‘Alice’ Goes Online to Sell Toilet Paper, Other Household Items
It’s generally been assumed that household products make for a tough sell online. The items tend to be the sort of thing that consumers need quickly (there’s no waiting around when the toilet paper runs out). They also pose shipping issues because products are often bulky and/or heavy.
Up to this point, online retailers have not aggressively gone after this business and that has opened an opportunity for a new website, Alice.com, to offer a service that allows manufacturers to sell their products directly to consumers.
"The vast majority of consumers don’t buy their household essentials online, and we set out to change that at Alice by taking a completely fresh approach to the CPG industry," said Brian Wiegand, CEO and co-founder of Alice.com, in a press release. "By eliminating the traditional retail layer, we allowed the companies that produce these goods to connect directly with the people who use them. The result is a neutral platform for CPG manufacturers to work together as an industry and channel their resources in exciting new ways for the consumer."
Vendors set the price of all items sold and receive all the revenue. Alice.com, which handles all logistics, gets its revenue from selling consumer spending data, advertising and distributing samples to targeted consumers chosen by the brands. Consumers are required to buy a minimum number of items and all orders are shipped free.
"The CPG industry spends billions of dollars each year trying to influence consumer behavior through traditional advertising, and much of that spending is wasted," said Mark McGuire, president and co-founder of Alice.com. "In contrast to this ‘spray and pray’ approach, Alice allows manufacturers to connect directly with consumers through targeted couponing, sampling and loyalty programs. The result is more accountability for the advertiser and more value for the end consumer."
Alice.com is looking to attract 250,000 shoppers to the site in its first year. The company, which currently ships only to the lower 48 states, has one distribution center in Indiana.
"They’re definitely tapping into something that I think could work but certainly it’s going to take folks to change their way about how they buy products," Kristen Chase, co-founder of CoolMomPicks.com, told Reuters.
Erin Doland, editor-in-chief of Unclutterer.com, told Reuters, she would use the service again after testing it. "Alice was better-priced then my grocery store on almost all of the products," she said.
"If they can figure out a way to make money, that’s wonderful," Sucharita Mulpuru, e-commerce analyst at Forrester Research, told the Financial Times.
"But a lot of smart people have been trying to crack this nut for a while and have lost their shirts doing so."
Discussion Questions: Does Alice.com have a shot at being successful? What will manufacturers selling through Alice.com mean for their relationships with retailers? Do you see a future, however long off, where retailers could become obsolete?
I’m actually excited about the online concept behind ‘Alice’ because it offers manufacturers a new opportunity to sell direct to consumers. However, success will be only as good as how well the site is publicized and used by consumers, and how well the site is managed within. We shall see…. I wish them well!
For those consumers who like to personally warehouse necessary and desired supplies, then Alice.com will be an asset. For those who are short of space and more secure about their lives, Alice.com is just a passing fancy. So unless Alice.com can lay items at the doorsteps of America at a perceivably lower total cost (including shipping) we will be witnessing another hula hoop.
I think they have a shot at success from the shopper POV. Who wouldn’t like to have stuff you always use just show up!
It has upside for trusted brands as well. I’d always pick Bounty and Cottonelle and frankly don’t care about the 50¢ coupon if my pt and tp land on my front porch on a regular basis. Same with Tide Free HE, and Bounce Free.
I plan to try it!
I applaud their inventive approach and wish them much success (I selfishly love it when fellow Wisconsin-based companies perform well in the CPG world!).
Will their model work? When originally conceived, Alice.com had no idea that the economy was going to take a dramatic turn and that shoppers would alter the way they shop. So, from that sense, timing is great. I believe that savvy consumers will adapt this approach to shopping if the service is dependable, the prices as good as predicted and the overall experience as inviting and intuitive as the Alice.com beta site delivers.
Will advertising and other non-traditional revenue streams create a sustainable model? Yes, if the CPG companies are willing to weather the initial chicken-and-egg period while consumers adjust their shopping habits. Patience will be important but I believe this gives branded manufacturers a competitive chance in an otherwise store brand ignited marketplace.
Will others try to emulate Alice.com? Not yet. And if this site gets out of the gate quickly enough it appears they have a solid platform from which to be leaps and bounds ahead of others who try to copy their concept.
