Brandless is (coming) back!
Brandless, the SoftBank-backed consumer goods company with a uniform $3 price point, shut down its operations in February.
Why couldn’t they make a profit? Confusion over their strategy.
Brandless attempted to create a brand of high quality, affordable products by eliminating the marketing costs of typical CPG companies. However, they failed to offer products at a consistent quality (hurting trust), while their uniform $3 price point was not cheap for many items (hurting value), and they confusingly spent heavily on marketing — which eroded their margins.
Why Brandless failed to become the Procter & Gamble for Millennials
The business model tried to do everything at once.
This time, Brandless appears to be ready to execute a more focused strategy. According to their website, Brandless is coming back with a ‘renewed focus on the things that made Brandless less like other brands.’
What does make Brandless less like other brands? Well, ideally they can go back to the founder’s mission, which was to offer the hallmarks of a brand (trust, consistency, some feel-good sustainability elements) without the costs (advertising and retailer markup).
I think they have a shot at doing it. This would not be the first time a brand has been brought back from the dead. Electronics store Sharper Image went bankrupt in 2008. The brand has since been brought back as an eCommerce retailer. Then in 2016, ThreeSixty Group bought the rights to make products under the brand name for $100 million dollars. Camera company Polaroid also went bankrupt in 2008. Acquirers have since leveraged the brand to sell instant cameras, film, and clothing, among other products.
There is a business (often led by private equity firms) of purchasing brand trademarks. This is because brand building is expensive. Despite Brandless’s failure to create a profitable enterprise, they did create something-of value: a brand and trademark with broad awareness.
The second reason for the positive outlook is COVID-19. Indeed, Brandless seemed to fold at the least opportune time. The eCommerce firm shuttered operations just before the massive jump in eCommerce sales as social distancing sent people shopping online. It’s still difficult to get a slot for online grocery delivery. Had they stuck around past February, potentially Brandless could have picked up some new customers.
Nevertheless, with a renewed focus, and a likely enduring increase in online shopping, Brandless has another shot at creating a viable brand.