Michael Alexander’s entire career has revolved around recycling. He spent 18 years researching and developing public policy for the Northeast Recycling Council, the National Recycling Coalition and others before founding his company, Recycle Away in 2009.
Recycle Away serves the emerging demand for recycling containers in corporations, schools, retail stores and other establishments. The Vermont company designs and sells recycling and trash bins produced by manufacturing partners. They only sell online and they don’t inventory any products. Manufacturers direct ship to Recycle Away’s customers.
It’s been an amazingly successful business model. Annual growth averaged 20% from inception through 2019, and the company has been consistently profitable. Recycle Away has positioned itself as the premier distributor of high-end commercial recycling bins in the US. Their customer list includes many of the nation's most well known brands, such as Google, Facebook, Amazon, and Snap, as well as top universities and cities both large and small.
Market vanishes overnight.
The company was on track for 50% growth in 2020 when the pandemic hit. When large portions of the U.S. economy shut down in March, the impact was immediate. Customer shipments worth hundreds of thousands of dollars had to be redirected because there was nobody on-site to receive them. One large customer who owed Recycle Away $300,000 sent a form letter announcing that they were freezing all accounts payable. Existing orders were canceled and new orders slowed to a trickle.
Failing fast is better than standing still.
After a few days of panic, Michael and his team got to work trying to figure out what customers would be needing in the new pandemic business environment. First, they tried featuring step-on trash cans, thinking that the sudden attention to clean hands would spur interest in the segment. It didn’t work.
Next, they promoted cleaning and disinfecting products. There was some early traction, but manufacturers were selling out and supply was drying up. A week into the shutdown the situation was grim.
Then they tried promoting sanitary wipe dispensers that they had been selling in small quantities for years. They featured them on their homepage and were amazed to discover that nobody else was advertising wipe dispensers in Google Shopping. They jumped in, quickly ramping up their ad spend from $50,000 to $150,000 a month. Within days, they received a $300,000 order for dispensers from a Fortune 100 company. They had found a new niche.
In April, just a few weeks after the pandemic threatened the company’s very existence, Recycle Away had the best month in their history — and less than 10% of revenue was from their core recycling products. If the story ended here, it would be an enormously successful pandemic pivot - but it doesn’t.
Putting customers first.
The demand for wipe dispensers quickly outstripped supply and lead times for delivery grew to 12 weeks. Continuing to sell products that couldn’t be delivered in a timely way was not an option for a company that prioritizes customer service above all else. The search for new ways to serve their customers continued.
The obvious choice was to sell wipes to fill the thousands of dispensers they had sold, but wipes were in short supply and they would have to make a large inventory investment for the first time in their history.
Finding the courage to make big bets.
They decided to take the plunge, completely departing from a history of zero-inventory. Within 30 days they had contracted for the manufacture of $1 million of bulk disinfecting wipes, found warehouse space and packaging services, and created two private label brands. They were careful to ensure that their new wipes products were the highest quality and made in the USA. Competition began to increase for wipes as other companies sourced them from overseas, but the company was able to profitably sell through their inventory with creative online marketing and great customer service.
Finding A Way.
Through the tumultuous year, Recycle Away focused intently on identifying and sourcing the mix of products that customers were demanding, even when those products no longer aligned with their original mission and the company’s name. Indeed, if they had continued to focus on their core recycling products, 2020 revenue would have been down by 70%. Instead, the company achieved their original goal of 50% growth and doubled their profit in the process. They added roughly 500 new products and 4,000 new customer relationships, selling products that they never considered prior to the pandemic. 2020 was a huge, if stressful, success and 2021 expected to be even better, but, as Michael told us, “You can’t pat yourself on the back, because change is coming”. That has never been more true than it was in 2020.
We’ll be sharing more stories of dramatic business transformations in the weeks ahead. If you or someone you know has a pandemic pivot story to tell, please contact us and tell us all about it.
About Venture 7 Advisors:
Venture 7 Advisors is a team of merger and acquisition advisors who assist the owners of small and mid-sized companies to plan and complete the sale of their business. We find the best buyer to meet each business owner’s financial and legacy goals. We represent clients in consumer products, distribution, manufacturing, B2B services, construction, telecommunications, and eCommerce from offices in Burlington, Vermont, the Hudson Valley, New York, and Western Massachusetts.
We're here to talk about your situation, provide information, discuss your options, and put things in perspective. Contact us at any time:
Bryan Ducharme
Managing Partner
Mobile: 802 578 6462
Scott Hardy
Partner, Master Entrepreneur