In this third instalment of my True Earth Paper trilogy, I’ll be taking a look at bamboo trays, the newest product TEP has to offer. The trays are alternatives to paper, cardboard, and Polystyrene Foam (Styrofoam) packaging, providing an environmentally friendly solution to eco-conscious shoppers. For me this is most prominent in the summer when I buy strawberries and raspberries, which come in the cardboard cousins of the bamboo trays.

TEP differentiates their product by stressing the negative impact Styrofoam and other alternatives have on humans and the environment. Like the bathroom tissues, most of their sales are through actively engaged users who are looking for alternatives to current products. 

So if TEP does the same thing here as with bathroom tissues, they’ll be successful, right?

Well, it’s a different situation. First, the market for toilet paper works much differently, with 80% of product sold while on sale. Second (and more importantly), toilet paper is sold directly to individual buyers like you or me, while these bamboo trays are sold to businesses. As a result, the higher costs (10 cents per unit) add up and may pressure buyers away from the product, particularly when it is a product, such as strawberries or raspberries, which already sell on low margins.

In this scenario, TEP has to be much more proactive. It is important for the company to reach out to their target market, which happens to be suppliers, manufacturers, and wholesaling intermediaries. Overcoming the barriers to adoption is key, particularly the additional costs and limited brand recognition.

I believe focusing on suppliers can be of value for TEP, as they probably have limited resources to do research on alternatives and are purely focused on convenience. The custom design capabilities of TEP differentiate the firm, and if they can express this sustainable advantage, then there is a chance to quickly penetrate at the early stages of the supply chain.

After introducing True Earth Paper (TEP) in my latest post, a great questions was asked by one of my peers: Does TEP patent their processes or product, and are their costs higher, thus creating a barrier for competing companies to follow suit and use bamboo?

I emailed TEP, and heard back from CEO Brad Kornelson, who graciously took the time to answer my questions. Here are some highlights from the correspondence:

• TEC has no patents and welcomes competition
• There are other brands of bamboo bathroom tissue in North America
• The product is targeted to consumers looking for alternatives to regular paper
• 80% of toilet paper is bought on sale
• As Silk n’ Soft grows, established firms may begin to enter the market, which should help to solidify Silk n’ Softs position and brand awareness

The main point I drew from the email was how TEP is targeting consumers. Right now, the company is focused on those who are actively searching for sustainable alternative, rather than focus on changing behaviours of regular consumers. The only way they attract new consumers is when their product goes on sale at the stores.

Wow.

Here is a company that understands how challenging changing behaviours is, particularly when there is a higher cost associated with the product. They focus on making themselves available to consumers who shop green and care about where their products come from.

So, how does TEP grow its target audience? Well, they have a solid position as a leader in the Canadian market with regards to sustainable bathroom tissues, and are working to raise awareness of their brand. Most importantly, the company is using sales promotions as a way to penetrate the market and grow product share. This strategy makes sense because of the cost-driven marketplace that the product competes in, as well as makes it easier to find new customers instead of direct marketing to them individually.

Often innovation is centralized around industries in their early development and growth stages. These industries tend to move quickly, with high product turnover and new advancements produced annually, if not sooner. But what about mature markets that have steady demand, yet almost no innovation?

The toilet paper industry sees annual revenues of over $5 billion, yet have limited innovations of both product and process (Note that there enhancements in quality, documented here). Although the demand for product is guaranteed, there are high barriers-to-entry, which result from cost competition among the current firms. Enter True Earth Paper.

Instead of using traditional paper, or even recycled paper, True Earth Paper uses bamboo as the main ingredient of its product, which is known as Silk’n Soft. The company sources the bamboo from China, citing deforestation as a major driver of their sustainable brand. The product has been a success, and has allowed the company to diversify into towels, and now even trays made from bamboo as well.

So how did this Canadian company penetrate the market? The founders participated in the show Dragon’s Den, and ultimately received offers from all 5 ‘dragons’. Getting the national publicity and recognition was huge for their image, and the company has begun receiving orders from across the globe. Although their initial success was derived from the show, True Earth Paper has continued to stress the positive environmental impact they have. I believe that this continual reinforcement, stressed through a well-developed website and online interviews, is what allows the company to compete with larger competitors such as P&G. What’s more, the company has been able to show their impact on the environment throughout the whole lifecycle of the product, leading to more trust from consumers through higher transparency of their practices.

To watch True Earth Paper on Dragon’s Den, check out this video:

https://youtu.be/B7JeMmWhxxI?t=1m