iHerb Case Study

People all around the world want to invest in their health, and some do it sooner than others. iHerb realized the need for natural products in this world back in 1996 when they were founded, and have since been delivering their natural products to anyone who’s willing to pay.

iHerb was originally founded in California in 1996 as a place where you could buy St. John’s Wort. But the company has seen a lot more success than they originally expected. Today, iHerb is an e-commerce giant that has brought in more than $1 Billion in revenue in 2019.

The company today sells more than 35,000 products that range from supplements, beauty products, pet food, herbs, and much, much more!

Located in Pasadena, California, iHerb is one of the few giants that are not only making a good profit but also helping make the world a better place. With the products that they sell all over the world, they are helping people from all continents stay healthy, become fit, and get the nutritional supplements they are lacking.

iHerb in Numbers

iHerb employs more than 1,600 people in California and Kentucky’s giant warehouses and distribution centers. Fulfilling more than 50,000 orders per day, the company is obviously not messing around when it comes to being the #1 worldwide retailer when it comes to natural products.

The company opened its 2nd distribution center in Hebron, Kentucky because of how close the area is to the east coast, and how close it is to DHL’s air hub in Covington, KY, which facilitates reaching their international customer base.

iHerb’s distribution centers are some of the most advanced ones in the world and have been one of the reasons the company has been able to fulfill so many orders on a daily basis. But don’t go too far, we will get back to how they operate their warehouses in a little bit!

As we mentioned in the start, iHerb has had a revenue of anything between $1 and $2 Billion in 2019 alone, which is more than enough to categorize them as an e-commerce giant.

iHerb delivers more than 50,000 orders every single day, both to its customers in the US and those stationed internationally.

You heard that right!

Currently, iHerb delivers products on a daily basis to customers located in over 180 countries. That means that thanks to their advanced systems, they are able to reach people on all continents and at a speed that’s letting people want to order again from this e-commerce giant.

All of these numbers make you ask yourself the question everybody asks, how did they do it?

Well, it certainly wasn’t easy, and definitely wasn’t an overnight success. As they say, the devil is in the details, and there are a lot of details when it comes to how iHerb runs their business.

How They Reached Their Success

In this chapter, we’ll get to know the intricate details that helped this company reach the success that it is today. Everything how they marketed themselves, how they interact with their customers both nationally and internationally, how they reach their international customers, and finally, how their state-of-the-art facility in Kentucky is a driving force in fulfilling the number of orders they are able to fulfill on a daily basis.

So, let’s jump right into it!

  • Marketing

In an interview with Steve Cho, their Chief Marketing Officer, he explains everything the company goes through when it comes to how they successfully market their products, their service, and how they reach their national and international customer bases.

Before we begin, it’s important to know the past and experiences of the company’s chief marketing officer, Steve Cho. The man worked at Yahoo in its early days, worked at Samsung, and finally at Coupang right before he joined the team at iHerb.

He is currently the chief business officer at iHerb, but we’ll be talking about his time in charge of marketing.

  • Bringing International Customers

The company has dedicated a lot of its resources to growing its “customer-facing organization in marketing”, as well as its international customer base.

iHerb took a lot of steps in order to bring in international customers. One of those steps was having the craziest SEO strategy that any company can follow. iHerb built several websites designed for each region they targeted.

For example, the company has an entire website dedicated only to Russians (ru.iherb.com), one for the UAE (ae.iherb.com), one for Saudi Arabia (sa.iherb.com), France (fr.iherb.com), and more.

By doing so, iHerb was able to create customized experiences for each region of their international customer base, allowing them to feel more at home, find offers made especially for them and their needs, which encourages them to not only purchase from the website but also make repeat purchases thanks to how quick the delivery is, and how satisfying the overall customer experience is.

The company’s primary international targets are the following:

  • Australia
  • Brazil
  • Canada
  • China
  • Finland
  • Great Britain
  • Hong Kong
  • India
  • Ireland
  • Japan
  • Korea
  • Netherlands
  • New Zealand
  • Norway
  • Russia
  • Singapore
  • Saudi Arabia 
  • Sweden
  • Switzerland
  • Taiwan
  • Ukraine

More than that, iHerb focuses on building trust with their international community of shoppers, and they have a few ways of achieving that:

  • Providing Affordable International Shipping

iHerb realized that one of the most frustrating experiences international shoppers face is the expensive shipping fees, which sometimes can cost you as much as or even more than the price of the product you’re looking to buy.

iHerb fixed this problem by partnering with global carriers such as DHL to bring down the cost of international shipping. By providing cheap shipping fees, which can be turned into free of charge if you reach a certain amount, it has not only encouraged people from all over the world to start buying from them but has made themselves one of the few online e-commerce stores that have such affordable fees.

