Startup Review: Alice.com

June 24, 2009 at 3:49 pm · 7 Comments · Startup Reviews

On Monday, Alice.com was released to the outside word. The Madison based startup, founded by the already successful Mark McGuire and Brian Wiegand, allows consumers to buy non-perishible consumer goods online and have them delivered directly to their door and never pay shipping. The site sends reminders when it thinks you might be running low on different products so that you don’t run out. From their blog:

Brian and I left Microsoft just over a year ago after they acquired our last start-up Jellyfish.com (news here). At the time, we set out to answer one question: “Why doesn’t anyone buy toilet paper online?” It sounds kind of silly—it did to me anyway—but that question was a metaphor for the larger challenge we wanted to tackle. Namely, could we figure out a way to get the mainstream consumer to buy Consumer Packaged Goods (CPG)—non-perishable stuff like toilet paper, toothpaste, laundry detergent, and diapers—on the Internet?

Despite the enormous size of this market, the vast majority of people still don’t use the convenience and power of the Internet for this category. In fact, consumers buy items like clothing and shoes—that need to be tried on and often returned—more than they do these simple CPG goods that are bought repeatedly in chore-like fashion.

I attended a talk that Mark gave at the UW Business School back in December about his experiences starting businesses and his current work with Alice and have been following their blog ever since. After their launch on Monday, I decided to try it out.

At first glance, I really liked the graphics and layout. They are inviting, playful and fun, without overwhelming you with too much going on to distract you from the core use of the site. The text has the same inviting, playful feel. For example, Alice’s phone number is 877-Yo Alice and includes text like “start your free account” and “never run out of toilet paper,” instead of something boring.

Once I registered, I started inputting the products that I use around the house. You can either find for products by typing them into the search box or selecting “my products” which gives you a “fish” for each type of household product you might use. You can click on each fish to find a product, shop via search or shop by room in your house. I did most of my shopping by clicking on “fish” (stand ins for each product until you select a one) and loved the inviting text of “lets go find some” to get to the products. I also really liked the scrolling coupons on the bottom of the site that offer deals on different products. At one point, I left my computer to come back later and had to sign in again. On some sites, its bothersome, but on Alice, there was a funny graphic of a policeman telling me I needed to log in again. I was fairly easy to sign up, select products and place an order and I really like the overall idea.

While I really like the site overall, the process of inputting all of my products took a pretty long time. It would be cool to see Alice preselect branded products for each product type I am interested in. In my case, brands don’t matter for products like soap, toilet paper, napkins, paper towels etc, as long as they get the job done. It would not only save customers time and energy, but it would allow Alice to possible make more money by pushing customers toward certain products.

Alice asks you how often you think you will run out of each product, so that it can remind you to reorder. I really have no idea how often I run out of most things, so it would also be nice to see examples of how often other consumers need to reorder the products that I am ordering. A cool graph of x% reorder in 2 weeks, x% reorder in 4 weeks and so on.

The biggest change that I would like to see is the ability to sort each product by price, after the site coupons have been applied and the ability to sort by cost per unit. I normally shop for products in the supermarket via a cost per unit comparison, but its not readily apparent on Alice. Its also interesting that it doesn’t seem to be advantageous to the consumer to buy in bulk. With many consumers trained to buy in bulk, its weird to see single rolls of paper towel have a lower cost per unit than the same paper towels in bigger sizes. I wonder if this will cause Alice to have higher shipping costs than they otherwise would, as there does not seem to be an incentive to buy in bulk.

The Good

Innovative, needed idea
Inviting, playful graphics, text and branding
Clean layout
Free shipping
Lots of products
Low Prices

Suggestions for Improvement

Sort by cost per unit and cost after coupon
Preselect brands for each product to save consumer time and possibly increase revenue
Create incentives for consumers to buy in bulk
Add a graph with information on how often others reorder

I really like the site and will try it out for a few months to see how it goes. I hate going to the store to buy these types of items, so hopefully it will work as well as I think it will. Check out Alice.com for yourself and let me know your thoughts.

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http://nathanlustig.com Nathan Lustig

Good question.

They have a different model than trying to just make money on sales. Instead they are trying to be a direct conduit between manufacturers and consumers and taking a fee for making the connection and selling access to the consumers.

I found this earlier today on CNET: http://m.news.com/2166-12_3-10270643-2.html. A quote from the article:

While Alice appears to the end use to be a reseller much like Drugstore.com or Diapers.com (I’m a Diapers.com customer, it’s great), it’s actually built on a fundamentally different business model. Alice is not a traditional middleman reseller. It takes no markup, CEO Brian Wiegand told me. Instead, it collects a “fee” from the consumer packaged good (CPG) manufacturers–the people who mix your toothpaste and put it into tubes–for shipping products out, and it passes all the customer data it collects from people buying the products back to the companies that make them. The manufacturers set their own prices.

