A new online grocery store is setting itself apart by ditching fancy labels and complex price tags.
Brandless, a San Francisco-based startup from serial entrepreneurs Tina Sharkey and Ido Leffler, sells everything from snacks and meal kits to toothpaste and cleaning supplies at the same price: $3 per item.
As the name of the company suggests, all of the inventory comes in spare, generic packaging marked only with an individualized checklist of moral or health-conscious "values," like whether it's organic, gluten-free, or non-GMO. The site currently stocks 115 products that span food, household supplies, and beauty and personal care.
Just days into the site's official debut this week, it's already raised $50 million in pre-launch funding from investors including Cowboy Ventures, New Enterprise Associates, and Redpoint.
The goal is to offer a quality, bargain-bin alternative to a burgeoning online grocery space in which convenience or niche focus often come at the expense of savings.
How does Brandless plan to do so without succumbing to the tradeoffs and compromises that usually come with dollar-store prices? The key is something Sharkey, the CEO, calls a "brand tax."
That's the mark-up most retailers and vendors charge for the value added by their brand name and all of the connotative meaning with which consumers have been primed to associate it. The cost reflected is the marketing dollars that went into establishing that association in shoppers' minds.
5 ways to drastically save on groceries:
5 ways to drastically save on groceries
5 ways to drastically save on groceries
1. Switch Stores
There are times when your larger grocery store might offer a better discount on some items — like these things grocery stores will do for you for free. However, have you ever stopped to ask yourself if you’re shopping at the store that offers you the best prices? It may not be worth driving too far, as you may lose more in gas expenses than you’d recoup in savings, but take stock of your local stores and see if there’s one that really may have better bargains.
For example, if you have an Aldi nearby and are not shopping there, you may be missing out on the simplest way to save. It is true they do not accept coupons, however, the prices there are often lower than the prices you pay at your regular store, even if you clipped a coupon. There are lots of options out there, so make sure you’re considering what others might be right for you.
(DANIEL LEAL-OLIVAS/AFP/Getty Images)
2. Shop Ahead
Most people create a shopping list based on the items they need now. That is important, but you may also want to add items you will need later when you find them on sale.
To help, if you look at your store’s weekly ad, often times the items you see on the front page are loss leaders, which means the store may actually lose money on the prices they are offering. So this may be the time to get the best deal. These sale items can be discounted as much as 50%. This may mean that you purchase three, four or more of the item on sale. Doing so allows you to feed your family and get the lowest price possible.
Keep in mind, stores tend to do this with the idea that these extremely low prices will draw you in and you’ll do all your shopping there, ultimately making up their losses on their sales. If you do decide to shop there, and see other items that are “on sale,” make sure you flip up the sales tag to see if you’re really getting a discount.
(gilaxia via Getty Images)
3. Plan Ahead
The reason most grocery budgets fail is because people fail to plan. Each week, sit down and plan your meals including breakfasts, lunches (don’t forget meals for work and school), snacks and dinner. And make sure you do your planning the right way. (If you’re looking for frugal meal ideas, check out this 16-cent breakfast.)
The problem most people face with meal planning and budgeting is they do it backward. Most people plan their meals and then create a shopping list but you may want to consider working it from another direction.
First, check your pantry and your freezer. If you happened to get a deal on chicken breasts last week and three weeks earlier rice was on sale and you bought several bags, you can use these items to create chicken and rice. You now have a meal planned that will cost you no extra money.
Once you’ve planned your meals based on what you have on hand, look at the weekly ad. Check to see what is on sale that you might want to use for this week’s menu. Add in those extra items your family needs this week.
Finally, plan out additional meals you need and add those items to your list. Hopefully, most of what you need for your food for the week is already in your pantry or freezer or is going to be on sale.
With a bit of planning and changing your way of thinking, you can knock down that weekly grocery budget.
4. Create & Use a Price Book
As mentioned above, stores can offer amazing deals on items you need. You should stock up, but how much should you buy? That is a challenge, but if you track the sales cycles you can learn how much to buy as you follow when items go on sale.
The way a price book works is simple. You write down the product that is on sale including the size, date and what you paid (not taking coupons into account). Then, watch the weekly ads. The next time you see that same item go on sale, make a note in your book.
As you do this, you will start to understand the sale cycles and can buy just enough to get you through each period of time, so you don’t have too much on hand, but just enough to help ensure you always get the best price.
Of course, not all items follow a cycle, but you might be surprised to learn which items do. However, you have to put in a little bit of work to break the code for yourself.
(FangXiaNuo via Getty Images)
5. Use Coupons the Right Way
I’m not against using coupons. In fact, I feel they are a great way to save money. However, you need to use them in the right way.
The problem many couponers face is they use coupons as soon as they get them. That is not always the best way to make them work for you. Instead, consider saving them to use when items are on sale.
When you find those items on the cover of the weekly ad (like we mentioned in point two) and you have a coupon to pair with the sale, you’ve really increased your savings and turned a hot deal into a smokin’ hot deal.
So when you get the coupons in your Sunday newspaper, file them away. Watch the weekly deals, and get out the coupons when you can pair them. In fact, if you really watch, you will learn that many items that have coupons go on sale after the coupons are released. That is not a coincidence.
