Brandless halts operations. What went wrong?
Brandless was launched in 2017 with a simple idea — provide everyday items with better quality ingredients in generic packaging at a single $3 price point. Brandless claimed that national brand prices were 40 percent higher on average than the comparable generic items it sold.
While hopes were high for the direct-to-consumer concept and venture funding was plentiful at the start, the reality was the business was not self-sufficient. Brandless has announced it is halting operations.
A posting on brandless.com said, “the fiercely competitive direct-to-consumer market has proven unsustainable for our current business model.”
The brand was losing money because of high shipping costs and product quality control issues, according to the online magazine, protocol, siting an earlier report on The Information site. Brandless increased prices as high as $9 on some items in an effort to make the math work for its business.
Last March, Brandless laid off about 13 percent of its workers in an effort to balance costs and revenues. Co-founder Tina Sharkey also stepped down as CEO after the company’s biggest investor, SoftBank Vision Fund, pushed for someone with retail experience to lead the business.
Ms. Sharkey was replaced in May by John Rittenhouse, the former COO of Walmart.com, who wanted to expand into higher-priced items and try to sell Brandless products into retail stores. Mr. Rittenhouse left the company in December.
Brandless experimented with pop-up shops in 2018 with a four-fold goal: community, taste/trial, range and education. A pop-up in New York City that year featured 300-plus items, representing the entire Brandless portfolio. The shop included a tasting wall of non-GMO, organic and vegan snacks. It also had a fair trade coffee station, a beauty lounge and a taste flight menu station.
Speaking with RetailWire at the time, Ms. Sharkey said, “Here at Brandless we put people first, which means value and values stick together. Better stuff, fewer dollars, no nonsense. Join us. But the two most important words are ‘Join us.’”
The most recent posting on the company’s site concluded with this: “We’re hopeful the future holds a new version of Brandless and that we see you again.”
- Inside the Turmoil at SoftBank-Backed Brandless – The Information
- Brandless shuts down operations, becoming SoftBank Vision Fund’s first failure – protocol
- Are $3.00 generics a sound grocery e-tailing model? – RetailWire
- Can Brandless deliver on its lofty goals in a pop-up? – RetailWire
DISCUSSION QUESTIONS: Do you think a Brandless-like concept could work? What would it take for that to happen?