A few years ago, Ido Leffler, a Bay Area-based entrepreneur and founder, woke up in the middle of the night, suddenly bothered by a system he’d been participating in his whole life: the inflated cost of consumer packaged goods. “It just hit me: Why were we spending $15 or $20 on things that cost maybe $2 or $3 to make?” Leffler tells Fast Company.
Take granola, for instance. The farmers’ market and health store staple can be plucked off shelves for as much as $7 for eight ounces, despite the fact that all it is is an interesting arrangement of readily available grains and nuts. The steep price–which is a function of some of the ingredients, like nuts, falling on the expensive side, but also a response to consumer demand–has rendered the product aspirational (we tend to think expensive things are better for us), but also out of reach for many Americans.
That, Leffler thought, should not be the case. And when he met with Tina Sharkey, then the CEO of Sherpa Foundry, the incubator arm of the Silicon Valley venture capital firm Sherpa Capital, he learned that she’d long been thinking in a similar vein.
“We’re in a whole new phase of modern consumption,” Sharkey tells Fast Company. “There’s a generation of consumers now who don’t want their parents’ establishments, they don’t want their parents’ governments, they don’t want their parents’ industries, and they don’t want their parents’ brands.” It’s a sentiment that’s fueled the creation of direct-to-consumer brands like Everlane, whose mission it is to democratize access to good-quality clothing by eliminating markups (often in the region of 50% to 75% of manufacturing costs) associated with traditional brick-and-mortar retail, which necessitates that companies bring in extra revenue to pay for both staffing and property.
But there wasn’t yet an equivalent for consumer packaged goods, so Sharkey and Leffler set out to create a new landing point for a consumer who’s looking for quality and transparency, and eschews brand loyalty and the resulting choice overload familiar to anyone who’s ever stepped into a grocery store aisle. Their resulting venture is appropriately called Brandless, and it launched on July 11 with a curated selection of around 115 essential products (which will balloon to 300 by December)–from condiments to kitchen appliances to cleaning products–all for $3 or less.
“It’s very hard to fix a broken system,” Sharkey says. When she and Leffler surveyed the consumer packaged goods landscape, they saw a network of retail competition, layered with markups and inefficiencies and obscured by opaque business practices and pricing rationales. “So we decided: Let’s just start with a clean slate and build a new one,” she says.
Over the course of several years, Sharkey and Leffler sought out dozens of manufacturers in different areas of expertise to come on board the Brandless team and develop products to be sold through the platform. Each item sold on Brandless goes through rigorous testing, tweaking, and iteration at the company’s product development center in Minneapolis–because there is only one of each item sold on the site, Sharkey says, they wanted to ensure it was the best quality possible.
And the direct-to-consumer model rids customers of what Sharkey and Leffler have termed BrandTax–the additional costs baked into purchases from other retailers. Through their market research, Sharkey and Leffler estimated that the average person pays at least 40% more for products of comparable quality; that can reach as much as 370% more for beauty items like moisturizer. Of course, the savings are not evenly distributed across all Brandless products–a $3 pack of 100-count organic cotton swabs is pretty comparable to what you might find in a drugstore, but a $3 bottle of organic maple syrup, when it’s not uncommon to see such items going for $12, is staggering. Anyone who makes an account with Brandless and begins purchasing through the site will receive a quarterly savings report, calculated against what they would have spent had they purchased the same items at major retailers.
Brandless’ pared-back approach is what enables it to keep consumer costs tied more closely to the cost of manufacturing. By producing only a tightly curated selection of products, the company avoids the expense of rolling out multiple variations on the same item. Like other direct-to-consumer ventures like Everlane, it also saves on the distributor costs and staffing salaries associated with brick-and-mortar retail. And because the whole ethos of Brandless is to strip away the idea of prestige or aspirational branding, it eschews sticking a higher price tag on an item to uphold a reputation for quality.
“We wanted to create a platform where people could find items that reflect their values–whether it’s organic, non GMO, or gluten-free–across a wide swath of products at a price that’s accessible to almost everyone,” Sharkey says. “Obviously, we have costs for all of this, but we bear those costs.”
Brandless has raised around $50 million in funding from investors like New Enterprise Associates, Google Ventures, Redpoint Ventures, Cowboy Ventures, and Slow Ventures.
Sharkey and Leffler are aware that a $3 price point is still not accessible for everyone: A McDonalds hamburger costs less, and when the average Supplemental Nutrition Assistance Program recipient is allocated around $4.23 per day for food, those dollars start to look a lot weightier. Brandless will do a lot to boost access to healthy, good-quality products for a wider range of the U.S. population, but the efforts of one company are not enough to dismantle or reach across decades of entrenched poverty. Sharkey and Leffler recognize this, though, and each purchase made on Brandless will automatically donate a meal through the nonprofit Feeding America.
There will be more partnerships and initiatives down the road, but through Brandless’ membership program, B.More, which anyone can join for an annual fee of $36, the purchase-level donation to Feeding America will be doubled, and the program will act as a convener of like-minded members. One such initiative that will be launching through the program is Brandless field guides to life, which will alert members to volunteer opportunities in their zip codes, and equip them with invites they can send their friends and community members to join in.
Ultimately, Sharkey and Leffler are aiming, by doing away with excess costs and supporting an ethos of transparency, to eliminate the background noise of financial stress and choice overload. “It’s not just about creating a community of people that are looking for everyday things that are affordable and match their values,” Sharkey says. “It’s about taking action, putting people first, and ushering in an entirely new way of modern consumption.”