Soap.com: Moving Beyond Diapers
By Tom Ryan
With the launch of soap.com, the founders of diapers.com are hoping
to take their low-margin, bulky-item online success formula to "everyday
essentials."
Just as diapers.com has succeeded in selling diapers, baby
wipes and formula to time-starved mothers, soap.com, to be launched in early
July, is aimed at bringing budget prices and overnight, straight-to-your-door
delivery to everything from paper towels and laundry detergent to toothpaste,
vitamins, makeup, and shampoo.
"These are products you bought 1,000 times before and you don’t
need to see or touch them," said Vinit Bharara, chief operating officer
of Quidsi, the parent of diapers.com and now soap.com. "You’re buying them again and again.
Shopping for them is a chore. At the end our goal is simple: Make your life
a little bit easier."
Jodi Allen, vice president, North America Baby Care,
P&G, sees soap.com
as a natural extension of diapers.com’s aim of "delighting mom." Having
a baby is "when her consumable needs grow" and begins her adventures
in bulk buying. The mother regularly
winds up stressfully hunting down such staples while having little time in
the shopping trip for true necessities, such as food for the family.
"We talk to moms all the time and they talk about shopping with their
baby as a time bomb ready to take off and this really relieves all that," said
Ms. Allen at the event.
Like diapers.com, soap.com is expected to benefit from
similar competitive advantages:
- Low prices: Prices are said to be 20 percent to 25 percent cheaper
than the local drug store along with free shipping for orders of $50 or more.
- Broad selection: The website will launch with about 25,000
products and 900 brands across every health, beauty, personal care and household
category. The average offline drugstore has 10,000 items. Soap.com will offer
more than 40,000 products by the end of 2010 and 100,000 by the end of 2011.
- Speedy delivery: Promises of delivery within two days. At diapers.com,
70 percent of the country receives orders placed by 6 p.m. the next day.
- Warehouse technologies: Soap.com will use the same warehouses and
facilities that diapers.com uses, and the same back-end inventory, logistics,
and shipping software. Its robot-driven warehouse technologies are said to
be the key the diapers.com’s success.
- Service: Soap.com will also leverage the same customer service that
ranked diapers.com as #2 out of 150 companies for customer service quality.
- Features: Soaps.com will show shoppers a personalized homepage with
products similar to those they have purchased before, and a savings center,
like a daily circular, that shoppers can filter by category. For items that
require closer inspection, like lipstick, zooming and color comparison are
available.
The execs recounted the success of diapers.com as the world’s fastest growing
internet retailer, going from $89 million in 2008 to $182 million in 2009
and projected to reach $300 million by 2010. While execs said the overall baby
care market is $2 billion online and $40 billion overall, the market size for "everyday
essentials" is estimated at $8 billion online and $125 billion overall.
"Now,
we want to take that same model and apply it to a much bigger arena," said
Quidsi CEO Marc Lore.
Discussion Questions: What do you think of the online opportunity for everyday
household products? What do you think of applying the diapers.com formula to
soap.com?
It is a huge shift in the traditional personal buying behavior, yet with CPGs and other manufactures being dis-intermediated from their end user, this will help them to attain more direct behavioral information that they can then use to effectively target. This should (if run properly) create effective engagement and loyalty and therefore, higher share of wallet and increased ROI.
Convenience plus shopper delight at finding great prices and free shipping is a powerful formula for busy moms and dads. The game is changing rapidly in online retail and shoppers will indeed respond. The only drawback is that the shopper must log on different sites for each category as they continue to expand to various products. The Alice.com model of all categories, all within one URL might have an edge on retaining shoppers with cross-category promotion/selling.
If the sales numbers they are quoting are real, it looks like a winner. Perhaps more cattle than hat than I expected.
I don’t know about “all household products” but for SURE those same moms who enjoy the convenience of buying diapers online will look forward to getting staples in the same way.
One thing I’ve observed is that at some point, taking your child shopping becomes an “activity”…but before that, it’s clearly a nightmare. So, what I like about soap.com is the synergy between the diapers.com customer and the new site.
Revenue is one thing, and profit is another. It is hard for me to imagine how they can keep their costs low enough to make money when the VC funds run out. But I don’t know their economics…if they are simply betting on future scale to get costs in line with revenue, then I’d bet against them. Too many internet companies tried that and failed ten years ago. But if they’ve already cracked the cost side, and they are scaling up that model, then more power to them.
Let’s see…
20% to 25% cheaper;
40,000 to 100,000 items;
overnight delivery…
Why, oh why would a shopper ever go to the store?
Somehow I think mom wants to get some time out of the house and do the shopping while dad watches the baby.
In those instances where mom can’t get out; this has some potential. Sounds like Amway might have a competitor of some magnitude here.
Definitely a very promising model – savings, selection and convenience. There is stock up shopping – picking up basics we buy regularly; often bulky; the same trip each time – and for this we gladly look for better solutions. For fresh meat and produce, exploring the store for new items — these trips can be more interesting because we are not hauling the big cartons of stuff and spending time on the “gotta have” pantry items.
Execution will tell the story here.
From the consumers’ perspective, this looks like a great value, assuming the pricing remains competitive. The challenge still remains with logistics. P&G has gone on record saying that it costs more to ship many products than it costs to make them. If that’s the case here, this won’t be a sustainable business model. P&G has, however, figured out how to go direct to consumer, and it looks like a great way for them to gain consumer insights.
Online verticals were the rage 10+ years ago and just about all of them went out of business. I can’t see shoppers going from site to site, shopping one category like this at a time. Amazon, Walmart, and others are much easier online as they provide one-stop shopping, just like the brick and mortar supercenters do.
I think most shoppers have a finite number of retailers they will frequent, both offline, and online. It’s too time consuming to shop one site for books, one for diapers, one for pets, one for soap, one for food, one for office, etc. And then there is the hassle of shipments constantly arriving at home, keeping track of orders, etc. And for the retailer, free shipping ain’t cheap!
Subscription retail. It just makes sense. Why not let customers choose those items they use regularly — dish soap, toilet paper, feminine care products — and set up a subscription? It has worked for magazines for decades.
Hmmm. Don’t Shaklee and Amway both do this?
This has seemed like a good idea for a while, just that no one could make it work. If they have it figured out, good for them and they should move forward.