eCommerce success: the story of The Honest Company

The eCommerce success story we bring you today is one of those success stories that really brings a different and more complete view of what it is to undertake online. 

It is, in a way, the graphic representation of how, having everything to succeed, a series of bad decisions related to the products themselves and your customers can make the foundations of the business itself waver.

Still, it is also very illustrative of how you can redirect a negative dynamic and get back on track. Actually, this is the most inspiring part of this case.

Join us in discovering the story of The Honest Company.

We live in a world where, fortunately, more and more people are concerned about ethical consumption. For a large number of consumers, knowing what is behind what they buy is a basic purchase driver. 

We need to know that the production chain respects the minimums of sustainability, that workers are treated with dignity, that products have not been tested on animals and, in the case of cosmetic products, that only components that are safe for our health are used (as in the case already mentioned by Cocunat).

The idea was, from the beginning and at a time when ethical consumption was not yet a must, to create a company that would satisfy the need of a growing niche: that of parents who need sanitary and safe products for babies and children: from diapers to cosmetics and hygiene products.

The idea is undoubtedly a good one - and even more so if we consider that we are talking about 2012, when there was not the same offer as today. But The Honest Company had something else that was going to give it the final push to grow very much and very quickly: a globally known face. 

The founder and ideologist of The Honest Company is Jessica Alba, a widely recognized Hollywood actress with an impeccable public image and a great career. In addition, her recent motherhood had opened her eyes to a need that was not being met.

So much so that he decided to found The Honest Company to provide those eco-friendly baby products to all mothers and fathers in North America.

She did not do it alone: she counted on Brian Lee, an entrepreneur who had built great online projects and whom she convinced to invest and co-lead the project thanks to his knowledge of the niche, the necessary products, the legal implications... it is said that her speech was devastating.

Both partners invested a total of 6 million dollars to start the project with guarantees.

 As we said at the beginning, this brand had absolutely everything:

 

    

To all this, we add a macro-influencer, a business expert and 6 million dollars to start.

Their idea could have been to directly open a chain of physical stores, but it was not taht. They opted for a 100% native online business. This favored the reach of the brand, multiplied the sales possibilities by reaching the whole country, and optimized costs from the start.

Later, they did sell in multi-brand stores, but that was in a second phase of business development.

A glance at their initial website in January 2012 is enough to clearly understand what they wanted to convey: this was a personal project aimed at offering healthy products, without harmful chemicals and with an attractive design.

As for their initial catalog, it included the essential diapers, all kinds of children's cosmetics and some cleaning products. Except for the latter, which are a little more tangential, all of them were oriented to the little ones.

Something very important is the manifesto that expresses their way of working and understanding the business. For many companies, this type of decalogue is nothing more than something nice to leave written in the "About Us" section of their website or in a somewhat empty section called "Mission and Vision".

In this case, however, the manifesto is an important section of the website, because it serves as a statement of intent and commitment to the client. It tells us what the brand's standards are, how it produces, the chemicals to avoid and its obsession with performance and quality without harming the environment or people.

Obviously, much of the burden of communication had to be on social networks. If you have a face as popular as Jessica Alba's (more than 18 million followers on Instagram alone), you cannot afford to miss out on that advantage.

In addition, the type of product invites the generation of a community, to share and promote a common idea and values.

The Honest Company is present on most major online channels, with special mention to Instagram, Pinterest and Twitter. In all of them we see a very coherent and well aligned line of communication, in which Jessica Alba's face appears frequently to promote a little more engagement.

I insist again: a well thought out project, great investors, influence and a good name in the market. 

In its first year of life, the company generated 12 million dollars (twice the initial capital contributed by the founders) and did nothing but grow and grow. According to the CBI report, the company's value was rising like crazy: in 2015 it was estimated to exceed $1.6 billion. 

But something happened.

The company registered a drop in value of 39% (about 636 million, according to these analysts). What could have happened to make this happen? How do you explain this drop in value?

In reality, there was not just one factor, but several. The first one was a very strong rumor with many aspects of reality. At that time there was talk of a possible sale of the company to the giant Unilever.

This could already be understood by its public as a "betrayal", a loss of its identity and, in a way, a breach of its founding principles.

But there are some more circumstances to be added, such as a certain controversy with some products -especially notorious and harmful to the brand was the chapter dedicated to their "natural" sunscreen- that led them to recognize that perhaps they were not completely safe -to the point of having to take them out of their catalog definitively.

As if that were not enough, this period of decline coincided with an excessive horizontality of eCommerce. The Honest Company was selling more and more products and expanding the number of categories it made available to its customers. Its catalog was multiplying and people did not understand very well why.

In addition, there was a certain amount of distrust from the audience around the company's products, especially after the sunscreen episode. They, initially very stimulated by the idea of using ecological and natural products, were no longer so clear about whether it was worth investing in products which, however natural they were, turned out to be ineffective for the use they were going to be given.

This is one of the most valuable lessons of this whole case study. The Honest Company was responsive enough and humble enough to turn the situation around. 

Lee stepped aside and left the operational management of the company in the hands of a third party: Nick Vlahos. A really interesting profile due to his career in other projects with certain similarities, such as Burt's Bees (natural products from wax, honey and jelly among others).

Vlahos recovered the course and readjusted the products and communication to what The Honest Company had always been from the beginning. He recovered the founding values, which are what drove the sales from the beginning.

Among other things, the company decided to take over production, product formulation and quality control. In this way, the risks of having to rely on external producers who only entered the equation for mass production, but always with the formula and brand indications, were minimized.