HEALTH

Alice.com sets to directly connect CPG manufacturers with consumers

BY Michael Johnsen

MIDDLETON, Wis. Alice.com on Tuesday launched its public beta of an online service that affords consumers a better way to buy household essentials online, the company stated.

The service combines always-free shipping and competitive pricing with a reorder queue that monitors customer usage of an item and sends a reminder to the consumer when the product needs replenishing. Like the Pro Merchant feature on Amazon.com, Alice.com never takes possession of manufacturer inventory. By contrast, Drugstore.com, another pureplay dotcom retailer, acts more like a traditional brick-and-mortar, buying, warehousing and shipping direct to consumers. On Alice.com, manufacturers sell directly to consumers in a format where there are no retail margin hurdles, slotting fees or in-store merchandising programs. Instead, manufacturers pay for “advertising,” which includes targeted couponing, sampling and loyalty programs.

“The [consumer packaged goods] industry spends billions of dollars each year trying to influence consumer behavior through traditional advertising, and much of that spending is wasted,” offered Mark McGuire, president and co-founder of Alice.com. “In contrast to this ‘spray and pray’ approach, Alice allows manufacturers to connect directly with consumers … the result is more accountability for the advertiser and more value for the end consumer.”

There’s certainly plenty of buzz building around e-commerce these days. According to the Census Bureau of the Department of Commerce, there were approximately $31.7 billion in online sales for first quarter 2009, up 0.7% from fourth quarter 2008; compared with traditional retail sales of $877.9 billion for the quarter, which were down 1.8%.

All of that suggests a robust online marketplace, where such retailers as Amazon.com and Walmart.com already have captured a significant market share of the e-commerce dollar. Some analysts have suggested Alice.com may find it challenging to attempt to navigate a cluttered online landscape.

The company’s “no shipping fees” offer avoids one of the primary reasons consumers don’t buy CPGs online — it doesn’t make sense to spend more on shipping than the product is worth. Also, today’s online retail pricing exceeds brick-and-mortar pricing by between 20% and 40%, suggesting that Alice.com will be positioned as the online discounter.

And time could be an impediment to an online CPG purchase, McGuire said. The impetus for the sale of CPG items oftentimes is pantry replenishment, meaning the customer has run out of the product and will not wait a day for an online order to ship. To address this, Alice.com has implemented an auto-replenishment program. “The vast majority of consumers don’t buy their household essentials online, and we set out to change that at Alice by taking a completely fresh approach to the CPG industry,” acknowledged Brian Wiegand, CEO and co-founder of Alice.com. “By eliminating the traditional retail layer, we allowed the companies that produce these goods to connect directly with the people who use them. The result is a neutral platform for CPG manufacturers to work together as an industry and channel their resources in exciting new ways for the consumer.”

That platform may provide an additional online opportunity for new-to-mass-market suppliers to generate a buzz around their products beyond such traditional pureplay mass retailers as drugstore.com and Amazon.com, or such brick-and-click retailers as CVS.com or Walgreens.com. “We are excited to participate on the Alice.com platform, and be a part of an entirely new and innovative approach to buying household goods,” stated Saskia Foley, EVP marketing and sales at Radius Toothbrush. “With Alice.com, we’re able to have a more direct relationship with our customers, and give them a great new option to purchase our products at affordable prices shipped free to their door.”

The Alice.com beta Web site is launching with more than 6,000 unique products (as compared with some 40,000 fielded today by Drugstore.com, for example). The company plans a full consumer launch in the fall.

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Walgreens to test diabetes care model

BY Jim Frederick

DEERFIELD, Ill. Ramping up its increasingly aggressive commitment to being a broad-based health solutions company, Walgreens is gearing up to test a new, pharmacy-centered disease management program for patients with diabetes.

Walgreens president and CEO Greg Wasson announced the plan during a conference call Monday with investment analysts as the company unveiled its third-quarter earnings results [see related story]. The new patient-care initiative comes as Walgreens continues its retail realignment and expands its integrated patient-care capabilities to health plan payers, employers and patients themselves.

“We’re pioneering new approaches to achieve better health care outcomes,” Wasson told analysts. “In coming quarters, we’ll pilot a chronic care management service in four markets, focused initially on Type 2 diabetes. The service will integrate capabilities across all of our platforms, including pharmacies, retail clinics, call centers and mail service, to enable patients to better control their conditions.”

In a related development, Walgreens stores in south Florida have teamed up with the Diabetes Research Institute Foundation, based at the University of Miami’s Miller School of Medicine, to raise funds for a diabetes cure, and awareness about the disease. The joint effort involves 265 of the chain’s stores.

The chain “will continue to invest in these areas” going forward, Wasson said.

Walgreens is in the midst of a major transformation of its business. Central to its reinvention strategy, first announced last fall, are efforts to position itself to America’s employer-based health plan sponsors, pharmacy benefit managers, physicians and other health stakeholders as a highly accessible, cost-effective solution to a health care system whose costs are spiraling out of control.

In line with that effort, Wasson also revealed Monday that more than 16,000 Walgreens pharmacists “will be licensed by this fall to provide flu vaccinations and immunizations.“We also have nurse practitioners in about 350 in-store clinics to handle routine family illnesses at a much lower cost than an emergency room visit,” Wasson added. “These services sit very well with the major themes of health care reform: access, affordability, and disease prevention and wellness.”

What’s more, asserted Walgreens’ top manager, those services are increasingly vital to a health care system that is broken and in fundamental need of reform. “If left unchecked, some estimate health care costs will grow from about $2.5 trillion today to $4 trillion within a decade,” Wasson warned. “Walgreens and the retail pharmacy industry have a role in generating savings in health care.

“Our pharmacists and clinicians at retail and employer clinics are accessible, affordable providers of quality care, and it makes good economic sense to include them as part of the solution,” he added.

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Nutritional formula used to treat children with IBD possibly shows negative effects

BY Anna Mcgrath

NEW YORK Medication used to treat patients with inflammatory bowel disease showed possible negative side effects in children and teens dealing with the disease.

Research by Raanan Shamir of Tel Aviv University’s Sackler School of Medicine and Schneider Children’s Medical Centre was inspired by the problem of malnutrition and growth retardation in children battling IBD. Steroids and other biological agents, the most common treatment for IBD, were having an adverse affect on the children’s growth, despite their effectiveness in adult patients.

The answer was a specially designed powder that contains all the daily nutrients a person needs. Aboard spacecrafts, astronauts dine on this nutritional powder mixed with water. The study showed that such a nutritional formula that was first developed for astronauts could be another path to treating IBD in children. This supplement puts 60% to 70% of children with Crohn’s disease, a common IBD disorder, into remission, a success rate similar to that of traditional steroid-based drugs, but without side effects.

The next step in his research, said Shamir, is to “define exactly the role of nutrition in inducing remission in these patients, and the role of nutrition in maintaining remission.”

Dr. Shamir recently reported his research in the Journal of Pediatric Gastroenterology and Nutrition.

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