The aim is to give CPG companies a direct pipeline to data about consumer buying behavior, and to consumers themselves. This is a move that puts them clearly in competition with their traditional retailers, but as Wiegand says, big retailers are already fighting the CPG industry by launching their own store brands. These house brands have already grabbed 20 percent of the CPG market.

Furthermore, the CPG companies are “losing their megaphone,” and need better ways to connect with their consumers. Wiegand says the efficacy of the 30-second TV spot is in steep decline. It was until recently the best way to make the world aware of things like a new scent of Palmolive. Likewise, the drop in the distribution of newspapers and their circulars is cutting off CPG companies from consumers.

I found Alice a very good online store. But what’s really interesting to me is the business model, for two reasons. First, because it points to a growing channel conflict in packaged goods that I wasn’t aware of. And second, because while Alice looks a lot like a typical retailer, under the covers it’s quite a different beast.
http://nathanlustig.com Nathan Lustig

Good question.

They have a different model than trying to just make money on sales. Instead they are trying to be a direct conduit between manufacturers and consumers and taking a fee for making the connection and selling access to the consumers.

I found this earlier today on CNET: http://m.news.com/2166-12_3-10270643-2.html. A quote from the article:

While Alice appears to the end use to be a reseller much like Drugstore.com or Diapers.com (I’m a Diapers.com customer, it’s great), it’s actually built on a fundamentally different business model. Alice is not a traditional middleman reseller. It takes no markup, CEO Brian Wiegand told me. Instead, it collects a “fee” from the consumer packaged good (CPG) manufacturers–the people who mix your toothpaste and put it into tubes–for shipping products out, and it passes all the customer data it collects from people buying the products back to the companies that make them. The manufacturers set their own prices.

The aim is to give CPG companies a direct pipeline to data about consumer buying behavior, and to consumers themselves. This is a move that puts them clearly in competition with their traditional retailers, but as Wiegand says, big retailers are already fighting the CPG industry by launching their own store brands. These house brands have already grabbed 20 percent of the CPG market.

Furthermore, the CPG companies are “losing their megaphone,” and need better ways to connect with their consumers. Wiegand says the efficacy of the 30-second TV spot is in steep decline. It was until recently the best way to make the world aware of things like a new scent of Palmolive. Likewise, the drop in the distribution of newspapers and their circulars is cutting off CPG companies from consumers.

I found Alice a very good online store. But what’s really interesting to me is the business model, for two reasons. First, because it points to a growing channel conflict in packaged goods that I wasn’t aware of. And second, because while Alice looks a lot like a typical retailer, under the covers it’s quite a different beast.
T

Nate, I would like to know your thoughts on Alice as a business. Clearly, the site works quite nicely and free delivery of household essentials can be useful for a lot of people, but why is this attractive for the company? If they’re just making their money on selling product, how much of this stuff must they sell to break even? You and I aren’t going to have the answers, but they’re important questions to pose.

The implicit fallacy (or explicit one, in the case of the quoted company blog post) here is that selling TP mail-order over the internet is a new thing. A friend of mine was an undergrad back when they were starting Target.com. Someone on that founding team spoke to his class and said they were hemorrhaging cash trying to ship people their toilet tissue. Alice is going down what appears to be the same route while offering free shipping!

Something’s gotta give. There must be something in their business model beyond a pure e-commerce play. Otherwise, I just don’t see how they can make money.

Bulky (toilet paper), heavy (liquids) products shipped for free + low margins (I’m assuming)…= ?

Anyway, I haven’t gotten a good answer to this. Maybe you know something I don’t.
T

Nate, I would like to know your thoughts on Alice as a business. Clearly, the site works quite nicely and free delivery of household essentials can be useful for a lot of people, but why is this attractive for the company? If they’re just making their money on selling product, how much of this stuff must they sell to break even? You and I aren’t going to have the answers, but they’re important questions to pose.

The implicit fallacy (or explicit one, in the case of the quoted company blog post) here is that selling TP mail-order over the internet is a new thing. A friend of mine was an undergrad back when they were starting Target.com. Someone on that founding team spoke to his class and said they were hemorrhaging cash trying to ship people their toilet tissue. Alice is going down what appears to be the same route while offering free shipping!

Something’s gotta give. There must be something in their business model beyond a pure e-commerce play. Otherwise, I just don’t see how they can make money.

Bulky (toilet paper), heavy (liquids) products shipped for free + low margins (I’m assuming)…= ?

Anyway, I haven’t gotten a good answer to this. Maybe you know something I don’t.
http://www.yacrosoft.com Thomas

That explains a lot. Thanks!
http://www.yacrosoft.com Thomas

That explains a lot. Thanks!
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Nathan Lustig

Staying Out of the Cubicle: Entrepreneurship, Innovation, Travel