Maybe there’s something to be said for brands after all. Brandless, the three-year-old retailer that made a name for itself by not selling brand-name food, housewares and personal products, is shutting down.
A spokeswoman for the San Francisco-based direct-to-consumer brand confirmed the closure, first reported by Protocol.
"Brandless set a new standard in the wellness and sustainable products industry, and while we weren’t able to compete competitively in today’s DTC market, I’m confident the next great brands of tomorrow will be built from this experience,” said Evan Price, CEO of Brandless, in a statement.
The retailer emerged on the scene in 2017 with great fanfare. Selling a range of personal care products and snacks for $3 each, Brandless was designed to appeal to a generation of millennials who wanted basics without the weight of a brand. Many younger shoppers had grown disillusioned with the more expensive brands their parents and grandparents used, and simply wanted something well-made and well-designed. Helmed by entrepreneur Tina Sharkey, the company started with 110 products and quickly doubled that number. In 2018, Brandless won the Startup of the Year award at Ad Age's Creativity Awards.
Two years ago, SoftBank Vision Fund committed to investing $240 million in a series C round of funding in Brandless. The Japanese company has invested in a host of digital players including workplace communications tool Slack and, most notoriously, co-working company WeWork. SoftBank declined to comment.
By 2019, Sharkey had left the company; she was replaced by Walmart veteran John Rittenhouse. At the time, Brandless was still expanding into new categories like pet products, but reports of payment issues from the SoftBank investment were circulating.
Rittenhouse’s LinkedIn page currently notes his time at the helm of Brandless concluded in December. Price formerly worked as CFO at Brandless, but it’s unclear when he took on the CEO role.
Mike Duda, founder and managing partner at Bullish, a creative agency that also invests in brands, says that Brandless might have tried to grow too quickly. He notes that Sharkey's early exit was not a good sign for the company's future.
“It’s a novel idea that was easy to root for,” he says. “But they needed a little bit more time to execute. SoftBank came in right away and gave it way more money than it probably needed.”
But Duda and others caution that Brandless’ demise is not a red flag for the world of d-to-c startups—rather, it’s a sign that investments will be slower and more strategic. In addition, not all ideas will become full-fledged brands.
Nik Sharma, a direct to consumer strategist and investor, says Brandless’ proposition—items cost just $3—was always a little suspect.
“People were really skeptical of why something supposed to be organic and healthy was costing $3,” he says. “A lot of the newer brands today focus on bringing experience, that might mean increasing the cost of the order,” Sharma adds, noting that survival will ultimately depend on product. “People are willing to pay more if they know the quality stands behind it.”
For example, Public Goods, a company with a brand proposition similar to that of Brandless, charges more for its household cleaners and grocery items, which it advertises as being healthy and sustainable.