Cover Story: Making a Name for Itself
With Procter & Gamble's announcement in late May that it was launching an e-commerce site, the consumer packaged goods (CPG) industry experienced a seismic shift. The days of manufacturers relying solely on retailers to peddle their goods — at marked-up prices, to boot — were gone, another casualty of the economic downturn. Selling direct to consumers is now a viable option as CPG manufacturers seek out new revenue streams.
Helping to make that option viable is Alice.com. Launched on June 23, 2009, as an online marketplace not unlike eBay, Alice.com enables CPG manufacturers to sell their household essentials — think toothpaste, laundry detergent, trash bags, toilet paper, etc. — direct to consumers. By making thousands of products typically not found online available for purchase, Alice.com has tapped into an underserved market, albeit surprisingly so to the company's founders.
"If you look at consumer packaged goods as a category, if you're starting from scratch with e-commerce, you'd think it would be one of the first things to come online," says Mark McGuire, Alice.com's co-founder and president. "It's a boring purchase, chore-oriented, very repeatable. It's a low-involvement sale; people don't typically need to inspect their boxes of Tide before they put them in their carts. It has a lot of those things that the convenience and ease of use of the internet really feel perfect for."
In order to remain competitive with big-box retailers (e.g., Wal-Mart, Target) and membership clubs (e.g., Sam's Club, Costco) that sell commodity goods, Alice.com offers competitive pricing and free shipping on all orders. This paired with the ability for consumers to receive these products on their doorsteps without a trip to the store has proven a powerful combination.
"CPG manufacturers have good flexibility in their pricing," says George Hague, principal of HAGUEdirect, a direct marketing agency. "They're accustomed to a model where they sell wholesale to distributors. When these same manufacturers go direct to consumers, they have more flexibility in their margins to offer free shipping for standard ground delivery."