In classic engineer fashion, Ernesto Humpierres (MBA 2011) has always enjoyed building systems, whether it’s a Lego set with his twins or an e-commerce side hustle with their mother, Sarah Scott Mitchell. For their first venture together, Mitchell and Humpierres launched a line of microwavable heating pads filled with cherry pits. “It’s a very niche market,” Humpierres acknowledges, but once they saw that it was also successful, they decided to diversify.

In June 2021, the pair launched Neutrall, an e-commerce company with a line of upcycled drinking glasses. To acquire the raw materials, the founders identified a partner in the Houston area that had relationships with local bars and restaurants. Now, instead of tossing empties in the municipal recycling bin—a service for which the restaurateurs must pay a fee—they leave them in bins that are collected for free by Neutrall’s partner.

“In the process of building an American carbon-neutral supply chain, our partners essentially allowed us to build and scale a private, local recycling network,” notes Humpierres. And 80 to 90 percent of the bottles Neutrall receives can be turned into usable products. The company ships the glasses in carbon-neutral packaging, with an additional carbon offset to guarantee the product’s neutral environmental impact.

The market for glassware in the United States currently hovers around $4 billion. “It’s not huge,” Humpierres concedes. But glass is a rare material that, while energy-intensive to create, can be reused literally for centuries. Given that, he sees a unique opportunity to build a storied brand with the potential to become a lasting household name.

Humpierres was originally committed to bypassing Amazon and relying instead on Shopify as an online storefront and on ShipBob for fulfillment. Then came the cold shower of reality: Customer acquisition beyond Amazon can prove very expensive. He decided to offer Neutrall’s products there for near-term profitability while the company continued to build the brand through other channels. But now he wonders whether to break it off.

Sticking with Amazon means a simplified supply chain. The Fulfillment by Amazon program handles fast fulfillment and, with free shipping, the economics are quite favorable. Convenience cuts both ways, though: “If you buy from me on Amazon, I don’t have your email, and I can’t respond to feedback or create direct dialogue with you because Amazon owns the customer data,” Humpierres acknowledges. That might be fine if you’re selling widgets, but he envisions a brand with strong principles and potential product extensions that would justify the heavy investment necessary to build a brand outside of Amazon. The question is whether there’s light at the end of the tunnel. Should Humpierres risk leaving Amazon in order to retain more control of the brand and build something bigger? Or should he allow it to remain a nice, profitable Amazon play, albeit with limitations?

I’ve been in a similar situation, and I think there’s no wrong answer. I did both initially but pulled out of Amazon to build the brand on Shopify. Amazon is easier to execute (no third-party logistics, no customer service) with more limited upside (no chance of brand extension, no reselling to existing customers), but you have to pay for customer acquisition even inside Amazon. Shopify requires you to invest in many things beyond product development and inventory—like creating content, designing and building a brand identity, and customer acquisition.

If you are building a brand, my advice is to keep Amazon while you build out your Shopify ecosystem, and then make the move. It may not be relevant in your business but buying inventory can keep the supply chain happy, and you can learn what sells while organically building through Shopify and social channels with influencer gifting. Consider investing in a PR/marketing agency if you aren’t good at content curation and creation. Then, after you have a brand identity and foothold, you can also consider wholesale or consignment. The cost to acquire a customer today is so high that wholesale becomes attractive at some point, depending on your margins. Protect those, and you’ll have more options. Finally, selling on Shopify and Amazon is much more than twice the work. Choosing to do one or the other, or both, is also a lifestyle choice.
—Sarah Ford (MBA 2007), founder and CEO, Ranch Road Boots

Neutrall is a great idea, currently focused as a D2C venture using Amazon, social media, and other online marketing initiatives to build the business. After the pandemic, however, that’s an increasingly expensive and cluttered approach with diminishing returns. (There’s a joke among CMOs: Where’s the best place to bury a body? Answer: The second page of Amazon or Google results. Nobody goes there.) It’s also a high-maintenance approach for a small venture because it requires ongoing knowledge of the algorithms and demographics of multiple, changing social-media venues. (For instance, how many of us could spell TikTok correctly even two or three years ago?)

At this stage, Neutrall should choose the least expensive and time-consuming approach to minimize transaction costs. But to scale, the founders should start to develop B2B channel partnerships with, for example, eating establishments (there’s brand value for bars and restaurants to promote sustainable glassware to ESG-conscious patrons), gifting services (many now provide platforms where Neutrall can maintain its brand and get end-user data), and perhaps certain municipalities where Neutrall products could help lower growing recycling costs (start with Houston and Austin). Any sales to customers like that can also help Neutrall’s D2C efforts on its own website or on Amazon.
—Frank Cespedes, MBA Class of 1973 Senior Lecturer of Business Administration and author of Sales Management That Works: How to Sell in a World That Never Stops Changing

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