Green products and services are a hot startup niche right now, as consumers increasingly gravitate toward eco-friendly brands. But that doesn’t mean that starting a company is this sector is a no-brainer. Josh Neblett, Sarah Wollnick and Tom Simpson managed to take what Neblett calls “a science project,” and transform it into a $15 million online retailer of green products. Today, GreenCupboards has more than 50 employees and sells 15,000 products from 600 suppliers. Here’s how they did it.
Neblett wrote the business plan for Green Cupboards in 2008 as a senior at Gonzaga University in Spokane, Wash. The idea was to sell the top ten or so eco-friendly household cleaning products online. “We had green chemists look at the products to figure out which ones were the best,” says Neblett. His professor, Tom Simpson, and classmate Sarah Wollnick joined him to transform the class project into a bona fide business. But they quickly realized the model was flawed. “With e-commerce, it’s really tough to offer a limited number of products,” says Neblett. “Plus we also found that the difference between the top product and the third or fourth best product was very small.” So the team decided to expand the company’s offerings. The company now sells a wide variety of products, including toys, pet products and office supplies.
Tap Your Ecosystem
GreenCupboards is situated in Spokane, which is not known as a tech hub. So much the better. “There aren’t a lot of cool startups like us in town, so we were really able to get the cream of the crop and hand-pick the best people out of school,” Neblett says. Also, the company won a local business plan competition, which helped the founders raise $288,000 to fund their startup.
In the company’s early days, big brands wanted nothing to do with the tiny GreenCupboards. “I made a point of making us seem a little bigger than we were,” Neblett says. “But it took us nearly two years to land Seventh Generation.” The lesson: don’t give up. Land your first big client/brand/strategic partner and others will follow.
Create Great Systems
According to Neblett, many e-commerce companies have buyers who handle a variety of tasks, such as purchasing, supplier relations and merchandising. But at GreenCupboards, those roles are split up, with employees dedicated to specific roles. “We found that it’s a much better model for us,” Neblett says. The company is also building proprietary systems to facilitate drop shipping to customers. “One of our goals is to become one of the most efficient retailers in the world,” he says.
Land the Right Partners
Amazon is a serious competitor and the 800-pound gorilla in the room for e-commerce sites like GreenCupboards. But in most cases, cooperation beats competition, so the team negotiated a partnership with Amazon. “We signed a contract to outsource our fulfillment to them,” Neblett says. “A third of our online transactions happen through them.” It was not easy to get that agreement in place, though. “Our proximity to Seattle helped,” Neblett concedes, who says he met with execs at Amazon several times to make the partnership work.
GreenCupboards now has 100,000 U.S. customers and the founders are considering expanding to Canada and the U.K. Growth in both e-commerce and in the green products industry has fueled revenue growth; Neblett is predicting $15 million this year. Is he hoping that Amazon might gobble up GreenCupboards at some point? “I don’t believe in building a company to be acquired,” he says. “If I do that, I’ll make the wrong decisions. I just want to build a fun company with a great culture.”
Read more Startup of the Week columns.
Donna Fenn is a business journalist and co-founder of Y.E.C. Mentors, an initiative of the Young Entrepreneur Council. She is author of Upstarts! How GenY Entrepreneurs are Rocking the World of Business and 8 Ways You Can Profit From Their Success and Alpha Dogs: How Your Small Business Can Become a Leader of the Pack.
photo: Courtesy of Green Cupboards
Josh Neblett and Sarah Wollnick