STORES Magazine - January 2010 - (Page 48)

NUTS AND BOLTS / ONLINE CPG Goes D2C Has found the model for selling household goods online? BY LEN LEWIS ired of shopping for those boring basics like toilet paper and toothpaste? Just a s k A l i c e — o r, a s t h e tagline of the recently launched website states, “Everyone needs an Alice.” T An homage to the bubbly housekeeper for TV’s “Brady Bunch,” is the brainchild of Mark McGuire and Brian Wiegand — serial online entrepreneurs who, after several successful startups in other areas, have entered the CPG (consumer packaged goods) arena with a service-oriented site that gives manufacturers an innovative new platform for direct-to-consumer selling. has had more than a million unique visitors each month since its June debut. And with features like free shipping and automatic coupons,’s concept of linking manufacturers and consumers seems to be taking off. STORES spoke with McGuire, Alice’s president, about the company’s strategy. This is your third start-up. Why did you choose the CPG business this time? enjoys shopping for things like toilet paper, and it’s not a high-involvement sale where you need to talk to someone or inspect the product. People generally know what they want and typically get the same thing over and over again. But less than 1 percent of these goods are sold online. There’s huge potential. Why have so many companies failed in this space? Starting with Webvan, which was the poster child for the dot-com bust, there have been a lot of carcasses on the side of the road. It was just a crazy time of overspending on advertising without focusing on the bottom line and customer growth. How are you going to avoid that scenario? We focused on the core elements of this business and where a start-up could change the rules of the game for the bet- ter. When we looked at this market, we distilled the business down to three things. The first is the need for free shipping; it’s such a threshold barrier in this market. People won’t overpay for convenience — especially in this economy. The second was competitive pricing. Again, people don’t want to overpay. The third piece was enabling shoppers to plan for purchases. If you have a twoyear-old at home and run out of diapers, it’s too late to order online. We made it very easy to plan purchases. We needed consumers to approach Alice as a service similar to Netflix: You set up purchases in a queue that is managed as you go along. Basically, you set up your own customized shelf of what you want to buy over time. The system tracks your purchase history and gets smart at knowing when you’re going to run out of something. What does the direct-to-consumer market look like for CPG? It’s very big, slow moving and methodical. But it’s intrigued Brian and myself for several years, primarily for those reasons and also because it’s been so unsuccessful online. Define unsuccessful. Knowing the convenience of the Internet, you’d think this would be one of the first categories to be purchased online. No one 48 STORES / JANUARY 2010 The packaged goods space is a difficult one for manufacturers going direct-to-consumer. Mainstream shoppers will go to Sony’s site to buy a television, Dell for a laptop or Callaway for golf clubs, but they are not going to go to Tylenol’s site to buy that product and someplace else to buy bathroom tissue. WWW.STORES.ORG http://WWW.STORES.ORG

Table of Contents for the Digital Edition of STORES Magazine - January 2010

STORES Magazine - January 2010
Editor's Page
President’s Page
Retail People
CEO Profile
20 Ideas Worth Stealing
Digital Coupons
Customer Loyalty
Labor Scheduling
Data Management
Human Resources
Retail Fraud
Loeb Retail Letter
ARTS Update
NRF News
Point of View
Retail Industry Calendar
End Cap
Global Powers of Retailing

STORES Magazine - January 2010