers to order at least $100 worth of products. And in May, Healthshop.com closed its doors. “Online, it’s a pretty crowded space and it has been for awhile now,” analyst Terrace said. “There are too many players and not enough dollars to go around. We’ve been predicting this and waiting for it to happen for a few months now.” Terrace said Virginia-based Vitaminshoppe.com, which started out as a brick-and-mortar store, is leading the pack of online supplement retailers. The company hasn’t made money yet, but it has been able to spread its name inexpensively through offline marketing in its physical stores. General Nutrition Cos. Inc., which partnered with Rite Aid Drug Stores to sell its line through Drugstore.com, also is in a good position, Terrace said. ENutrition tried to set itself apart by using content from Weider Publications and focusing its efforts on the fitness market. “We’ve always been more concerned about spending effectively rather than just spending,” Johnes said. Earlier this year, the company struck a deal with Wild Oats, a brick-and-mortar chain of health food stores, to create the company’s Web site and to cross market each other’s offerings.
Ailing ENutrition Joins Slew of Dot-Coms Making Cuts