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The Entrepreneurial Agenda by Robb Mandelbaum
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May 13, 2008
Is Competition Good for Green Business?
Posted at 11:02 AM
I was recently asked that question by someone at Office Max (as a quick background we just launched a major partnership between TerraCycle and Office Max this week). This is a tough question because one of the conventional methods of maintaining market share is to block competition and to construct numerous barriers to entry -- from IP to exclusive partnerships, etc. This is definitely the case in a mature and stable market where it is challenging to grow the market.
But is this the case in an emerging, niche market like green consumer goods? The best case study I can give is the launch of Clorox's green line. The household cleaning category is a large multi-billion dollar market in the U.S. The green household cleaning segment, however, is at best 3% to 5% of that. Probably less. Prior to Clorox's entry, the segment's leaders were companies like 7th Generation and Ecover. These green companies have strong distribution in places like Whole Foods but almost nonexistent distribution in places like Wal-Mart (actually Jeffrey Hollander, CEO of 7th Generation, writes on his blog that he will not sell to Wal-Mart).
When Clorox entered the green cleaning segment, all major retailers took a second look, and in the end the entire category experienced major growth. This allowed our cleaners to be launched at Office Max, tested at Target, and slated to be launched at a number of other major retailers. So, in other words, bring on the competition within the green segment. It may just be our ticket to truly turning the majority of consumer products green.
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I was always taught that new competition in a niche or young market segment only serves to prove the potential and grow the size of the market.
This Clorox case is proof that having a major brand jump into your segment helps more than it hurts because it draws more attention to that segment and grows the whole pie, which benefits all parties.
Competition is a healthy and necessary part of growth for this industry. We should welcome free market thinking that is truly green. Competition drives marketing efforts which further educates the consumer. I for one don’t mind having a choice of eco-friendly bathroom cleaning products to choose from.
I completely agree that competition is good, and in fact essential for the green products segment to survive in any industry.
At http://www.thegreenoffice.com, we are focused on providing a complete selection of the greenest products available, and with providing consumers the information they need to make informed decisions.
For instance, while many office stores are encouraging people to buy 'recycled paper', we enable consumers to learn the difference between *post-industrial* and *post-consumer* content, and encourage them to select 100% post-consumer recycled paper products whenever possible.
Adoption of green office products by the mainstream is definitely a step in the right direction, and there is plenty of space for players large and small, so long as you differentiate yourselves and do a great job serving your core customers.
Anything that brings more attention to living green and green products in general I am all for, whether it's competition or just joining forces with a big name like Office Max (where I work as a customer service rep at the Peru call center). As long as it attracts attention and makes more people think it's all to the good. Trust me when I say as soon as I have a catalog in my hands I that shows terra cycle products I will be proudly directing customers in that direction. I have been folowing this company since I first heard about it on the idigmygardens forums when the lawsuit from miracle grow first began it's nonsence and when I heard it was going to be in our catalogs I was practically doing the happy dance from my chair.
I just ran across The Eco-Capitalist blog and am glad to see Tom blogging especially since I greatly believe in TerraCycle and invested in them through Active Angel Investors.
Great job & post, Tom!
BTW, the RSS feed is broken.
Hey Tom, love what you're all about. Keep turning good ol' American capitalism on its head -- I can't think of a better person to help us dig ourselves out of the mess we're in...really!
As a life member of the Sierra Club, one of its volunteer leaders and an environmentalist actively engaged in the campaign to green Office Depot 5 years ago, I have an opinion on both of the excellent points raised in this piece. As for the Green Works line, a large chasm remains between the market penetration of such green cleaning lines as Shaklee and Seventh Generation so the partnership between Clorox and the Sierra Club is an excellent catalyst for change in the industry. I trust the judgment of Carl Pope, executive director of the Sierra Club and support his decision to pursue this alliance with Clorox.
As for Office Depot, it offered the green top recycled paper line for a long time but we tree huggers were profoundly disappointed that many of the company's other lines of paper continued to be made with 100% virgin fiber. So, we wrote letters, we protested and we persisted. After a long fight, Office Depot saw the light. Now, it has partnered with Terra Cycle, one of the greenest companies in the United States. That is big news and proof that competitions (even in an apples-to-oranges comparison) can be good for business.
Look what all these people, companies and schools are doing on GreenEnergyTV.com I read an article that GreenEnergyTV.com has viewers from 154 countries and people should share what they are doing!
I think we should appluad companies and individuals who are going green! Doing something is better than nothing, and that will get more notice than doing nothing at all.
Mark
you should be asking clorox how long it takes for their product to break down into the basic elements. if it takes more than 3-5 days then it truly is not biodegradeable product and for the sierra club member to be applauding this i would be suspicious. a true biodegradeable product should be 3-5 days for the entire content to break down not the u.s standard which says only x amount has to decay in a certain time and y amount has this much time and z has this much time to decay. the u.s. standards are different than the dictionary standards, same is true with natural and organic. the u.s. government and the bodies regulating the standards for these types of products have lowered there standards so more people can fit into these catagories
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