An Economic Look at New Startup Brandless

A new startup has launched called Brandless, a company that aims to tackle the $2 trillion consumed goods market by marketing itself as brandless. It is a great concept, and anytime a consumer can save money on pasta tongs, toilet bowl cleaners or cookies then it should be celebrated.

What has been bugging people like myself is the way it is being reported on. Just because you’re calling yourself brandless, it doesn’t mean that you’re a brand. You are still a brand.

Plus, there’s nothing to be ashamed of to be called a brand.

I wrote about this on LibertyNation.com in an article titled “‘Brandless’ Club Seeks to Fight Name Brands By Being One.” Here is an excerpt:

Brandless customers may think they’re escaping the iniquitous free market system, but they aren’t. One of the reasons why the idea of branding is powerful is because it holds the companies accountable.

If you head over to the grocery store today, you will notice several different brands of ketchup. If Heinz provides an inferior product, then you can buy French’s – and vice versa. Ditto for Brandless. If Brandless is selling delicious ketchup then customers will continue to purchase ketchup from that brand. On the other hand, if the Brandless ketchup tastes awful, then those customers will go elsewhere.

Moreover, brands act as quality assurance agents because customers do not have the complete information about product quality at the point of purchase. The name reminds someone if something is worth buying or not.

What many fail to realize is that brands serve a necessary market function. Cynical shoppers say they are paying a higher price for brand-name goods than other products that do not have a well-known identity. This idea is what prompted the Soviet Union, following the Communist revolution in 1917, to scrap brand names as well as factory production markers altogether. What transpired afterward was a marketplace supplied with low-quality items and many dissatisfied consumers.

I also talk about the article in an interview with Scott Cosenza. You can watch it below:

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