Alice Takes Brands on Different Path
Listen to a fascinating, in-depth interview with Brian Wiegand,
CEO at Alice.com. See
the RetailWire Podcast below…
Fifty-six
percent of respondents to a RetailWire poll in June 2009 said
Alice.com, a new website that enabled manufacturers to sell grocery non-foods
staples directly to consumers, was somewhat or very likely to succeed. Forty-one
percent didn’t like the new site’s chances at the time.
Moving to the present,
Alice.com CEO Brian Wiegand remains positive on the company’s business for
a variety of reasons including its unusual business model and validation from
others rushing into the same product category space on the retail side.
Mr.
Wiegand said Alice.com is right for manufacturers because it fills a variety
of needs. Most importantly is the desire to have a direct connection with customers.
Many consumer products manufacturers, he told RetailWire,
are starting to look at retailers "as a channel and not necessarily as a
customer."
Manufacturers are using a variety of means to connect with
end users, according to Mr. Wiegand, and Alice.com provides "a set of
services in a platform" to
help them deepen the relationship based on individual company or brand objectives. "We
took more of a platform approach, of helping the manufacturers engage in whatever
type of direct consumer effort. Some have sales goals, some have database building
goals, some have brand building … you know everyone is a little bit different."
Mr.
Wiegand credited Procter & Gamble with influencing others to
more actively engage consumers and drive direct sales. He said fewer companies
today are holding back over concerns related to relationships with retailers.
He pointed to the number of manufacturers that have jumped on the Internet
Retail 500 list in recent years.
"You see Nike, Apple, Dell, Cuisinart, Mattel, there’s just countless
numbers of companies now that are offering a direct consumer offering. So that
trend is happening all over the place and it’s natural in market conditions
to create efficiencies in driving value to your end consumer," he told RetailWire.
While
upbeat on Alice.com’s prospects, Mr. Wiegand said it continues to identify
new opportunities to drive business. One is the Christmas holiday selling season.
"We haven’t capitalized. I saw drugstore [.com] announced their biggest
day ever on Cyber Monday. … They expanded to include a number of gifts
and toys and other things. … Our bigger months are January and February,
just from looking at last year’s numbers. This year, we tried a merchandising
holiday promotion and it’s actually worked really well. I think there is a
lot of potential this time of year to do some creative things and I give drugstore
[.com] a lot of credit. There’s so much more that we really could do working
with the brands. Because everything we do, is really driven by the brands.
The brands tell us what to do, what they want to do and they really drive the
merchandising on Alice."
The recent acquisition of Quidsi, operator of
Diapers.com and Soap.com, by Amazon has brought an interesting new wrinkle
to the household staples space online.
"First and foremost it’s a very exciting development because it’s
a giant validation of exactly the market that we’re in," said Mr. Wiegand. "Any
acquisition of a magnitude of that size I think generates a lot of energy and
attention. There were a number of people that truly thought this category
would never be online and that it would never work online. So now I think some
of those thoughts are in the rear view mirror and this segment is vibrant and
growing. … And then, you know, anytime you can combine two
competitors into one is always a good thing as well."
As to Alice.com’s
future in light of the Amazon deal for Quidsi, Mr. Wiegand said, "Well
with my background selling my last company to Microsoft and selling two companies
before that … when I enter a new venture, the entire goal is liquidity and
that’s for shareholders and myself and founders and so … there’s nothing
imminent on the horizon for any announcement that I have…but it is a hotbed
of interest and again, that acquisition does stir up a lot of energy and you
never know what might happen."
Discussion Questions: What do you think about the online sales opportunity
for non-food staples such as laundry detergent, household cleansers, etc?
Is Alice.com with its unique business model positioned to succeed against the
growing competition in the space?
It’s difficult to be anything but optimistic for a venture like Alice.
All you need do is look at some of the key trends. For the holiday season, e-commerce is forecasting (and apparently achieving) high double digit increases while 4-wall is happy to forecast a 2% increase over 2 years of deep declines. Demographics, a return to equilibrium in 4-wall selling space, and a continuing reduction in e-commerce delivery times all work towards steady, solid growth in companies like Alice. The more interesting discussion is what 4-wall needs to do to differentiate itself, particularly in the commodity businesses.
It is interesting that this alice.com article and the JCPenny Facebook article that follows appear in the same space today.
As software companies become more adept at integrating their exclusive offers with social networking sites, the “seamless ability to spend” will only become more effective. I believe all the free standing retail sites are going to have to learn to support a new consumer interaction model that supports consumer purchases from anywhere. This model might collect purchases as they are entered and then accumulate them into a single delivery for the consumer. As the consumer is playing a game or updating their Facebook profile, they may be tempted to make a purchase that is combined with others. Instead of writing it down for their next trip to the mall, the product will arrive with their weekly delivery.
This online platform says opportunity; a direct path to engaged consumers and potentially a good value for shoppers.
For high volume, repeat purchase, this makes great sense. For shoppers, a chance to find products that meet needs for price, product, and service. Making it easy and convenient adds a great deal, but the business model to make the shopper experience rewarding and richer with social media adds even more. Now down to execution and consistency!
Alice.com has a fantastic business model that ought to work. Like anything else it all comes down to brand awareness and execution.
“Buy me, Amazon!” That’s what rang in my head every time I read and heard about Quidsi prior to Amazon doing just that. The ongoing stick-poking that led up to the acquisition obviously worked and worse things could happen to Mr. Wiegand as he seeks to realize “liquidity.” My question isn’t whether Alice will succeed, it’s how long the Amazon-in-a-bottle micro movement will march on and whether Amazon’s default solve will be to catch the flies rather than swat.
All of the consumer trends suggest that Alice will be a success. I agree with David B. that increasing brand awareness will be key to growth. How many average consumers know what Alice is?
I see this as another step in the CPG evolution. National Brand products are in a bind. With 300 channels of television and continuing target market splintering, reaching the consumer is difficult. Retail consolidation continues. The average market share for the top three retailers (supermarket and supercenter) is 74.6%. Couple this with increasing Private Label share and you have a problem. We are all still learning the internet, but CPG must find a way to directly connect with consumers. Alice may be one of these elements.
Alice.com should be ad advertiser on the Super Bowl. Better yet, it should have the big CPG brands collaborate on the expense and a kick-a** spot. Even better, it should work with a shopper marketing expert to figure out how to add brand experiences and thematic promotions, which increase user emotion and memory of the positive experience. With the price of commodities on the rise, Alice.com needs to strive for differentiation, not just awareness and delivery of the goods. Brian might also want to explore the social media advocate area for some ideas on how to leverage the obvious opportunity for Susie to tell Cathy, who tells Kristin, etc.
My New Year’s resolution is to try Alice.com but my worry is it will keep me out of the stores and that’s not so good for a shopper marketing consultant now is it?