While accepting the deal (sans negotiation) with Wal-Mart would have definitely boosted EarthKind's revenue, it would have strained the firm on a few different levels. "We didn't have the infrastructure to support the customer — I didn't want my people focusing on one customer solely. … Such a big [account] ends up risking the report cards with others," Block said, who decided early on that no single retailer would make up more than 15 percent of EarthKind's business. (Lowe's made up 15 percent of the firm's sales last year.)
Settling on a lower price with Wal-Mart could have also impacted deal-making with everyone else. "All of a sudden my negotiation in that room [with another retailer] becomes much more difficult if they throw the Walmart [price] up," she said.
There was also the fear that Wal-Mart's lower price may have eroded EarthKind's profit margins and hindered Block's growth plan. That plan includes sourcing American-grown raw materials from family farms, manufacturing stateside, keeping a low carbon footprint, and investing in a workforce of which 20 percent is made up of developmentally-disadvantaged workers, who help with packaging. She also provides 100 percent paid health care, vacation packages and bonuses for all employees based on company growth and profitability.
While a deal with Wal-Mart won't happen until Block can facilitate a more involved price debate, she's slowly ramping up operations so EarthKind can handle other big retail brands — maybe Target and Costco — in the next year or so. In 2015, she moved manufacturing from North Dakota to North Carolina so she could ship product quickly and more cost-effectively to retailers. Last year, she added robotics to the plant floor. She has also hired three executives to fill out her leadership team.
One indirect way to finding more big customers — and another possible way into Wal-Mart and Target — is via Burt's Bees, the all-natural skincare line owned by The Clorox Company that Wal-Mart already sells. EarthKind is an inaugural member of Burt's Bees Launchpad, an annual grant program that helps start-ups operating in the all-natural health and well-being market. Through the contacts she's made in the program, Block recently toured the Burt's Bees factory, where she picked up ideas on how to reward and motivate employees.
Block is also mentoring a Burt's Bees sales planner, who previously ran the firm's business with Target. "We've not been able to get into Target stores — they own the moms and millennials market," Block said.
Meanwhile, Block has no regrets about playing hard-Moneyball with the world's biggest retailer: "Saying no to Wal-Mart allowed us to make sure we have good execution with our other customers," she said. "And it doesn't break their hearts when you say no to their competitors."
— Maggie Overfelt, special to CNBC.com