The initial idea sounded good. Skip the branding and the inherent costs involved, and offer DTC products at a flat-rate. Brandless, launched in 2017, promised to ‘shake-up’ the packaged goods industry by skipping the expenses of brand-marketing. The company offered essentials like groceries and home goods. Each product was priced at a flat rate of three dollars. That was pretty cool. But, unexpectedly, Brandless went belly-up on February 10, 2020.
Why did Brandless ‘Tank’?
While each component of the business model might have seemed healthy at first glance, Brandless fell victim to a common problem that new businesses face. The components of their business model could stand alone, just not together. At the end of the day, marketing is the keystone of cohesion.
The first of a few mistakes that the hopeful company made was its brand strategy. Simply put; they spread themselves too thin. They wanted to offer everyday consumer goods at a low price. However, they also tried to market them as ‘wholesome’ or ‘good for you’ etc. Throw in the fact that they had such a low price-point and their marketing strategy was inherently ‘anemic’ in the way of advertising and packaging. Therefore, the company was doomed for eventual demise.
But What is so Bad About Cheap Products That are Good for You?
Yes, from the standpoint of a consumer, it does seem quite appealing. The problem is that the competition is steep on all fronts. Think about it. The market for groceries and consumer goods offered by Brandless is already flooded. On one hand, you have big chain stores like Walmart. They offer similar products for cheap. Also, companies such as Amazon that offer consumer goods at a low price with the convenience of being able to order products online. DTC products at low prices have become available everywhere.
The competition is enormous. On the other hand, there are plenty of companies out there that offer organic foods and luxury home goods that are quite expensive. However, they are purported to be of high quality and ‘different’ from the rest. Again, the competition is steep. Without a strong marketing strategy and a streamlined mission statement, Brandless became ‘lost in the wash’.
Shouldn’t the Flat-Cost Strategy Work, Though?
The idea was not all that bad. The problem was consistency. Sure, there were people that tried it out, but the problem had everything to do with consistency. While three dollars is not a lot of money for some of the kitchen wares, three dollars is quite a lot for a run-of-the-mill toothbrush, etc. In order for this aspect of Brandless’s strategy to have worked, the simpler items would need to be of consistent and outstanding quality. Their quality just didn’t cut the mustard.
The Nail in the Brandless Coffin
At the end of the day, the glue that holds a good brand strategy together is marketing. Often, consumers believe what they are told about what they are buying. The trick is, you have got to tell them. Marketing does not have to be expensive to be effective. Of course, if the brand itself doesn’t have a clear direction or definitive focus, how can you be certain that the consumer will?
What Can We Learn?
The moral of the story is that every company, like it or not, has a brand. Even DTC products need methodical marketing with a clear strategy. A quality product or a low price will do no good if the consumer is not aware of it. It is also crucial that the consumer knows why he or she should buy the product. In today’s world, every market has become saturated. The key is making your brand and your product known, despite all of the chatter. Click here to learn more about smart marketing strategies and branding.