Brandless

Brandless Case
Brandless is just one of the many brands that fail to be the disruptive force they set out
to be. With the lack of market need adding on top of a poorly designed business model, they
were not exactly positioned for success. Still, multiple additional factors led to the demise of
this otherwise innovative solution. Brandless set out to disrupt the grocery and physical
retailing industry, but their methodology ultimately led to this business's failure. They fell short
in more areas than one and refused to acknowledge the nature of what a disruptive strategy
entails. They set out to compete against the largest incumbents in this space, such as Target and
Walmart, but the problem was not whom they competed with but instead how they chose to
compete. An analysis of Brandless's value proposition and business model and the dimensions
of disruption they targeted can give insights into why Brandless failed and the implications this
presents for direct-to-consumer companies.
Brandless chose a value proposition that they believed would capture the attention of
their target market, which are primarily millennials age ranging from 25-40. They thought that
their target market cares less about brands and more about eating organic foods, shopping with
socially responsible companies, and transparency from those companies. Therefore, they set out
with a value proposition of a low cost of $3 per item, simple website offerings, and the
convenience of shopping across an entire product line without having to pay a brand tax. They
capitalized the value around consumers not paying a "brand tax" as a key driver of transparency
across their organization. One key thing that Brandless did consider when pricing their items is
that their target market was price sensitive. In fact, 80% of millennials are influenced by price
when shopping (Kestenbaum, 2). As expressed by one of the founders in CBS Morning, they
differentiated based on the idea that "better should not cost more."
Brandless had a sound value proposition; whether the market gravitated towards it or
not, they established a way to bring value to their target market. However, the value proposition
is only a part of the business. Brandless's business model was to operate as a direct-to-
consumer model and differentiate by significantly marking down their goods to a price point of
$3 per item and not having any brand name items. Their business model relied on people
buying smaller quantities of goods per purchase; however, consumers tended to favor large
packaging to avoid multiple trips with the items they were selling. Charging $3 for a bottle of
shampoo may seem attractive to Brandless. Still, consumers are more interested in buying those
items occasionally and are not interested in the idea of having to keep buying them even if the
price is lower for that one item. Essentially, they were adding value that didn't bring value to
customers.
Brandless set out to disrupt the grocery retail market, and it can be argued that their
value proposition created possibilities for disruption. Brandless, however, fell short in creating
a disruptive market force. They did capitalize on some components of disruptive innovation but
failed in their go-to-market strategy. Based on the concept of disruptive innovation, Brandless
created a cheaper, simpler, smaller option for users, which outlines key components for
disruption. However, instead of focusing on the lower underserved market, Brandless's strategy
was to compete directly with incumbents such as Target and Walmart. Instead of starting small
and gaining customers who had unmet needs from larger firms, they attempted to capture the
mass market and high-end consumers. By doing this, they failed to grasp the underserved
population and instead lost market share to these large firms that were already serving the
needs of the mass market.
Successful direct-to-consumer brands all have one thing in common: a disruptive
strategy. A great example of a successful direct-to-consumer brand is Warby Parker. Like
Brandless, Warby Parker wanted to get rid of the brand tax that these luxurious brands charged
even when they weren't the ones making them. Luxottica makes the glasses for brands like
Ralph Lauren and Chanel glasses, and they charge a 10-15% licensing fee to add those brand
names to the glasses. Warby Parker wanted to give that 10-15% back to customers and offer
luxurious glasses at a lower price-point ("How Warby Parker Disrupted an Industry," 3). They
did not want customers to make trade-offs on quality, convenience, and price and wanted to
create this experience for customers in an otherwise monopolized industry. Instead of initially
selling in retail stores like competitors, Warby Parker met the customers where they are with
their innovative home try-on program. They did not set out to compete head-on. Instead, they
began chipping away at the monopoly that had left consumers unhappy for decades and offered
value where customers need it most without compromising quality or price (Dube, 4).
Brandless does a great job setting up distribution channels and taking out the middleman
that creates those brand taxes. Still, their strategy and business model is what ultimately led to
the demise of this innovative brand. Taking into consideration the fierce competition and
mature nature of the grocery industry and competing head-to-head with incumbents was a risky
decision that did not pay out well for Brandless.
Work Cited
Dube, Simba. “What Causes DTC ECommerce Brands to Fail?” Invesp, 5 Feb. 2021,
https://www.invespcro.com/blog/what-causes-dtc-ecommerce-brands-to-fail/.
Experience Point. “How Warby Parker Disrupted an Industry.” The Prototype Blog,
https://blog.experiencepoint.com/warby-parker-disruption-design-thinking.
Kestenbaum, Richard. “This Is How Millennials Shop.” Forbes, Forbes Magazine, 14 June
2017, https://www.forbes.com/sites/richardkestenbaum/2017/06/14/this-is-how-
millennials-shop/?sh=9b51240244ce.

Brandless

Uploaded by

Copyright:

Available Formats

Brandless

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Brandless

Uploaded by

Copyright:

Available Formats

Brandless Case

You might also like