Do brand owners now have the tool to fight back against retailers?
The new site is selling goods from a number of major manufacturers in the US at prices that compete with the big guns like Wal-Mart and Target and which are at a significant discount to other online retailers.
The intention is that Alice.com will source goods direct from the brand owners and sell them on to the consumer at-cost, with its revenue coming from advertising on the site. For now the site is unwilling to say which of the manufacturers - that currently have products listed - have so far agreed to sign up to its ‘direct-from-supplier’ model.
This secretive approach by the manufacturers is down to their fear of reprisals from retailers, which highlights just how weak a position they find themselves in. Whereas the retailers can shout from the roof tops about how much better their own label products are when compared with the major brands, the manufacturers of these products can’t even be seen to supply a start-up website (whose volumes for some time will probably be the size of a corner shop – if they had them in the US that is).
The appearance of Alice.com is undoubtedly a healthy move as it has the potential to create more of a level playing field between the major retailers and their suppliers (oh strike me down for having such a thought).
I can recall when the internet first emerged, it was regarded as an opportunity for manufacturers to cut out the retailers and sell direct to consumers. It didn’t quite work out that way as retailers clearly have over the years perfected the art of buying in bulk from suppliers and then splitting this down into small units for consumers. This is what they do and this is not what manufacturers do.
But things might be different this time with Alice.com because it is effectively acting as the middle man just like any traditional retailer. It is acting exactly like a retailer but for one key difference - its only source of revenue is through advertising on its site.
This is where the major problem lies because many, many businesses have set up online with an advertising-reliant model and apart from a few rare examples (Google) their business models have simply failed to stack-up.
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