If you’re like most people, the thought of ever purchasing everyday household essentials (such as soap, razors and diapers) online probably seems a bit silly and misguided. How can it possibly make economic sense to pay to ship these heavy, bulky products without blowing your budget?
Online retailers have tried over the years to sell consumables online with little success. If recent events are any indication; however, the stars may finally be aligning for explosive growth. The category is experiencing an online renaissance of sorts with established players and a few new entrants racing to stake their claim on the web as consumers increasingly look online to find deals and transact more of their purchases. This past year has seen the launch of a handful of sites aiming to capitalize on shifts in consumer behavior. Recent highlights include:
- Alice.com launched last summer offering consumers a convenient way to shop for consumables and over the past few months has averaged over 550,000 unique visitors per month.
- Just last week the founders of Diapers.com launched a sister site dubbed Soap.com to sell over 25,000 household products (much wider than Alice.com’s assortment).
- P&G unveiled its "eStore" earlier this year which aims, in part, to sell P&G products directly to consumers via the web.
- Amazon.com continues to expand in this area and promote its little-known Subscribe & Save program (which offers consumers an additional 15% off of many household items when they sign up for automatic reordering).
These sites offer free or flat-rate shipping with some qualifications. In addition, they make it easy for consumers to take advantage of available manufacturer coupons. So how appealing do these sweeteners make online ordering and is it worth the advanced planning and effort to shop for these products online?
To find out I compared the prices on a variety of popular national brand household products across these online sites as well as at two stores my family frequents (one a mass merchant, the other a warehouse club store). Manufacturers of course attempt to thwart easy price comparisons with subtle packaging tricks so I adjusted for this by calculating a unit cost (per ounce for example) for each item.
What I found might surprise you.
Generally speaking, the prices online were competitive, and in the case of Amazon.com actually better than those found in my local stores. In some cases very large savings can be found online if consumers only take the time to look.
Upstarts Alice.com and Soap.com offer slick websites, but the standout winner in this comparison is Amazon.com. In all but one instance its Subscribe & Save program offers the lowest available prices around (either online or in-store). Even non-Subscribe & Save prices were competitive, even with the membership club store. A 20 pack of Crest Whitestrips (Professional Effects), for example, can be had on Amazon.com for just $27 (after coupon), compared to at least $45 on every other online site and the two stores I visited. I also found diapers to be $10 cheaper on Amazon.com (assuming when you apply the 15% discount for Subscribe & Save in addition to their current 15% promotional discount), which made me feel kind of silly for all the $1 coupons we’ve been clipping for use at our local club store.
When you factor in the total cost of purchases at these stores the disparity only grows. Consumers pay no sales taxes online and can take advantage of free shipping offers, while the total cost of a purchase at a club store would include travel and shopping time, gas, sales taxes (in most states) and of course the annual membership fee (~$50).
Certainly considerable savings can be had in physical stores if consumers opt for private-label, store brand products (which consumers are also doing in increasing numbers). But for eager consumers looking for brand name products who are willing to plan ahead, the growing cadre of online players vying for a piece of your disposable income deserve a closer look.
As VP of Retail and Consumer Products at Compete, Matt Pace is responsible for leading a team of client services professionals who deliver digital intelligence and insights to clients in the retail and consumer packaged good industries. Before Matt joined the Compete Team he was a CPA and senior auditor with Deloitte & Touche. Follow Matt on Twitter @mattpace.