How The Honest Company Braved Scandal and Emerged Stronger
Founded in 2011 by American actress Jessica Alba, The Honest Company was created in an effort to provide safe, eco-friendly alternatives to traditional baby products — which are often riddled with petrochemicals and synthetic fragrances.
Due to Alba’s own history of childhood illnesses and an upsetting experience with welt-inducing baby laundry detergent, it was incredibly important for the founder to ensure that all of The Honest Co.’s products were organic and toxin-free.
With the help of her fellow founders, Alba built a successful consumer goods company — recently valued at over US $2 billion after its successful 2021 IPO.
But the journey hasn’t been easy for Alba and The Honest Co. Having dealt with multiple lawsuits over the last decade — filed by consumers, investors, and non-profit organizations alike — it seems as though this brand is almost constantly surrounded by controversy.
Still, with increasing public interest in sustainability and eco-friendly products, The Honest Co. is serving a market that’s set to boom and see an increase in spending power over the next few years.
So, how did The Honest Co. reach its 2021 success, and what can you learn from its hits and misses? Let’s take a deep dive.
The Honest Co.’s (Rocky) Road to Success
Source: USA Today
After the birth of her first child in 2008, Jessica Alba’s interest in finding alternative baby products began to take shape. And after an incident with some welt-inducing baby detergent, her determination to create the products she needed was solidified.
After joining with business partners Sean Kane, Brian Lee, and Christopher Gavigan, Alba launched The Honest Company in 2012 — with 17 products available for purchase. During the following year, Alba lobbied the US Congress in an effort to make the testing of consumer goods more regulated for chemical ingredients — something that would have a positive effect on many different industries.
In 2013, The Honest Co. boasted sales of US $50 million, and by 2014 they’d raised US $70 million from venture capitalists to fund their first — albeit unsuccessful — attempt at an IPO. Within the same year, the brand reported US $170 million in sales, which is a big jump from the previous year.
The next few years saw more funding, a move from Santa Monica to Los Angeles, and the acquisition of Alt12 Apps — things were looking up for The Honest Co. With retail partners like Whole Foods, Costco, and Target, The Honest Co. was able to reach its target audiences quite easily. By the end of 2014, the brand sold 90 products — from diapers to baby wipes to formula.
And in 2015, they launched Honest Beauty, a separate entity that sold organic skincare and makeup products.
However, one of the brand’s first roadblocks showed up the same year when multiple customers reported skin burns when using The Honest Co.’s SPF 30 sunblock. After the product was first released, customers complained that the consistency was greasy and thick — unpleasant to use and with an odd scent.
In an effort to address these issues, The Honest Co. reformulated their SPF 30 sunblock and rereleased it. However, to make the sunblock more aesthetically pleasing, they had to decrease the zinc oxide concentration — aka the stuff that actually protects your skin from the sun. And though this new formula was approved by the FDA, some customers reported bad skin burns when using it.
The Honest Co. handled the situation quite well, stating in an article for People:
“The Honest Company is committed to providing safe and effective products, and we take all consumer feedback very seriously. “Our Sunscreen Lotion was tested, by an independent 3rd party, against the protocols prescribed by the U.S. Food & Drug Administration’s (FDA) monograph for over-the-counter sunscreen products. The results showed that our product is effective and safe for use as an 80 minute water-resistant (FDA’s highest rating), SPF 30 sunscreen lotion in accordance with FDA regulations when used as directed. “The number of complaints received on our own website about our Sunscreen Lotion constitute less than one half of one percent of all units actually sold at honest.com.”
In many ways, this seemed to be a case of a few, loud voices making their displeasure known and less a case of The Honest Co. selling a dangerously ineffective product. Thankfully, this scandal didn’t seem to stick around too long — but that doesn’t mean this brand caught a break.
In 2016, Honest dealt with an issue surrounding the use of SLS in their detergent, and later that year, they were sued by the Organic Consumers Association for advertising their baby formula as organic — with the OCA alleging that it contained “11 synthetic substances prohibited under federal law in organic products.”
The Honest Co. fired back, pointing to its FDA approval and certified USDA Organic status, and, in December, the Los Angeles Superior Court dismissed the complaint permanently. Once again, this up-and-coming brand had to deal with a scandal that didn’t amount to much in reality. However, it did its part to ensure Honest’s journey to success wasn’t an easy one.
After settling their open lawsuits, The Honest Co. saw its valuation drop below US $1 billion in 2017. And between the 2015 Series D and 2017 Series E funding rounds, the brand’s shares went from $45.75 to $19.60.
Though Honest didn’t admit to any wrongdoing on their part, it seems that their brand image took some damage from the negative publicity.
Cut to 2021 and the situation is still pretty complicated. On a positive note, The Honest Co. officially went public on May 5th, with its shares being traded o the Nasdaq stock exchange. After raising more than US $412 million via its IPO, the brand was up 40% with shares priced at US $15.
This is great news for Alba, as in many ways, this has shown Honest’s ability to rally and persevere through hard times.
However, as of September, a new lawsuit has been filed against the company by shareholders — this time for failing “to disclose the fact that sales were only up because customers were stockpiling the products due to the Covid-19 pandemic sweeping the nation.”