Now you’ve got the tools and tips you need to really make a difference with your budget. It might take a little effort to implement some changes, but it can be worth it.
(Hero Images via Getty Images)
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"If we could eliminate that brand tax because of the inefficiencies in a system that was built hundreds of years ago really," Sharkey says of their formative thinking, "then we could actually offer tremendous value to be able to shop the values you care about at a value that would blow the doors open to a much broader swathe of the American population."
Name-brand labels aren't the only frivolity Brandless carved out for efficiency's sake. Each of the products also comes straight from the manufacturer, whom Sharkey says the company works with extensively to ensure that every item is more or less distilled into its most elemental form. Everything's then shipped directly to customers.
That may sound like just common sense, but Sharkey says that kind of simplicity is rare in the industry. More often, middle-men such as wholesalers, vendors, and shippers weigh on retail supply chains, each with their own added cost of business.
"How something leaves a factory and makes its way to a consumer—it has to go through all these channels," she says. "And those channels end up adding on lots and lots of costs."
Then there's the premium that can be charged for the laundry list of attributes savvy modern consumers tend to care about—whether or not a bag of coffee beans meets fair-trade standards or a bottle of soap was tested on animals. Brandless considers those ideals built into the price rather than a means to charge more.
The result at the end of the day is a shopping experience cheap enough—an average of around 40-percent less than comparable goods by Brandless' own estimates—to reach a stratum of coupon-cutting customer that's currently underserved in the web's virtual grocery aisles, Sharkey says.
Conceivably, there's a lot of opportunity in that segment; only around 1 percent of retail grocery sales currently happen online, according to the U.S. Census Bureau. Along with perishable food safety, price is one of the most commonly cited concerns among people who are hesitant to go digital.
The company also wants to eventually prioritize "food deserts," areas of the country singled out by the U.S. Agriculture Department as lacking affordable produce and other fresh goods due to sparse supermarkets and other providers. Sharkey says she's proud that in the site's first 48 hours of operation, orders poured in from 48 states.
Brandless also currently donates a meal to nonprofit Feeding America's hunger relief efforts for every order made on the site.
Of course, no online grocery business today can escape a new elephant in the room: Amazon's pending $13.7 billion acquisition of Whole Foods, a convergence of which the mere idea is credited with tanking Blue Apron's newly minted stock and dinging those of around a dozen other retail chains. It's especially pertinent to Brandless as Amazon doubles down on its own lines of private-label premium foods offered at a discount.
Sharkey is diplomatic about the Goliath competitor.
"If Amazon can make [quality organic food] accessible to people who are living in a food desert or don't heretofore have access to those kinds of foods, we think that's fantastic," she says.
Ironically, it's Brandless' brand that she says will ultimately set it apart from Amazon. Like many companies seeking to draw a contrast with the e-commerce giant, Brandless claims to offer the kind of product curation and level of trust that can't necessarily be found among Amazon's pages upon pages of overwhelming options.
RELATED: 6 rules to follow when shopping online
6 rules to follow when shopping online
6 rules to follow when shopping online
1. Make sure that the website you are ordering from is secure
"Many websites will have a seal at the bottom stating that the website is indeed secure and will not make your information public under any circumstances. A site that has 'https://' at the beginning of their web address as well as a padlock symbol is typically a site to trust." -My Broken Coin
2. Search for product reviews beforehand
"Returning items to online stores can be a major hassle. So why not find out what others think of the product before you purchase it online? For example, before buying a new laptop, search for comments and complaints associated with the brand. If there are more negative reviews than positive, and the same problem is reoccurring, then it may not be a brand worth investing in. This will save yourself from buying something that would have to be returned to the store soon after receipt." -My Broken Coin
3. Look for promo codes before checking out
"Who doesn't like saving money, especially on necessities? Almost every retailer will have some sort of promotion available, so ensure you look for one before purchasing. You may not find every code useful or relevant to your purchase, but there are plenty out there that could save you money. So, before you check out ensure you search your retailer for voucher codes and see how much you could save." -My Broken Coin
5. Check and double check your shopping cart
"When shopping online, it's incredibly easy to get side-tracked and accidentally add things into your shopping cart. For example, you may double click on an item and not notice that you've order two of it until it's too late. As well as this, if you've visited a site before but abandoned your cart before purchasing, the site will sometimes have saved your items when you visit again. Thus, it's incredibly important that you double check what you're buying." -My Broken Coin
6. Track your order
"Many sites give you the option to track you orders. This is especially handy when you need your order by a specific date (before Christmas, in time for a birthday party, etc.). Stay on-top of your order's location at all times, including the cities that it is arriving in and departing from every day. A lot of online trackers go through FedEx or UPS and are typically very accurate." -My Broken Coin
4. Price-match whenever possible
"Price-matching and price-comparison is the one of the best strategies for saving money while shopping online, as you will be able to purchase items that you otherwise would not have been able to afford. Retailers are in constant competition with each other to offer the best price and product to customers, so find the one that's offering the best deal." -My Broken Coin