Brandless was actually a brand – just a bad one
In the 1992 Gen X twentysomething movie Singles, a guy flirts with a girl in a club and says he does not "have an act". Her cutting response? "Not having an act is your act." Well, not having a brand was Brandless' brand.
In February 2019, Brandless, which abruptly shut down operations last week, published a company code of conduct (PDF here) stating that “our mission is to better everything for everyone. We endeavour to make better stuff accessible and affordable for more people. Our mission is deeply rooted in quality, transparency and community-driven values.”
Most significantly, the document also said that “we are courageous, audacious and committed to being a new kind of brand.” Brandless also trademarked its simplistic white box packaging, which it co-designed with New York agency Red Antler.
A brand by any other name would smell as corporate. (Due credit: Freddy Tran Nager, a marketing communications professor at the University of Southern California, had a copy of the Brandless code of conduct and sent it to me.)
Brandless’ failure, in part, resulted from being a brand that pretended not to be a brand – and thereby not seeing the success that comes from having a strong one. It was a case of mixed business messaging. After all, it is impossible to distinguish yourself if your goal is to be indistinguishable.
According to Fortune, Brandless had revenue of $20.2m but a net loss of $48.8m in 2018. The company, just like WeWork, showed that actual profit always matters more than empty growth.
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Generic products in the past
Within living memory, generic products first became popular in the United States during the late 1970s and early 1980s – a time of both high inflation and high interest rates. For obvious reasons, people wanted to save money during the period of economic turmoil. Generics spent no money on advertising, copywriting, or design and could pass those savings onto consumers. Just see this TV ad from 1981.
After the economy recovered, people dropped generics as quickly as they had forsworn disco. In the 1980s and 1990s, well-regarded brands such as Colgate, Coke, Pepsi, Sara Lee, Mars, Cadbury's and Danone saw a resurgence. I also remember my elementary and junior high school classmates judging everyone by which sneakers they wore. (Whether Nike or Adidas was better was a constant source of debate.)
The history of Brandless
Brandless was founded in 2012, the same year that Time magazine reported that generics had become popular again after the Great Recession hit in the late 2000s. The company was one of the first to combine generic FMCG products with a direct-to-consumer model. The initial strategy? Not to have any retail middlemen distribution costs or promotional spend and then use the savings to sell everything for $3.
Brandless received a lot of hype. Fast Company named it one of the top 10 most innovative retail companies in 2019. In December, an eMarketer report said that “brandless brands will surge in 2020 as consumers prioritize value over marketing”.
Brandless announced in 2019 that it would also sell products in stores, raise prices and launch a line of cannabidiol (CBD) products. In addition, the company focused on brand purpose, storytelling and creating a community.
Also last year, chief executive and co-founder Tina Sharkey said at the National Retail Federation's Big Show in the US that “our brand is about a community that’s steeped in kindness and truth and trust and transparency, and this is how you build relationships". (But I thought Brandless was not supposed to be a brand.)
Brand purpose. Storytelling. Cannabis. Community. Transparency. It is as though Brandless’ strategy was simply to add every modern marketing buzzword to the company’s mission statement. But ticking off a list of cliches does not create a successful company.
Here is a hypothesis that I have yet to see unproven: the more buzzwords that a company uses, the more likely it is that the company will fail. Buzzwords are not replacements for a real brand, a quality product, a smartly selected price, an efficient distribution model, and an effective promotion plan.
Where Brandless went wrong
Brandless seems to have believed the mistaken assumption of many chief executives and chief finance officers that branding and marcom promotion are not investments but simply costs to minimise.
Generics have tried to undercut name brands since forever. It is not anything new. But generics are historically popular during only economic downturns. Today, with an economy that has improved since the Great Recession, brands are again very important.
“Consumers love brands and are willing to pay a premium for brands they trust,” Retail Leader editor-in-chief Mike Troy rightly wrote last week. “It is why even in the private brand world, retailers long ago stopped merely knocking off national brands and sought to build their own brands with unique value propositions. This trend is in full effect today as many retailers of food and consumables have embraced a brand building philosophy and now derive as much as 30% of their sales from private brands.”
Brandless tried to have it both ways. Here is a basic example that I created.
We can assume that the crisps are essentially the same. But the generic has basic black-and-white labelling with a standard, boring font and no promotional copy except for the nutritional information. In contrast, brands have colourful packaging with a creative, branded font and original graphics.
