I remember in 2011 when the New York Times published a piece saying that green product sales were getting hit by the recession. Maybe this was true for some of the larger brands, such as the Clorox Green Works Brand, which was at one point accused of greenwashing. But for independent brands, they fared well through the recession, according to EcoMom CEO Jody Sherman. They did so well, in fact, that his sales on the specially curated Las Vegas-based, eco-friendly products retail site has grown four-fold year-over-year the past two years. Revenue is in the single digit millions now, and projections are for double digits by 2013. Its largest big box competitor Amazon.com has reported strength in its green sales as well. But to grow Ecomom’s customer base and stay competitive, Sherman decided to seek another round of funding.
Ecomom just closed a $4.7 million round, bringing its total raise since inception in 2004, to $10.7 million. All of the funds which previously invested came back, which is a good sign. I always worry when I don’t see any returnees in follow-up rounds. It’s a red flag. But in the case of Ecomom, they had all and more: Crosslink, Cueball Capital (which led the last round), Blue Pacific Ventures (leading this round), Chamath’s Fund (Embarcadero Ventures, invested for third time), Vegas Tech Rhodium, 500 Startups, Siemer Ventures, and Rising Tide.
Major angels also participated including Rohan Oza and Walter Kortschak. The new major investor is Daher Capital. That’s ironic, because Daher is one of GRP’s largest LPs, and GRP had previously passed on Ecomom.
Sherman and his team plan to use the $4.7 million to accelerate growth, beyond Ecomom’s current customer base of 50,000, through additional marketing to take advantage of a booming market.
Now is certainly a good time to accelerate growth, especially in green. The latest Commerce Department data shows that consumer confidence is up. Consumer purchases, which account for 70 percent of the economy, expanded at a 1.5 percent annual rate from April to June.
But who knows how long this strength will last, as the Fed remains cautious about the recovery’s resilience with more expensive fuel prices expected this Fall, which would cut into consumer spending. Although central bank policy makers said earlier this month they will pump new stimulus into the economy if necessary, Ecomom needs to work quickly to boost its customer base if it expects to reach four-fold growth and double-digit sales as projected by 2013.
What works in Sherman’s favor is that a 2011 Green Is Universal poll showed that 62 percent of consumers say they’re making a conscious effort to buy products made by environmentally responsible companies, 68 percent of which say it’s even worth it to pay higher prices for these products if it’s a brand they trust. That’s what Ecomom prides itself in and how it sets itself apart from larger competitors such as Amazon: Trust.
The company has a 70+ point audit system for products it chooses to sell on its site. They look at whether products are healthy and safe and whether they’re useful and cost effective. It’s really trying to build brand loyalty by going to great lengths to continue to find new ways to make it’s customers feel good about what they’re buying.
Earlier this summer Ecomom launched a campaign called, “It’s All Good,” which promised to deliver a day of organic meals to a child in the US for every customer order. Actor David Arquette even got involved. So far, the company has delivered more than 45,000 days of food for children to food pantries in New York, Los Angeles, Indiana, and Nevada.
Sherman says, “Zappos was able to kick Amazon’s a** by building trust and loyalty in its customer base, making them feel good about their purchases and helping them feel safe, and that’s what we’re hoping to do.”