How fast can you grow a successful subscription commerce company? Pretty damn fast. Just ask Golden Globe nominated actress Jessica Alba. The Honest Company, co-founded in 2011 by Alba, is an American consumer goods company selling non-toxic household products online. If you haven’t heard of the company, you’ve likely been binge watching Game of Thrones, paying little attention to what’s happening in the burgeoning world of subscription commerce. In it’s first year of selling products the Honest Company hit $10 million in revenue. By 2013 the company eclipsed $50 million and in 2014, that number reached a whopping $170 million.
The early days were inspired by a real need and a void in the marketplace. In 2008 Alba attended a baby shower thrown by family and friends, where she remembers her mother advising her to use detergent to prewash clothes she’d received as gifts. She used a mainstream brand and immediately broke out in hives.
Alba spent late nights researching the contents of the detergent and everything in her kitchen and bathroom. What she found was shocking: most household products included petrochemicals, formaldehydes and flame-retardants. Jessica began to hunt for alternatives.
During her search for eco-friendly options, Jessica experimented with her own products made out of baking soda, vinegar, etc. When she came across Christopher Gavigan, who for 7 years led a non-profit called Healthy Child Healthy World, she asked him what to buy. With limited companies producing all things eco-friendly, safe and nontoxic, a professional relationship and business plan were in progress.
By 2011, Alba had turned herself into an expert on consumer products even going so far as traveling to Washington, D.C. to lobby for updated legislation. She was (and still is) particularly focused on reforming the 1976 Toxic Substances Control Act, which has allowed more than 80,000 chemicals to remain in household products. Only five are regulated by the Environmental Protection Agency; just 11 are banned from consumer goods.
Alba and partners began their new start-up with an initial seed of $6 million, according to a source close to the deal. The group called their new venture The Honest Company – a nod to its values and transparent ingredients.
While Alba and team intended for The Honest Company to remain online, they began selling products in a limited number of boutique stores. When Costco came calling in 2013 wanting to sell baby shampoo in family-size packs, the Honest team relented. Since then, Whole Foods, Nordstrom, Buy Buy Baby, Destination Maternity and even discount giant Target have started carrying Honest Company products. Notwithstanding its brick and mortar presence, 75% of revenues are online commerce generated, with the majority of those sales coming via the company’s $79.95 monthly recurring bundles of diapers and wipes – a leading indicator of the true power of subscription revenue.