We just flipped the switch on Alice.com, opening up our new service to the outside world. It is a fantastic feeling to bring a new company to life, and we are lucky to have an amazingly talented team that has worked really hard to make Alice happen in a short amount of time. It is great to be a part of it.
The Big Question
Brian and I left Microsoft just over a year ago after they acquired our last start-up Jellyfish.com (news here). At the time, we set out to answer one question: “Why doesn’t anyone buy toilet paper online?” It sounds kind of silly—it did to me anyway—but that question was a metaphor for the larger challenge we wanted to tackle. Namely, could we figure out a way to get the mainstream consumer to buy Consumer Packaged Goods (CPG)—non-perishable stuff like toilet paper, toothpaste, laundry detergent, and diapers—on the Internet?
Despite the enormous size of this market, the vast majority of people still don’t use the convenience and power of the Internet for this category. In fact, consumers buy items like clothing and shoes—that need to be tried on and often returned—more than they do these simple CPG goods that are bought repeatedly in chore-like fashion.
After many months, we’ve uncovered three main reasons why consumers choose to continue to drive to the store to buy CPG goods:
1) Shipping Fees. Paying for shipping stinks, and most online shoppers just can’t stomach the thought of paying $6 in online shipping fees for a $3 tube of toothpaste.
2) Competitive Pricing. Try buying CPG online today and you’ll often pay anywhere from 20% to 40% more than you do at traditional mass retailers
3) Online is Too Late. Lots of people buy CPG items when they run out, at which point online purchases aren’t really an option.
So there it was—build a service that had always free shipping, competitive prices, and a Netflix-like reordering queue that made it easy to plan ahead. Alice started coming to life, but it was easier said than done.
The Big Idea
We realized very quickly that in order to solve the consumer’s problems, we couldn’t be a traditional retailer, buying products, marking them up, and making a profit on their sale. So instead, we changed the model, shifting from a retailer, to a platform that exists to help CPG manufacturers sell directly to their customers. Basically, we made a more direct connection between the companies that produce these goods, and the people that use them. And by eliminating the retail layer and opening up our platform for manufacturers to use as a direct channel, we were able to do two key things:
1) Create lots of efficiencies and cost savings that the CPG manufacturers could pass along to the end consumer in the form of competitive prices and free shipping, and;
2) Deliver targeted, value-added advertising opportunities for manufacturers to transform their traditional advertising dollars into added value for consumers (things like new forms of coupons, product samples and loyalty programs).
You can read more about the model on our press release here, but we are really excited to give CPG manufacturers the ability to come together on one platform to channel their resources in exciting new ways for the consumer. It won’t be easy, but at least we are swinging for the fences, trying to disrupt a model to deliver more value to an end consumer. (You can read more about our start-up philosophy on the flywheel blog here, if interested).
Introducing Alice, In Beta
Day one on our beta site you will see roughly six thousand unique products from hundreds of different manufacturers. You can read more about all the great ways we think you’ll be benefit as an Alice customer on our community blog here. And during our beta phase, we’ll be working hard to on-board as many manufacturers as we can onto our direct platform, expand our unique automatic coupon and other advertising programs, and continue to enhance the functionality and quality of our user experience. We hope you give the service a try, and we really look forward to your comments, and the opportunity to help you never run out of/for toilet paper again.