As COVID-19 reshapes our economy, our newsletter will help you unpack the news from the day.
Some small businesses are flourishing during the COVID-19 pandemic
Nearly all businesses in the U.S. have been touched, and in some cases, decimated, by COVID-19. The airline industry says it will be bankrupt without a federal bailout; restaurants, salons and retailers — chains and individually-owned — are hemorrhaging, leaving countless hourly workers unemployed.
But surprisingly, some companies have seen soaring growth due to COVID-19. The publicly traded video conferencing platform Zoom, now part of the country’s collective lexicon, has seen its stock rise, as have delivery services as most Americans try to “shelter in place.” Large companies like pet supplier Chewy, meal kit company Blue Apron, as well as smaller businesses and startups have been blindsided by surging sales over the past several weeks as COVID-19 and increased containment restrictions turned worlds upside down.
“We didn’t see it coming,” said Ryan Lupberger, the co-founder of Cleancult, a venture-backed startup that manufactures natural cleaning products in zero waste packaging.
“People are just not finding cleaning products in stores,” said Lupberger in New York City, where half of the 15-person team is working remotely, the other half is in San Juan, Puerto Rico. Cleancult’s Amazon sales have increased eight times over in the past several weeks, according to Lupberger, tripled in retail stores and doubled on Cleancult’s website.
Cleancult’s manufacturing is located in the Midwest without a “shelter in place” mandate thus far. Production of lemongrass soaps and orange zest cleaners, among other products, has been ramped up to meet demand, shifts have been doubled, the work week has been expanded to seven day. Lupberger leaves worker safety measures to the warehouse manager. “All I know,” Lupberger said, “is that it’s been expensive.”
With an immediate recession predicted due to COVID-19, venture capital funding is drying up and startups like Cleancult are worried. “We see this huge demand,” Lupberger said, “but we don’t have the dollars to support it.”
Some of Cleancult’s VC funding has been delayed, and Lupberger and co-founder Zachary Bedrosian have started to look at alternatives like loans and basic lines of credit.
Tushy saw its bidet sales skyrocket when consumers began to have a collective melt down about toilet paper scarcity. Founded by Miki Agrawal, Tushy makes portable, self-installable bidets, allowing users to clean themselves with water rather than toilet paper. Bidets are popular in many countries, but have yet to catch on in the U.S.
In early March Tushy’s CEO Jason Ojalvo said he had projected a possible bump in bidet sales due to concerns about health and sanitation. But when videos of frantic shoppers pushing carts piled high with economy size packages of toilet paper went viral, sales exploded. “The toilet paper hoarding,” conceded Ojalvo, “caused the really significant boost.”
Over two weeks Tushy’s sales doubled, quickly tripled and are now holding at ten times according to Ojalvo. Tushy bidets are sold out on Amazon and back ordered on the Tushy website. With bidets currently being manufactured in Asia Ojalvo aims to fulfill back orders by late March or early April.
When Ashley Tyrner, the founder of Farmbox Direct, a subscription service that delivers boxes of fresh produce, woke up on March 14, she thought there was some type of bug in her computer system. “There’s no way we could have taken that many orders overnight,” recalled Tyrner recently, “but we did. We are doubling the company every 24 hours.”
Many of Farmbox’s new customers are located in areas where supermarket shelves sit empty. Others new customers set up deliveries for parents and grandparents who are not risking infection by leaving their homes to shop.
Scough, a mash up of “scarf” and “cough,” is a Brooklyn-based company that makes stylish wrap around scarves and bandanas in funky patterns with attached hidden masks. The immunosuppressant community has typically purchased Scough masks, according to founder Andrew Kessler, as well as airplane travelers, motorcycle and bike riders. In early March masks were in such high demand that Scough’s entire stock sold out.
“We went from like, ‘Oh, wow, that’s a bit of an uptick,’” Kessler recalled, “to ‘Uh-oh, everything’s kind of breaking,’ to, ‘Oh, no, we’re going to be out of out of stock in two months,’ to ‘We’re going to be out stock in two days.”
Kessler is scrambling to produce more masks, but Scough’s supply chain has been thoroughly disrupted, so he’s looking at alternatives. “Our inboxes are just flooded with people asking questions about masks and what to do and how many they can get,” said Kessler, who hesitantly said he might resume production in four to six weeks. “But factories are shutting down” said Kessler, “and who knows anything anymore.”
Fardad Zabetian, founder of the multilingual web conferencing platform Kudo said they’ve recently had more than 200 inquiries a day about Kudo’s services. “They’re looking for a solution for, let’s say, tomorrow,” said Zabetian with a laugh, “that’s kind of the state of where we are on the technology side.” He estimated his business has increased 400% since COVID-19 spread to Europe and then North America.
Kudo is similar to other video conferencing platforms like Zoom, but with live, simultaneous translation in multiple languages. Zabetian said international meetings that had been slated for March, April and beyond, are being conducted on his platform. It has about 2,000 professionally trained interpreters, many of whom are in lock down cities across Europe, willing to work from their home offices.
“What COVID-19 is doing for Kudo,” said Zabetian, “is speeding up that adoption curve of people trying a new technology. Because that’s the only way they can meet.”
Feelings on profiting during a pandemic
Some business owners have mixed feelings about the sudden surge in sales during a global pandemic.
“It’s really complex,” said Lupberger, of Cleancult’s rapid growth. While he’s happy Cleancult’s products are in demand, he’s aware it could be perceived as exploiting the situation.
Cleancult has just launched a new initiative, for every customer order placed on their website, they’ll donate a bar of their lemongrass soap to NYC Relief.
“There is some ambivalence around our cultural moment happening, coinciding with a really kind of scary time for so many Americans,” said Tushy’s Ojalvo. “But at the same time, what’s important to note is that we haven’t really changed our marketing positioning or stance.”
“We’re kind of just doing more of the same,” Ojalvo said. “Actually, we’re doing less of the same,” he corrected himself, referring to a humorous Tushy ad they recently pulled (made 18 months ago) featuring two guys competing for the last roll of toilet paper in a bodega. “[We’re] trying to be extra sensitive,” Ojalvo said.
With the increased volume, Farmbox’s Tyrner said she feels good about keeping some of her Kansas City supplier’s employees from getting laid off, since supplying hotels, schools and restaurants has evaporated. She’s also hired several new people to work in Farmbox’s customer service department.
Scough’s Kessler has become accustomed to spiking mask sales during catastrophes, such as wildfires. “We try and just remember the reason why we did it in the first place,” said Kessler of designing scarves with hidden facemasks, “so that sort of keeps us going.”
“It’s not a happy moment,” said Zabetian despite Kudo’s booming growth, “the consequences of coronavirus is much bigger than Kudo or Zoom or any of this.”
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