Claiming fraud, we’ve yet to see how this particular scandal will unfold. However, despite the many upsets along the way, The Honest Co. has still managed to become an incredibly successful brand in the industry of organic, sustainable baby products.
So, let’s discuss what we can all learn from their journey.
What Can You Learn From The Honest Company?
Source: The Honest Company
It does feel as though The Honest Co. has dealt with more than their fair share of roadblocks over the past decade. And while some of the customer complaints and lawsuits were based on legitimate issues, others were dismissed outright.
So what can you learn from Honest’s mistakes and resilience? Let’s see.
1. Do Your (Own) Research
In 2016, The Honest Co. was handed yet another scandal — this time about their laundry detergent.
The Wall Street Journal reported that Honest’s liquid laundry detergent contained “a significant amount” of SLS, or sodium lauryl sulfate. But why was this considered breaking news? Well, according to their Honestly Free Guarantee, there are certain synthetic chemicals that the brand promised never to use in their products — SLS being one of them.
And while the detergent didn’t contain SLS in its pure form, it did contain sodium coco sulfate — a gentler alternative for sure, but still composed primarily of SLS.
So how did this happen? Well, The Honest Co. sourced their detergent from Earth Friendly Products (EFP), which didn’t test for SLS. And EFP purchased untested chemicals from Trichromatic West who also… didn’t test for SLS.
It seems as though each company assumed the other would be responsible for keeping SLS out of the product. However, that clearly wasn’t the case — and it was The Honest Co. who took the brunt of the blame.
At the end of the day, a brand is responsible for the ingredients used in its products — the buck stops with them. And while it may not have been The Honest Co.’s mistake that landed them in hot water, it was, at the end of the day, their responsibility to their customers to ensure their products met their self-proclaimed standards.
The Takeaway? Many brands outsource the ingredients needed to make their products to third-party suppliers. And there’s nothing unusual or wrong with that setup. However, if your brand wants to guarantee its quality standards are met, it’s up to you to do your own research.
While it would save money and time to blindly trust the companies supplying your own, the safest route will always be to take responsibility and do your own research.
2. Use Data To Combat Naysayers
Most successful companies will deal with criticism and negative feedback at one point or another. Unfortunately, some seem to attract more than others.
In the case of Alba and The Honest Co., there have been naysayers in spades — and the founder has had to find ways to deal with them while growing her brand. In a 2021 interview with People, Alba explained her approach to dealing with her critics, saying:
“I love facts and data, so whenever there’s a naysayer with a laundry list of why everything shouldn’t happen, I love asking questions. ‘Oh really? Why couldn’t this work?’ And then you collect all the data that you need to come in and hit them over the head with it.”
Clearly, this approach has worked a few times, as Honest has bounced back from many a potential downfall. And this approach is not unique to Alba’s brand or industry — it’s always a good idea to have data on hand that supports your campaigns and initiatives.
The Takeaway? You are going to deal with questions, criticism, and negative feedback in your job at one point or another — be it from a colleague, supervisor, or customer. How you respond will have a huge impact on your future success.
Instead of ignoring or outright refuting such feedback, take it in, do your research, and come back with facts and data to support your position. This will always be a better-received rebuttal, as it’s harder to dismiss hard data.
And for all the brand managers looking for a tool that provides the data and customer insights they need to support their own activities, we encourage you to consider advanced brand tracking software. With reliable insights and customizable target audiences, brand tracking software gives you the data you need to combat your own naysayers.
3. Leverage Customer Feedback To Improve Brand Experience
While this may seem like advice you’ve heard before, it never hurts to see how a successful brand has used customer feedback to make it to the top.
There are plenty of instances where The Honest Co. has used customer feedback to make important changes and improve their brand experience. A great example from 2016 is as follows: Honest offered a diaper subscription service, where customers would receive a certain amount of diapers at pre-determined intervals.
However, to cancel this subscription, customers were required to call the company and potentially wait on hold. While this isn’t a huge faux pas, it did prove irritating and problematic for many customers.
In response to this issue, The Honest Co. quickly rolled out a new online cancelation feature, which was well-received by consumers.
While this wasn’t a make-or-break issue, it’s impressive that the brand reacted so swiftly to customer feedback and made the changes necessary to meet consumer expectations.
The Takeaway? Some customer feedback is very helpful and other feedback is… less helpful. Not every piece of feedback you receive is worth your time and effort. But every once in a while, a customer will point out something about your products or services that you yourself had not yet noticed.
By listening to customer feedback and using it to make changes to your brand experience, you can show consumers that you truly care about their thoughts and opinions. This should, in turn, increase brand loyalty and trust.
In just over 10 years, The Honest Company went from a tiny start-up to a publicly-traded company valued at nearly US $2 billion. That’s a pretty impressive journey!
And while the road hasn’t been easy, The Honest Co. has established its place in the industry of organic, sustainable baby care & beauty products. For those that want to follow in this brand’s footsteps, feel free to try out our tips listed above.
And for those that now understand how important data is to support your growth and initiative, we recommend trying out advanced brand tracking software. You won’t regret it!
Originally published at https://latana.com.