Brandless Closes Shop in Blow to Virtual CPG Challenger

Brandless, the distinctive online retailer determined to disrupt the traditional consumer goods industry, is closing up shop after two and a half years, representing a blow to the notion of direct-to-consumer retailing.

Brandless had raised nearly $300 million in funding but said it was unable to find a path to profitability.

“While the Brandless team set a new bar for the types of products consumers deserve and at prices they expect, the fiercely competitive direct-to-consumer market has proven unsustainable for our current business model,” the company said in a statement on its website. Media reports said the majority of its workforce has been laid off, with a small crew left to complete fulfillment of current orders.

Founded upon the notion of providing value to consumers by eliminating what it called the “brand tax,” there is irony in the fact that the brand itself is likely to be the only thing that survives it.

Brandless positioned itself at the intersection of multiple consumer trends disrupting traditional retail, including private label, convenience, simplicity, wellness, indulgence, value and curation. Upon rollout, its distinct line of personal care and shelf-stable grocery items—selected for ingredient quality attributes—came with a single $3 price point it said was enabled by eliminating what it estimated to be the 40% markup attributable to the advertising costs of comparable branded items.

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Shoppers on the Brandless website were able to see that brand tax deducted as they built their online shopping baskets. A paid loyalty program offered consumers free shipping on orders of more than $48.

Brandless last year abandoned the single price point as it moved to new product categories such as CBD and sought higher average shopping baskets as fulfillment costs reportedly ate away at profits. The company had also sought to attract new shoppers through pop-up stores and other offline efforts, including a reported plan to get Brandless items into physical retail channels.

The company was founded in San Francisco by tech entrepreneurs Tina Sharkey and Ido Leffler, and former Target merchandising veterans Rachael Vegas and Jessica Glendenning were among its senior leaders. Vegas left for a senior merchandising role at H-E-B last year. Former Walmart executive John Rittenhouse was named CEO last year but reportedly departed in December.