Is their projection realistic? I would not be surprised to see this approach surpass their early consumer predictions–thus making the purchase data and market basket info even more valuable in years to come.
Good luck Alice.com. With innovation comes some pain…but through the growing pains may come tremendous success.
As my colleague Sucharita implied, the question here is whether the revenue model for Alice.com is sustainable. I’m not sure I believe the couponing/sampling/database marketing monies will be enough to cover shipping and distribution costs and I suspect over time we’ll see more traditional channel economics and horse trading arise.
One of the more interesting aspects here is the CPG’s ability to set their price: as a CPG I have to make sure I’m not looking bad in my other channels but if I price cost competitively to retail, I’m taking a HUGE margin–eventually I believe Alice.com will find ways to grab some of that margin and still be a worthwhile investment for CPGS.
Certainly someone had to take on the challenges of selling market basket goods. No one CPG can sell and distribute a broad enough product line to entice consumers. I don’t think this will ever replace bricks and mortar but I do think there’s a basic array of household products consumers will be happy to have show up on their door without a lot of effort.
If they can keep prices low, consistently offer free shipping and turn a profit, they will be successful. This model was tried repeatedly during the dot-com bubble of the late 90s and repeatedly failed across numerous categories. The fact that consumers must register in order to see the products and prices offered is a drawback. It will be interesting to see if consumers will divide their grocery/household items list when they are going to the store anyway.
This is the “long tail” opportunity for CPG that has been a long time coming. Stores can only hold so many products, and category managers are inherently risk-averse–a new product better be a huge hit to justify crowding out other proven sellers and for the inventory commitment required to stock stores. In apparel, it works for brands like Kenneth Cole or Tommy Hilfiger to open a store in the same mall as Macy’s, for example, because they can use their own sales data to prove to the Macy’s buyer that an item will be successful in the dept. store.
It’s not really practical for P&G to open a store next to Walmart to prove out items that haven’t made it into WMT’s distribution. But online could serve the same function without all that infrastructure investment–as long as they figure out the logistics.
Don’t be surprised if the next step is for Alice to become the Amazon of CPG: offering the Alice platform as an eCommerce service to grocery retailers with a ship-to-store or ship-to-consumer option. I don’t see them making enough money on consumer data and advertising alone.
There are a certain percentage of consumers that value their time and don’t want to waste it shopping for items such as this. Therefore, Alice will be attractive to the busy Mom who’s too busy being a taxi to shop for these items, the busy executive, etc. There is a market, but I don’t think it is one that will pay a premium, so pricing is critical.
From a brief look at their site, it looks like they could be on to something good. I think with the right combination of online and offline advertising, they stand a real chance of succeeding.
Of course in the long run, service, price and selection with be the real key to success.
On the upside, I will never have to be embarrassed again by a cashier calling for a price check for a tube of KY.
If you put your money on this one, then I’ve got a horse at Belmont that’s a sure thing. Then we can talk about that bridge I’ve got for sale.
I am all for entrepreneurship, testing new ideas and concepts. I have been on the record since the mid-1990s as a proponent of online shopping of every stripe and I tend to practice what I preach. There are good and bad models for every business idea.
But unless you get a whole bunch of shoppers who are determined to pantry load household items, this is not going anywhere. I agree, items are too bulky and heavy. Shipping and delivery would be an expensive nightmare.
Sorry, but I think Alice is going down the rabbit hole on this one and not coming back up.
Prior attempts to offer consumers an option for drudgery shopping failed because they missed on two critical strategic facets: their business models were too similar to the entrenched and more efficient supply chain, and the consumer benefit in time or money was inconsequential.
The “Alice” approach could hit on both facets. The business model is certainly different and as mentioned above, likely to morph in the direction of negotiated pricing. The consumer value facet appears to deliver on the financial component. The biggie will be if they can use their shopper data to benefit the consumer, not just as a source of revenue.
No one wants to buy toilet paper, but everyone does, I hope. So, (I thought Hoffman was going here) if this and other drudgery items can show up at my doorstep just before I deplete my home inventory at a price equal to or less than the local supercenter, I will be a lifelong customer.
Sounds like assisted living for the masses.
What I like about Alice is that the items of focus would rarely, if ever, be returned (unless damaged). What would the grounds be for returning a bottle of Tide? That alone would make the site more profitable than most.
