CPG Playbook   //   January 23, 2024

How Blueland is refining its wholesale strategy after launching in Whole Foods

When eco-friendly cleaning company Blueland first started talking to Whole Foods about a wholesale expansion in 2020, the brand had yet to hit any retail shelves. Co-founder Sarah Paiji Yoo said the company, which first launched as a direct-to-consumer brand, knew it wasn’t ready at that point.

“The skill sets and muscles you need as an organization to support DTC is very different from retail,” she said.

But by the end of 2022, as Blueland experimented with its products and packaging on shelves in The Container Store and Erewhon, Paiji Yoo reached back out. As of early January, Blueland’s refillable hand soap products are available in all 515 Whole Foods locations nationwide, what she calls the brand’s “largest opportunity” in retail to date, and brings its retail footprint to more than 6,200 locations, including Meijer and Kroger.

The launch marks the latest development in the quest for plastic alternative brands to get onto major retail shelves. But there is still a long road ahead. Brand Basics CEO Tim Murphy told Modern Retail earlier this year that bringing its natural cleaning products into physical retail would “be the biggest risk the company ever takes,” citing the costs associated with retail distribution and promotion.

For the plastic alternative brands that do go wholesale, it’s proving to be a slow, steady and selective expansion. Before heading into wholesale channels, Paiji Yoo said that before getting into retail, the business had to become profitable, which it has been for about 18 months. It’s also carefully considered the types of products it offers in each retailer — for example, its April 2023 debut in Target was only for its body wash product. And its laundry or dishwasher tablets come in 40-count packs for wholesale instead of the 60 counts that are delivered to monthly subscribers.

“Sustainability is core to everything we do, and having a bunch of the wrong product in the wrong doors is also not sustainable,” Paiji Yoo said.

Overall demand

While it may involve some consideration for eco-friendly brands, research indicates mainstream demand is there. Garnter research show that 63% of consumers say they value either sustainability or environmentalism. Director analyst Kassi Socha said this “creates a superset of consumers with green intention.”

On the business side, Gartner’s research shows that 84% of business leaders see customers as one of the top three stakeholders creating pressure on their organization to invest in sustainability initiatives.  Socha pointed out how Trader Joe’s in late December announced it would look to reduce its plastic packaging following a Change.org petition that at the time gained the support of more than 80,000 people (it’s now at more than 124,000).

There’s also added pressure to reduce plastic packaging coming from state and municipal governments, Socha said, which can lead to alternative packaging models becoming more mainstream. Plastic bags are now banned in at least eight states, with plastic straws also banned in spots like Miami Beach and Seattle. A California law aims to see all packaging be recyclable or compostable by 2032 in a quest to eliminate single-use plastics. The customer demand, financial incentives and regulatory environments combine to make it more profitable for big box stores to move away from single-use plastic products. 

“Having a plastic alternative is no longer something that retailers have to extend a 200% price increase to deliver on,” Socha said.

For its part, Whole Foods has continued to grow the number of eco-friendly brands its carries. It stocks well-known brands like Mrs.Meyers’s, Seventh Generation and Method, plus the 30-year-old natural products line BioKleen. Recent entrants have proved to dip their toe in with small steps — Dirty Labs, for example, launched in Whole Foods in 2022 with its plastic-free and biodegradable laundry detergent.

The retailer is selective about what it lets onto shelves, with a list of 135 banned ingredients like phosphates, phthalates or FD&C colors. It also requires brands to show proof of their ingredient origins, production methods and disclosure sourcing. 

Paiji Yoo said while Blueland’s revenue is mainly driven by its subscription business, retail is an essential part of the equation when it comes to steering people away from products that have single-use plastic.

“For the category, still 80% of people want to buy cleaning products, they want to pick up their laundry detergent, they want to get their hands on where they’re doing their others sort of like weekly or bi weekly shopping,” she said.

Scaling considerations

Reaching profitability required cutting down on social ad spend, where it had been spending more than $1 million a month. “That was a very clear area, where if you do the exercise of — if that went away, we could get profitably pretty much overnight,” she said. 

From there, the brand saw “massives strides” in subscriptions. It focused on what it could do to drive retention, higher average order volumes nad more conversions among potential customers. And as that channel improved, it went back into paid marketing, Paiji Yoo siad.

Getting into retail required ensuring the right assortment of products and initially testing out the channel in a “smaller way,” she said. Early partners included 90 doors of The Container Store, plus Los Angeles-based chain Erewhon. Initially, the brand made ”so many mistakes in that first round of packaging,” she said. The original design for in-store packages had instructions that showed how to use the refillable on the front. The back had a cutout to reveal the glass bottle inside. But this led to store associates putting the bottle facing front. Blueland then redesigned its in-store packaging to put the cutout on the side.

There’s also the type of product to consider. While a more behavior-changing product — like a powdered dish soap that turns to frothy bubbles when wet — may not appeal to a first-time customer, refillable hand soaps are an easier entry point, Paiji Yoo said.

The brand also tinkered with the number of supplies in its wholesale products; its dishwater and laundry tablets are in 40 counts, rather than the 60 count that comes online. That’s largely because the DTC customer is more likely to buy in bulk than a retail customer, Paiji Yoo said. For example, the 30-pack of hand soap refills that go for more than $60 online wouldn’t necessarily show up on Whole Foods shelves. Instead, Blueland sells a three-count of its hand soap refills at $6.99, or $15.99 for the starter kit that incudes a refillable glass bottle.

“That consumer knows us, they feel comfortable with spending those price points on our site. As you can imagine, I don’t know that we’ll ever sell a 30-pack in a regular grocery store of hand soap tablets,” she said.

While Paiji Yoo said there isn’t an exact way to calculate how many retail shoppers eventually turn into Blueland subscribers, having another channel helps the brand grow. She said broadening its presence on physical shelves is an essential way to get into more households because of how many people are still buying cleaning products in person.

“If we truly want to do that, we have to be in retail and make it easy for people to make the make the switch to reusable and refillable products,” she said.