How New Direct-to-Consumer CPG Retailers are Winning vs. AmazonNovember 29, 2018 - by Kathy Oneto
There’s a lot of talk about retail dying. However, despite store closures reaching record highs and Amazon approaching $1 trillion market cap, new retailers are still entering the ring. Most companies are fearful of what Amazon could do to their industries and business models, yet several new direct-to-consumer (DTC) CPG retailers are braving the competitive retail landscape and are targeting niches to define a unique space to call their own.
Some of these new online grocery retailers gaining momentum with better-for-you positionings and lower prices include:
–Grove Collaborative featuring home and personal care products that are good for consumers and sold at lower prices than competitors. Now that the company has built an audience, it’s expanded with its own product lines, as well as co-branded lines, like with the magazine Real Simple.
–Thrive Market, which brings the Club membership model online and specializes in offering healthier products at lower prices (25-50 percent off retail); or, in their words, selling “wholesome products at wholesale products.” Not only that, they also provide free memberships to low-income families, making healthy food more accessible to all.
–Brandless bringing the Everlane business model and ethos to the grocery channel, cutting out the middleman and being transparent about pricing. Their mission statement says it all: “Better stuff, fewer dollars. It’s that simple.”
These direct business models are winning, because they offer a better experience across all of the 4 P’s:
-Price: The product strategies and revenue models (e.g., consolidated buying, private label products, membership fees) allow them to offer better value that’s competitive with Amazon.
-Product: The companies stand for a set of standards, just like Whole Foods has in the past, with the intent of building trust in the final product. This is smart, given the niche targeting towards wellness consumers who seek transparency and want to feel confident about their purchases.
-Place: They consolidate the purchasing of certain types of goods to make it easy and convenient to shop. They are also moving towards free direct shipping, which is a necessity for anyone aiming to compete with Amazon.
-Promotion: The companies seek to align with consumers’ values to make it easier for shoppers to make a choice.
As these young upstarts show, retail isn’t dead yet. By evolving and understanding how they can meet consumers’ expectations, desires, and values, they can stand a chance against Amazon and other major players in ecommerce.