New Honest CEO plans to apply Amazon experience to ecommerce

The Honest Company’s new CEO is eyeing upgrades to the brand’s ecommerce strategy, and considering category expansion.

Carla Vernón joined Honest in December, bringing experience as VP of consumables categories at Amazon and leader of recognizable brands such as Cheerios, Annie’s and Nature Valley for General Mills.

Vernón will now marry the commerce acumen she built with those companies to a premium brand that is driven by purpose. Founded by Jessica Alba in 2012, the digitally-native Honest makes products in personal care, beauty, baby and household products. The company has taken off in the baby category, as 60% of revenue came from diapers and wipes in the fourth quarter.

“Honest is a brand built on a number of values... clean formulations, high-quality ingredients and input, products where you can believe the quality is worth the value that you are paying for them,” Vernón said on the company’s earnings call to recap the fourth quarter and full-year of 2022.

Vernón said the brand has “unique DNA,” in that it was built by “thoroughly modern” entrepreneurs that typically speak to a younger set, but cuts across demographic lines. That can set up expansion into new categories.

“Honest is a brand that needs to speak to all consumers, all demographics, all cultural groups, all life stages,” Vernón said. “I am extremely confident that the shoulders of Honest are broad, that the shoulders of Honest are strong to bear the weight of many categories and that there are categories waiting for Honest values to come in and energize the category and change what consumers think they can expect from the category.”

This will require a balance: Honest wants to be thoughtful about where the brand can “lead, innovate and win,” Vernón said.

“We exist to push our categories farther with our purpose-driven ethos,” Vernón said.

At the same time, it wants to find a fit with its margin strategy, and ensure it can maintain a premium positioning that has taken a hit as a result of price increases among brands across the landscape amid inflation. Honest may de-prioritize or exit some categories along the way.

In particular, Vernon believes investing in hero products can help propel the brand.

“That’s something I learned on brands like Nature Valley, a business that had many, many SKU offerings, but some of them are very core, driving the fundamental growth and business model of the brand and then new places to play where they will really fit our business model as we go forward,” Vernón said.

The company’s fourth quarter results underscore why there may be a need to explore expansion. Revenue increased 2% over the prior year, but consumption was up 15%. The company recorded a net loss of $12.6 million.

The results showed a disparity between channels: Digital revenue declined 14%, while retail revenue increased 18%. Revenue was 57% retail, 43% digital.

The company said online orders were lagging consumption. Honest saw 8% consumption growth on Amazon, but also saw the ecommerce giant take a more cautious approach to inventory. With the cost of digital advertising going up amid rising CACs and privacy-oriented changes, it also shifted marketing spend to realize key opportunities in retail.

Vernón said the brand is also aiming to overhaul its ecommerce experience. Vernón is set to draw on her work with Amazon overseeing many of the same categories where Honest has a presence. These include babycare, household products, food, beverages, health and wellness and beauty.

At Amazon, Vernón was credited with elevating the shopping experience for beauty. She introduced more emerging and prestige brands, launched virtual lipstick try-on and created the first-ever beauty-focused holiday shopping event, called Amazon’s Holiday Beauty Haul.

Now, Vernón plans to work closely with the honest.com team to make sure the brand is meeting the expectations of the digital shopper.

“That has everything to do with things from being efficient in the experience of the storefront, really making sure you maximize the storefront so that the consumer transactions are clear, efficient and fast and so that we can really customize what we show to customers on the storefront so that when they are shopping, it’s an experience that’s highly relevant for them,” Vernón said.

While retail has gained more focus as partnerships with Target and Walmart have driven not only growth but incremental customers, Honest Company's overall strategy remains grounded in both channels. That means it is taking care to provide a standout presence on the ecommerce channels of retailers, as well as its direct-to-consumer site.

“As we continue to grow with our retail partners, we want to make sure that Honest is effectively being brought to life in the digital mediums that they are continuing to grow and invest in,” Vernón said.