JUST GOOD BUSINESS CASE STUDY : A Clean Sweep

It started with green heart – and from its beginnings in the dugout basement of house in Northland permaculture community, Ecostore has been running ahead of the market shift toward environmentally friendly products.
While that foresight is now hitting pay-off time, with the company experiencing growth rate over the past two years of around 217 percent, there’s no dilution of the pioneering spirit that informed its birth. That’s not only expressed through continual exploration into better products and more eco-effective processes, but through fundamental rewiring of the traditional business model.
That’s been driver from the start, as Ecostore founder Malcolm Rands explains.
“The company was born because we were already leading green life and using these home-made household cleaners that we thought other people might like to try. That’s the simple story. The more complex and ambitious one is that I was trying to create different paradigm for business where Ecostore is only part one of two-part project.”
That’s because Rands spent several years heading not-for-profits (NFPs) and spending 95 percent of his time fundraising. So, he thought, why not put the time into creating company that could act as vehicle for raising the funds needed for NFP ventures.
“If I invented company that could be globally huge and make heaps of money, you could then give away percentage of profits to not-for-profit.”
It may have taken while to get the profit side sorted, but as Ecostore steadily grows its offshore markets, Rands has passed the day-to-day running of the company to CEO Mitch Cuevas to free up some of his time for phase two – the NFP piece.
“That’s always been the plan,” says Rands. “Ecostore gives 10 percent of its profits to something called Fairground Foundation, which right from day go has been sister organisation but silent one because we had no profits – now it’s getting more active.”
The name – with its connotations of equity, groundedness and of place where the commercial, artistic, social and political aspects of community meet – was picked out in the early 1990s. That’s when Rands first started finding wider market for his household cleaning products under the name of Fairground Ethical Trading.
That it’s now starting to come to fruition is testament to the long-term vision which drives the company. As Rands explained, it’s always been seen as good business paradigm because the benefits run both ways. Fairground gets its funding; Ecostore benefits from the brand exposure gained on the back of Fairground activities. And, its current project is certainly newsworthy: designing an urban eco-village.
It’s early days yet but Rands anticipates that when this project is up and running, it will be self-funding. And the intellectual property generated from its inception will be passed on for free, he says.
“It’s the difference between that and normal business model – here at Ecostore we hold onto our IP very tightly because we need that to make profit and move forward. But Fairground can give it away.”
It’s not the only difference – as Rands discovered when he made his foray into the business world in 1993.
“After being in NFPs for 15 years, becoming capitalist pig was just wonderful,” he jokes. “Not just because we were making money, but because you could have an idea and put it into action straight away.”
One of the first major moves was shifting the operation down to Auckland about 12 years ago. “Mail order proved not particularly eco-viable when we had more than third of our customers in Auckland and most of our products were made there as well. We were trucking stuff up to Northland only to dispatch it south again. At that stage, some friends had rented the top of the old boathouse in Ponsonby and offered us the ground floor.”
The initial plan was to spend maybe year setting up the shop as mail-order outlet for the business and then head back to run it from Northland. But it took on life of its own and ‘Ecostore’ was born. The next step to making the products more accessible was mainstreaming them through supermarkets. The company took on some partners to help fund product redevelopment and packaging.
“Up to that point, our packaging was actually our mail-order catalogue, but suddenly we had to have shelf appeal,” says Rands. “Again naively, we went into 20 New World outlets and played with it for year to get it right. So by the time we were ready to seriously move into that space, we had two competitors.”
This didn’t turn out to be major impediment. Ecostore now dominates its sector with over 50 percent of the New Zealand market and growing name offshore. Expansion in Australia has been pretty good, says Cuevas.
“In 18 months, we’ve gone from two products in Woolworths to 25 across 800 stores and that kind of growth for an eco-product in what is probably one of Australia’s toughest environments is an amazing feat.”
The company gets around two requests week from people wanting to be agents for the brand – from Russia to the Middle East or South America, says Cuevas. Some have been pursued and some have been hits. Entry into the United States proved worthwhile – even though the marketing package has Rands raising fairly quizzical eyebrow.
“Part of the deal was using me as front person – they’ve created this character of ‘Ecoman’ from New Zealand and in March last year I was whizzed around the Midwest in hire car. I’d arrive in town and there would be people in Ecostore T-shirts with cardboard cut-outs of me and people lining up to see me because they’d been told I was celebrity. I even autographed bottles of dishwashing liquid!”
Starting in depressed state (Michigan) during recession last February was hard test, but there’s now deal for Ecostore to go into 150 stores in Manhattan. As to whether New Zealand’s image helps the brand, Rands says it’s mixed package. Most consumers probably don’t even know where the country is, but at the Natural Products Fairs everyone knows about New Zealand.
Export growth is all part of what was big year for the company in 2009 –
despite the recession. Accolades included its listing on the Deloitte Fast 50, and the company’s naming as Sustainable Business of the Year at the NZI National Sustainable Business Network Awards as well as “Trailblazer” in the Large and Corporate category. Judges were particularly impressed by the company’s commitment to the environment, its social practices and lifecycle tracking processes that follow each product from design and manufacturing to use and disposal.
The company also achieved Enviro-Mark NZ Diamond certification – local first for manufacturer of household cleaning products. That, says Cuevas, represents an important point of difference and credibility in offshore markets. He also notes that it’s not just the company’s reputation that has benefited but its bottom-line savings.
Far from resting on its green laurels, the company is working with Better By Design with an eye to improving product design and brand communications.
“That sense of pioneering is part of the way we do things,” says marketing manager Melissa Fletcher. “We are constantly looking to see what’s out there, and what we can do to be leaders in innovation. It’s challenge, but we want to keep riding the crest of that green wave.”