Selling Consumer Packaged Goods Over the Internet

The “No Middleman” Middlemen (Stores Magazine)

Selling Consumer Packaged Goods Over the InternetA key factor leading to success in retailing is to be the first with a unique business proposition.  For instance, for McDonalds it was understanding that customers often want fast service rather than high quality products.  For Home Depot it was taking a small hardware store business model and expanding it to a size that dwarfed mom-and-pop stores.  For Amazon it was offering an enormous variety of products that customers could conveniently purchase on their computer but, due to shipping time, were also willing to wait some time before they could enjoy.

For a new retailer, finding the right features to distinguish them from their competitors has become more difficult as existing retailers have easy access to market research that keys them in to what others are doing.  Yet, sometimes a smart, hard-working retailer discovers an angle that sets them apart.

An example can be found in this story that primarily focuses on Quidsi, a company that runs two e-commerce websites selling consumer packaged goods.  The company, which initially started with Diapers.com, a website directed to parents of young children, has expanded with a new website, Soap.com, selling a much wider selection of consumer products.  The company’s key selling features are providing consumer products that other websites do not handle and offering free shipping for orders of at least $49.

Going forward, the key issue for this company is whether they can succeed against massive competition that not only includes Amazon but also includes Procter & Gamble’s online store that sells P&G products directly to consumers.

The generation of young people who grew up with the Internet at its collective fingertips is now coming into its key spending years – buying their first homes and starting families – and are “waking up to the value and time-savings derived from buying online,” says Compete managing director of retail and consumer products Matt Pace.

One of the greatest failures of the early 2000’s Internet bubble was Webvan.com, whose business model enabled customers to order groceries online and have these delivered to their homes.  What factors are likely in Quidsi’s favor that will not lead them down the same road as Webvan?

Image by Ben and Laura Kreeger

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