Is Competition Good for Green Business?
BY Tom Szaky
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.
Last updated: May 13, 2008
TOM SZAKY is the founder of TerraCycle, a New Jersey based company that makes fertilizer using worms and produces retail products from recycled goods. The firm was started while he was a student at Princeton University. Tom was named "The No. 1 CEO Under Thirty" by Inc. magazine in its July 2006 issue.