On July 11th, a new online-only private label consumer goods retailer, Brandless, opened up its web shop, adding another competitor in the battle against traditional brick-and-mortar business while also challenging national CPG brands.
According to TechCrunch, Brandless is the brain-child of Tina Sharkey and Ido Leffler and it's founded on eliminating what it calls the “BrandTax™”, or the additional costs baked into national brand pricing due to “inefficiencies”, markups, and traditional marketing. The company estimates “the average person pays at least 40% more for products of comparable quality as ours. And sometimes up to 370% more for beauty products like face cream.” Brandless looks to pass the savings on to consumers by leveraging its in-house production and direct-to-consumer distribution model while capitalizing on the proliferation of private label brands.
The result is a selection of 115 everyday non-perishable food, household, health, beauty, and personal care products all priced at $3. Both costs and shopper choice anxiety are controlled by a narrow assortment (one olive oil instead of five), while minimalist packaging eliminates waste and keeps the focus on each product’s values and ingredients. Most products tout non-GMO, organic, fair trade, and gluten free labels similar to brands like Rx Bar. Shipping is a flat rate of $9 and free for orders above $72, although signing up to be a B.More member for $36/year reduces the threshold to $48.
Putting Brandless’ statements to the test, Market Track reviewed print circular promotions across 400+ retailers in 2017 prior to Brandless’ opening to determine how the retailer’s price points per ounce stacked up against private labels and national brands. The chart below confirms that Brandless has a compelling value proposition – particularly within organic pantry items such as condiments and peanut butter. Within personal care products however, the retailer’s price appears more aligned with established natural brands. Convincing consumers to switch when they can purchase a larger bottle of Mrs. Meyer’s at $3.00 or Dial or Softsoap for $1.00 or less will be a significant challenge.
Average $ Price/Oz. - Brandless vs. Private Label vs. Non-Private Label Brands
1st Half 2017, 400+ retailers (grocery, mass merchandisers, drug)
Source: Market Track's Promotional Data
For traditional brick-and-mortar retailers, the potential impact of Brandless depends on a few factors including final costs with shipping and the attainability of free shipping, the ease of the online experience, and the more nuanced ability to meet consumers’ taste and quality standards at such price points. For manufacturers, it depends on how well the retailer can foster direct relationships with shoppers through non-traditional channels like social media and free samples and capitalize on the preferences of new, younger customers that don’t necessarily want to buy the same products their parents use.
If Dollar Shave Club and Warby Parker are any indication of the potential for success, this proclaimed “Procter and Gamble for Millennials” is one to watch.