Method Soap: Bringing Green (and the Rest of the Color Spectrum) to the Masses
A pioneer in the rapidly-growing market for environmentally friendly cleaning products.
Founded in 2001, Method Products approached the cleaning products market with a fresh perspective, pairing creative and fun design, while maintaining a mission and commitment to “green” cleaning materials that are accessible and appealing to the general population. Method grew from $34M in revenue in 2005 to $100M in 2012 and are now estimated at revenues north of $300M.[1] Method’s success, borne out of the efficacy of its business and operational alignment, has spawned a number of competitors and imitators from new and well-established brands alike.
Innovative Design & Cleaning Products?
Method focused heavily on the design and aesthetic of its product to make it stand out and serve as a visual representation of the company’s creativity and innovation.[2] Method hand soap bottles are uniquely pear shaped, and customers can choose from a variety of eye-catching colors and fun scents. Customers are drawn in, and they may choose to dive deeper and discover Method’s commitment to environmental sustainability.
First, Method is transparent about the ingredients used in its formulation, only using nontoxic and fully biodegradable materials.[3] This is in contrast to many traditional cleaning agents that have known and unknown toxic impacts if inhaled or exposed to the skin, and can persist in local water tables even after they are rinsed away. More concentrated formulas in areas like laundry detergent reduce packaging material needs. In addition, Method’s bottles are a closed loop system, sourcing from 100% recycled plastic and also subsequently recyclable.[4]
These designs allow Method to show that positive environmental benefit doesn’t translate to substandard cleaning products or a less mainstream, hemp-filled lifestyle. These choices directly support Method’s value proposition of fun, accessibility, and environmental benefit for the customer.
Supply Chain Alignment
In addition to the deliberate environmental choices for the product itself, Method cascaded the principals of its core strategy through its supply chain, resulting in a tightly coordinated and highly aligned production and distribution process.
Looking more closely at product manufacturing, Method announced earlier this year the opening of a new facility in the Pullman neighborhood of Chicago. The factory will be powered in part by renewable energy (solar panels on the roof), will be equipped with energy efficient equipment, and will be LEED platinum certified, the highest rating possible. The plastics supplier for the factory is also co-located, reducing operational inefficiencies, shipping cost, and emissions associated with transport. [5]
Method has also partnered with transportation companies so that about 35% of its trucking fleet runs on biodiesel, further reducing the net environmental impact of its products.[6] Method distributes its product in the mass market, with partnerships with Target, Safeway, Staples, and Lowe’s. The environmental focus of Method’s supply chain is unquestionable, but also done in a way to drive at lowest cost via lower employee turnover, material efficiency, and energy efficiency.
Commitment to Valuing Human Capital
Method also focuses on sustainability of its workforce. Employees are paid more than 40% above living wage, and the company values local hiring to boost local economies, as demonstrated by their most recent factory setup in the Chicago area. Employees are also encouraged to think about their relationship with the local community, with workers given up to 20 hours a year of paid time to do community service. These initiatives enable workers to stay engaged with their work and relate to the underlying mission.[7]
Corporate Organization
In selecting a buyer in 2013, they were savvy to go with Ecover, a large Belgium-based environmentally-friendly cleaning products company, which has given them needed capital and greater economies of scale to drive cost down while remaining committed to their mission. [8]
The Road Ahead for Continued Growth
Method has been successful pursuing its current strategy, and the “green” cleaning market has grown significantly, from 3% of the cleaning product market in 2005 to approximately 30% today. Under the well-capitalized Ecover umbrella, Method is in a good position to expand to international markets, such as Europe and Asia, though the road may not necessarily be smooth, given the rise of new competitors from traditional players like Clorox and newer entrants like Mrs. Meyers, which was acquired by SC Johnson.[9] Increased competition will make it more important for Method to continue to communicate their advantage to the marketplace, both environmentally and aesthetically.
Sources
[1] http://fortune.com/2013/10/10/mopping-up-with-method/; http://www.nytimes.com/2013/01/17/business/smallbusiness/a-founder-of-the-soap-maker-method-discusses-its-sale.html
[2] http://primary.slate.com/articles/technology/top_right/2011/07/eric_ryan_cofounder_of_method.html
[3] http://methodhome.com/beyond-the-bottle/ingredients/
[4] http://methodhome.com/beyond-the-bottle/packaging/
[5] http://chicagotonight.wttw.com/2015/06/16/method-factory
[6] http://inhabitat.com/is-it-green-method-home-products/; http://www.bcorporation.net/community/method-products-pbc
[7] http://www.bcorporation.net/community/method-products-pbc
[8] http://www.nytimes.com/2013/01/17/business/smallbusiness/a-founder-of-the-soap-maker-method-discusses-its-sale.html?_r=0
[9] http://www.wsj.com/articles/SB10001424052748704364004576132081767603482
Love this post, Amanda! What I found most interesting is that Method doesn’t overly advertise the way their supply chain matches with their mission (on the face of the products, it’s super tiny font!)– it seems like most of their marketing is word-of-mouth. Would be very interesting to see the trend in their margins, especially with increased competition and supply chain pressures. Really enjoyed the read!
Prak
This is great, Amanda! I definitely didn’t know all that went into the company behind my soap. In watching the video about the new plant, I was surprised by how automated and exact the process was. Considering their commitment to valuing human capital, I actually expected to see more human capital. However, it makes sense that it would be so automated, because this probably means they have less waste, and can run a more cost efficient process. I think you’ve also identified their biggest challenges for growth, in the number of competitors entering the green cleaning space, especially given that although green is growing, it’s still not dominant in cleaning supplies.
Awesome post, Amanda! I definitely did not know how much Method really invests in sustainability. I was particularly struck by the 20 hours of paid community service it provides each employee. Throughout this semester, the importance of investing in human capital and aligning your workforce has become apparent in nearly all of our courses. From the employee-driven culture at Mod Pizza to the self-managed teams at C&S grocers, it’s evident that well-aligned employees drive a firm’s success. It’s awesome that Method truly empowers its workforce to take part in the company’s vision.
Amanda – Great read, thanks for posting! I very much admire the Company for its consistency in purpose through promoting a sustainable product and creating it with sustainable manufacturing practices. Like many early moving consumer products companies, I have to admit I’m fearful that they will not be able to sustain their fantastic growth over the long-term. They were lucky to time their expansion with greater consumer awareness and affinity for sustainability and managed to differentiate through attractive design. I worry that the product penetration can be copied. Their brand ethos and authenticity, however, might be able to drive their continued success. Prak mentions advertising, and I wonder if we will start to see the Company commit to more advertising to sustain growth, develop the brand and stave off competition.
Rob