Why Amazon Wins Where Brandless Failed
A three-year experiment in selling generic consumables directly to consumers recently came to a quiet end. The online store Brandless stopped selling its private-label soaps, toothpaste, office supplies, home goods, and more, with the company's website explaining "the fiercely competitive direct-to-consumer market has proven unsustainable for our current business model."
Some consumers are disappointed, though seemingly few are surprised. The DTC (direct to consumer) market has absolutely exploded, as have retailers' private-label initiatives that lower prices for all. The Brandless failure, in fact, has implications for all of those organizations employing a similar business strategy. That includes Amazon (NASDAQ: AMZN), which has fully embraced its own line of home goods and consumables unashamedly sold with an "Amazon Basics" label. Simply put, perhaps the premise of offering cheaper alternatives to nationally recognized brands isn't all it's cracked up to be.
It wasn't the premise that was the problem for Brandless, however. It was everything else.
Source Fool.com