Minimum order price for free shipping depending on the region.

This has made iHerb your go-to store for all nature-related products, and iHerb has quite a large number of those.

According to a 2013 report, around 53% of shoppers will immediately abandon their shopping carts if they find that the shipping cost will make the total price more than expected. To combat this, iHerb decided to start showing the shipping fees before you actually reach the checkout point, so that their customers aren’t shocked at the end.

But iHerb didn’t stop there! 

Instead of having only 1 shipping option for their international shoppers, iHerb decided to include quite a few. You are always offered multiple shipping options, including a 2-4-day shipping method that is unheard of in the international online shopping community. All of the shipping options include tracking information so that you are always aware of where your parcel is.

Other than that, the standard shipping price to reach almost anywhere in the world doesn’t exceed $8, which is a lot less than what the international community is used to.

  • CX (Customer Experience)

iHerb knew that when a customer buys from you and doesn’t have a satisfying customer experience, then that will be the last time you ever hear from them, which is why they dedicated their resources and built teams that specifically handled their customers and made sure the service provided to them was satisfying.

The company has always ranked high when it comes to how satisfied its customers are and have baffled experts as to how they were able to achieve such high customer satisfaction with their international community.

iHerb focused on 2 things: shipping policy flexibility which we have discussed earlier, and quick response time.

The e-commerce giant has made it fairly easy for customers to find support regarding any product they have purchased, and they have specifically facilitated this process through their mobile iOS and Android apps, which we will get to in a second.

After a customer has found the product they are having problems with or questions about, they can easily reach out to one of the company’s customer service specialists who will be more than happy to help them sort out their problem. Not to mention that the waiting time isn’t as long as it usually is with a company of this magnitude.

  • Mobile Apps (iOS & Android)

The iHerb mobile app has been a success since the day it was first launched. With more than 5 million downloads on iOS, and over 10 million on Android, the app has retained 4.7- and 4.5-star ratings on the 2 platforms respectively.

Since the majority of people (80%) stayed most of the day being on their phone, not to mention how 90% of mobile use is done through apps, iHerb saw the need to make a mobile application that makes ordering, tracking, and reaching customer supports much easier, and doable from your pocket.

  • OPEX Perfect Pick System

Remember when we said that iHerb opened its 2nd distribution center in Hebron, KY? Well, they didn’t move to what you would call an ordinary warehouse!

One of the reasons iHerb has been able to ship as many products in such a short time depends solely on the genius of the OPEX Perfect Pick system that they have installed in their Kentucky facility. They have specifically been this successful thanks to how they were able to deliver their customers accurate, high-quality natural products all the way to their doorstep.

After the company built their facility, and with the help of Bastian Solutions, they were able to install the most advanced picking system known to man.

What is OPEX Perfect Pick?

OPEX Perfect Pick is a goods-to-person system where the products are stored within the same system. Confused? Not for long!

The system works as follows: when you place an order on any of iHerb’s numerous international websites, the order is sent directly to the picking system in Hebron, Kentucky. Then, the system delivers the product to an operator who then stores the product in a shipping cart.

That shipping cart may move to other operators who will place other products inside them if they are going to be sent to the same address, if not, then the cart proceeds sealing, labeling, and then sent straight to shipping.

By doing this, iHerb is able to process an order 15 minutes after it is placed on their websites. This way, they can fulfill same-day delivery for their customers in the US, and the 2-to-4 days shipping for their international customers. The company is able to ship an average of 80,000 products to its buyers wherever they are in the world.

By using OPEX, the company has been able to fulfill orders in 1 tenth the time they needed back in their original facility in California, as well as using 1 tenth the labor.

How does this work exactly?

The OPEX system uses iBOT robots to help process orders very quickly. Items and products in the Perfect Pick system are placed into totes that are divided into cells. There can be up to 8 cells in each one depending on the size of the products.

The Perfect Pick system can store up to 3 million products at any given moment. The system is segmented by 10 aisles, the robots continuously rearrange the products to make sure the ones needed are easiest to reach whenever needed.

To make sure products are reached very quickly by the robots, they are placed at redundant locations. This way, the robot can go to the nearest location that houses the product it is looking to deliver to the operator. The iBOT robots are able to move both horizontally and vertically to access the products.

The system is so advanced that nothing would explain how it works better than an actual video of how it operates.

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