This concept also feeds into a trend that we’ve been talking about…Shipping costs have gone from anathema to asset as everyone from Zappos to H&M to small electronics manufacturers cut costs in other areas in order to provide overnight shipping directly to customers or to facilitate air shipments that will have fresh fashion and hot technology on the retail floor faster. Hand-wringing over shipping costs is becoming downright old school!
Alice.com has taken the Costco and BJ’s business model and turned it into an online business opportunity. It may take a little time for consumers to jump on board but I believe Alice.com will be successful. I don’t believe consumers would mind registering with Alice when offered discount coupons, especially during this economy. Consumers like myself, are constantly watching for ways to save money especially on household products you buy on a regular basis. I think this concept will be explosive. Best of luck, Alice.com.
Most of the food internet efforts were simply too early. One key for Alice success is no retailer stocks all the items CPG company manufacturers. The American consumer moves around, but do like their old favorite items. The second factor is the aging of America. Some day they will take the Baby Boomers driver’s license away. Then how do they buy groceries? This is when online sales will really take off. So the Midwestern retirees to Florida can buy all the national and regional brands and sizes as before. This will drive sales.
Conclusion: there is no market place reason Alice should fail, it’s just execution.
I’ve put in several orders with Alice, and now I enjoy my grocery shopping even more. I can concentrate on fruits, vegetables, meats, fish, and dairy instead of dish soap, shaving stuff, paper products, etc. It doesn’t take me as long to shop, and I concentrate on meal planning rather than finding the cheapest paper toweling. I’m sure busy moms will appreciate skipping several isles in the grocery store like I did.
Interesting concept is an understatement! I think the younger and upcoming consumers will drive this idea towards success as they are both time-starved and technically savvy. I also think that a lot of these younger consumers will be driving smaller fuel-efficient/hybrid vehicles with less storage capacity and will take advantage of free shipping to make their purchases of household goods online. Add to this the popularity of disposable cleaning supplies and devices (e.g. Swiffer) and you have a great combination of success factors.
A cursory look indicates that the prices are not much better than the supermarket and certainly not in the league with Walmart or Costco. I also have trouble with the idea that they only offer household and HBC items, splitting the shopping trip in half. So, I think it will appeal mainly to folks who prefer doing things online rather than leaving the house. Finally, it’s hard to see that the shopper data collected could pay for free shipping and yield a decent profit.
Well what would happen if Amazon decided to shut them down? Just for laughs I looked up a couple of my “standard” items on Amazon and Alice and Alice was considerably cheaper and the quantity requirement was much lower at Alice. We all know that Amazon has the power to right these wrongs very quickly. Alice will do well as long as they can compete, but they aren’t selling anything that’s not available to anyone with a business license and a warehouse. I wish them luck.
The “never run out” concept was pioneered by Streamline, an online grocery service that earned quite a following in greater Boston circa 1999-2000. Nice idea, but why limit it to household and personal products only? It may be easier for Alice, but it adds complexity for the shopper who must go elsewhere to manage the rest of the pantry.
It’s interesting that Alice.com does not take ownership of the merchandise it offers, thereby claiming to “cut out the middle man,” but I expect that distinction will be meaningless to shoppers. It’s a claim we heard way too often during the dot-com boom, but in the end we discovered there is a big difference between disintermediation and re-intermediation.
Still, as an early and dogged believer in online retailing, I’m intrigued by Alice and will be watching closely.
This is an interesting concept, but it is not a business model which will work. The average ring for CPG is too small. Who wants to purchase their TP or cleaning supplies, which just cost a few dollars online? The savings have to be large enough to warrant the wait (for delivery) as well as overcome the cost advantages of the large mass and club retailers who already own this market. I doubt that this model will make money, thus its success is dubious, at best.
I like the automated organization aspect of Alice. Online shopping functionality has to be brought to different levels and offer more than what you can get at B&M stores all while prices are the same or less. These automated reminders, if it works properly, can be a huge timesaver for busy Moms (and Dads).
I agree with Nikki above…I just don’t see this as a self-sustaining revenue model. They have addressed the chief problem of shipping cost for the consumers, but I imagine Alice is going to have to pick up those costs, which will be significant.