The power of information could easily frighten someone who worries about "Big Brother" style bureaucracies or considers the consolidation of so much data—purchase records, motor vehicle records, tax records, and so on—a threat to their privacy. However, the generation that has come of age in the era of the Internet, cell phone cameras, and surveillance systems in every public space doesn't seem to expect nearly as much privacy. They view the constant exchange of information, even rather personal information, as simply a part of the game of life. And it's a game that anyone can play.
With GoodGuide anyone can take advantage of independent product ratings and feel better equipped to face the often dizzying array of choices in the marketplace. (Does anyone really need that many flavors of tea?) With Alice.com, another information-based start-up, individuals can go a step further. They can willingly hand over rather personal information about themselves—like how much toilet paper or deodorant they use—to the companies that make these products and hundreds of other household items. In exchange, Alice.com and the companies keep you supplied, via packages sent free of shipping costs, automatically.
Would you exchange private information about your personal hygiene—or, for that matter, how many trash bags or sponges you use—if Alice.com guaranteed that you would get better prices, never run out, and never have to shop for them again? As it turns out, millions of people would. Among them are lots of mothers who happily trade information for free, reliable deliveries of items like diapers, and senior citizens who can stop worrying about schlepping to the supermarket for supplies in bad weather or when they don't feel like going out. Instead they can count on Alice.com for any of six thousand different products made by 125 manufacturers.
The president and co-founder of Alice, Mark McGuire, spent years developing the idea, only to have it debut at the height of the Great Recession. Although he was concerned that people might not be open to a newcomer, conditions actually worked in his favor. Customers under time pressure, who wanted to reduce their trips to the store, were drawn by the convenience. Costsensitive shoppers discovered they could get goods delivered free by Alice at roughly the same price they would pay at a store. And when they stay out of the store, they are less likely to grab an impulse item they never planned to buy.
"They're trying to do things like plan their shopping lists and limit impulse purchases or save as much money as they can by comparing one price of a brand that they typically get to all the other brands they could substitute that for," McGuire says. "Doing that online and through Alice is great. Also, you get automatic coupons with us. There are a lot of retailers, the Walmarts and the Targets of the world, they've done a tremendous job and they're incredibly skilled at getting me in the store to buy a bottle of laundry detergent and walk out with three other things that I didn't think I needed." However, in the new economy, "People are very much focused on their basic essentials and getting rid of those extraneous purchases," adds McGuire. For these folks, "Alice has had perfect timing."
People also don't mind the convenience. Despite tight budgets, "Consumers are still looking to pamper themselves and reward themselves," says McGuire. "Our tag line is everyone needs an Alice. It's almost like having a maid or someone that helps out with your house and eliminates a chore. And you can do that in a way that's not wasting money."
For the scores of manufacturers who signed up with McGuire, Alice.com trades its customer data in exchange for best pricing, which gets passed on to the Alice community. But it also solves a problem that major companies have faced as the Internet, digital video recorders, and other technologies have given people the power to delete, bypass, and avoid traditional print and broadcast advertising. With Alice they get one-to-one relationships with customers who tell them everything they need to know about how, where, and when their products are used. Nothing could be more valuable to manufacturers who want to distribute a special offer, roll out a new product, or find a previously unmet need.
Before it was even a year old, Alice.com was so promising that McGuire was able to raise a second round of capital from investors who believe he can succeed. His business model, he says, is like the travel service Orbitz, which arranged to serve as a central booking site for almost all of the world's airlines. Orbitz succeeded by helping them reach customers directly instead of through travel agents who collected commissions from the carriers.
"We set up Alice very much the same way," said McGuire. "All of these big brands are getting killed by these dominant retailers, and they need to find new ways to get to their end customer, but they can't do it alone. As a consumer I'm not going to go to the Nyquil store to buy my Nyquil and the laundry detergent store to get my laundry detergent and pay shipping and get all these boxes. I want to go to one place where I can get all the brands. That's really what created that opportunity for Alice."
Reprinted by permission of the publisher, John Wiley & Sons, Inc., from Spend Shift: How the Post-Crisis Values Revolution Is Changing the Way We Buy, Sell, and Live, by John Gerzema and Michael D'Antonio. Copyright (c) 2010 by John Wiley & Sons, Inc. All rights reserved.