Go Direct, Young Man (& Young Mama)
Corner stores and bodegas are known just as much for their high prices as convenience, and one of the hallmarks of a savvy shopper is buying in bulk at Costco or a supermarket. But a number of manufacturers are starting to make it even easier to save money.
Paint seller Benjamin Moore announced this week that it will sell its products directly to consumers via its Web site, delivering right to their door. It's the latest in a growing number of companies trying to sell to consumers directly – at lower, often wholesale prices online. Carl Minchew, Benajmin Moore's director of product development, says as more consumers turn to the internet, the decision to sell online just made sense.
"Online shopping increasingly is part of today's lifestyle and demanded by consumers," Minchew says. "Today's purchase decisions more frequently occur during non-store hours. A product must be accessible and available on the consumer's timetable, not the other way around. Any business that hopes to remain relevant and viable has to be responsive to this reality and incorporate it into its selling strategy."
Online retailer Amazon.com and others have done well by offering a lot of goods -- even specialty or hard to find items -- but selling a relatively small number of them. Selection is what drives profits. In sales, it's commonly known as the longtail approach. It's the reverse strategy of the big box retailers like Costco, who lack the shelf space to carry but a select number of goods, but sell at volume with low prices.
Now, upstart Alice.com is entering the fray. It's cutting away the online or bricks-and-mortar retailer altogether. Instead, it acts as an online shopping portal that allows shoppers to buy directly from the manufacturers. It's focusing on the staples you need but don't have time to buy: toilet paper, garbage bags, toothpaste. Sure, Target and other retailers offer some of these everyday items online, but the selection is limited or has an "available in-store" sticker on it.
Seems simple, right? An online place to buy the small stuff you need on a regular basis. But only about half a percent of the trillion-dollar business had been done online. The barrier was shipping, says Brian Wiegand, CEO of Alice.com. He says it costs more to ship a tube of toothpaste than to actually buy the item. His company solves that problem with free shipping and even searches for coupons for you. And there's no retail store marking up their margin. Instead, the consumer wins by buying direct from Alice.com.
"The manufacturers are really in control of Alice. They decide what products are listed, what the price is. We're not a retailer," says Wiegand.
Shoppers at Alice.com can set up a shelf that remembers the products that they use on a regular basis for quick replenishing. Wiegand says items aren't automatically recharged and redelivered, however. The consumer still has control over when the shipments arrive. Wiegand says they are making what was once a hassle, now a fun, convenient shopping experience.
"I don't think anyone really wants to spend time and gas to go to the store and pick up toilet paper. I think everyone will want to pick up their goods this way."
A quick check on at least one item stood up to Wiegand's claims. Aveeno's Nourish and Moisture shampoo, 10.5 oz, sells on Alice.com for $6.23 with free shipping, beating Target.com's price of $6.49, which only offers free shipping on orders $50 or more. Costco.com offers two shampoos and one conditioner packaged together for $21.49, but that doesn't include the $50 annual membership fee or the shipping. Other shoppers have noticed, too. Wiegand says his six-month-old site averages about two million unique visitors each month.
All this "fun" at lower, wholesale prices with free shipping doesn't come without at least one price to pay. You'll have to register to start using the site, and information such as your gender, household demographics and what you buy is mined for marketing research. And those makers of shampoos and toothpaste are only too happy to pay Alice.com for that.