Brandless was in the middle. The company produced generic products along with standardised labelling that was recognisable on any product and straight out of a traditional brand book. Just like any other brand. It also included promotional copy with trademarks. Essentially, Brandless tried to exist in two different worlds but truly lived in neither. Brands, in part, are built by distinctive brand assets, but Brandless had none.
If you want to be a generic, be a generic. If you want to be a brand, be a brand. Do not half-ass it and stay in the middle. You will not achieve either goal.
Why brands are still important
Still, despite the lessons from Brandless, the principles and value of branding remain under attack. Fran Cassidy, head of the Cassidy Media Partnership and an advisor to the Institute of Practitioners in Advertising in the UK, recently worked with the Financial Times to poll what global business leaders thought of branding.
“The results were pretty dreadful,” she said this month. “Only 15% of non-marketers said that a strong brand was really important to future cash flow. Only 11% said a strong brand was really important for margin improvement. I worry that the business community as a whole has forgotten what brands are for.”
When I was a child in the US, I was friends with a kid who came from a family in difficult financial circumstances during the aforementioned 1980s. They often avoided brands and bought cheaper, generic products instead. To this day, I still remember that he was embarrassed by them. People prefer not to buy generic products because of what those items signal to others. And signalling is rarely discussed today.
As I wrote in a prior column on the rise of direct-to-consumer products, “brand” has been historically defined as a “function plus something”. And that “plus something” is what delivers a price premium. Just see the example of Liquid Death, a brand that is nothing more than bottled water – but with unique labelling and messaging that is geared towards straight-edge punks who do not drink alcohol or soda.
But let’s start at the beginning. Here are a few introductory branding principles that are important to know because brand through cultural imprinting leads to the greatest results over the long term.
Differentiation is key
Products are usually very similar. Coca-Cola and Pepsi are not that different. B2B marketing software platforms in a specific area tend to do the same general things. There are hundreds of marketing presenters in the world, and I need to distinguish myself somehow as a professional marketing keynote speaker.
It is the specialisation and differentiation – and not the pure function – that matters. At my local pub in Tel Aviv, there are a dozen different international beers all made from grains and hops that all taste essentially the same and will get you drunk. But I usually order Goldstar because I want to support an Israeli beer. The brand means something to me.
Brandless did not differentiate itself except in terms of cheap pricing (which has an effect only during recessions) and purpose-driven buzzwords (which are less effective than we think).
Customer perception matters
Brand positioning has always been a combination of promise and expectation. Yes, products must deliver a function. But the most successful ones also promise the aforementioned “plus something” – and customers eventually expect to receive whatever that is. The debate within the marketing industry is over which “plus somethings” are most effective to use.
Brandless’ problem was that it had an ineffective “plus something.” No one in the real world – those outside of the marketing industry bubble – really cares on a philosophical level about whether a product is branded or not. And Brandless had little else going for it.
Consumers are not that product-oriented
Brands are shortcuts that make our lives easier. When I was a teenager in the US, I worked after school at a Steak ‘n’ Shake diner. It was a regional chain. I was often bored, so I would invent new ways to prepare salads for customers by coming up with funny ways to arrange the vegetables.
One day, the general manager took me aside and told me to cut and place the vegetables in the standard way that the chain mandated. At the time, I thought he was an idiot. (Teenagers are “know-it-all” assholes.) But I know today that he was correct. The business wanted customers to know that they would receive the exact same food and the exact same service at whichever branch they would visit. It was part of the brand.
Today, if I buy a bottle of Heinz ketchup anywhere in the world, I know exactly how it will taste. I can throw it in my shopping cart without a second thought because I know the brand. It makes my life easier. How many people with busy lives really want to spend that much time thinking about what FMCG products to buy?
It extends to other product categories. We think people spend countless hours researching products on the internet, but how many consumers truly know the minute differences between the automobile tires or insurance policies that are available? They are undoubtedly influenced by the brand.
Brand is everything
In the film Singles, the guy pretending to be something he was not did not impress the girl. But – spoiler alert for a comedy that is almost 30 years old – the two ended up together.
Why? Because he built an actual brand in the form of a real, caring boyfriend. Sure, his function was always there – a young, virile man who could have performed the same biological purpose as any other young, virile man. But it was the brand that mattered.
Brandless did have a brand. It was just a bad one.
The Promotion Fix is an exclusive biweekly column for The Drum contributed by global keynote marketing speaker Samuel Scott, a former journalist, newspaper editor and director of marketing in the high-tech industry. Follow him on Twitter. Scott is based out of Tel Aviv, Israel.