eCommerce,
6 MINS

Brandless Has a Retention Problem

November 05, 2018

brandless product assortment

Brandless is the $3 grocery and consumer products website launched in 2017. Their goal was to create the next great consumer packaged goods brand and disrupt the $760 billion industry by offering low-cost, high-quality home products and non-perishable foods.

But so far, the company isn’t feeling the love. According to a report by Recode, Brandless has yet to catch on as a consumer habit. Just 20% of shoppers who placed an order on the site in the fourth quarter of 2017 placed another order a quarter later, according to data from Edison Trends.

If anything it’s not the products: the company sells over 350 “better for you products” – everything from coconut oil to vegan peanut butter to writing supplies and journals – all for the incredible price of 3 dollars per item. They’ve courted the younger buyer, who believe in their mission which they advertise as “deeply rooted in quality, transparency, and community-driven values.”

However, since the launch, Brandless has had to face a growing set of competitors in the “hipster generic” space, like Amazon  Basics, Walmart’s Jet.com line of Uniquely J, and and the recently launched Target Smartly brand.

Brandless also suffers from a limited set of offerings, unlike its competitors. At Target.com, you might buy the $2 Smartly hand soap – but you also might put a Bluetooth speaker or TV in your cart. Brandless’s competitors carry over 100,000 products, and Amazon sells millions. Its hard to compete at that scale simply by virtue of having a low price point.

Retention is critical for companies like Brandless because it trades in low-cost goods that need to be repurchased frequently. Low retention numbers mean those customers aren’t coming back.

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