Sick of paying for brands?
One of the creeping suspicions of modern life is that we collectively get ripped off by brands. Deep down we all know that we pay a premium for items because they have a desirable name and picture on them – but how can we avoid them?
The idea that quality is linked to a brand name is well-established, but not necessarily true. In some cases it is – you probably wouldn’t buy a watch or a car from a name you’d never heard of – but when it comes to everyday items like food, clothing or cleaning products there really is no correlation.
Investors are understandably keen on putting their money into the biggest brands. The likes of Coca Cola, Nike and all the rest will offer some of the most reliable returns in the world over the long term, making them as close to a sure bet as you will get.
However, a different type of company is emerging, led by an American outfit called Brandless which aims to put people first and focus on the things that matter. In practical terms, this means selling non-GMO foods, avoiding products which require animal testing and meeting environmental standards when creating things which are then sold direct to the consumer without the 40%+ price mark-up which comes with most brands.
The idea that high-quality, standardised products like this can be delivered affordably to the consumer’s door is an interesting one. The major e-commerce services such as Amazon initially thrived because they sold items which were always the same regardless of where you bought them, such as books. With this in mind, customers wouldn’t have to worry about the quality of the product even though it came from a shop they could not visit in person.
With things like food or hygiene products there is a greater element of risk. As mentioned earlier, we have tied the notion of quality up with brand names that we recognise. This in turn allows us to order supposedly riskier products from e-commerce sites with the guarantee of quality still in place. If the brand names are removed, will people still be as keen?
It seems they will be. ‘Brands’ which eschew logos and the mark-up which comes with them are becoming more and more popular as they seem to chime with changing attitudes. Places like Brandless and MUJI are doing extremely well.
In spite of perceptions that people are more brand-obsessed than ever, there is certainly a counter movement gathering pace which demands quality and authenticity without the premium prices, and there is room for investors to get involved at this early stage.