Having kids is expensive. That's a lesson even a Hollywood power couple like Kristen Bell and Dax Shepard — stars of NBC sitcoms "The Good Place" and "Parenthood," respectively — can appreciate.
"[Kids] are parasites," Shepard jokingly tells CNBC Make It. "They're not bringing anything in," adds Bell.
In a sense, the couple's two daughters — ages 6 and 8 — are responsible for their latest business venture. In 2019, Bell and Shepard co-founded Hello Bello, a Los Angeles-based start-up that sells a range of all-natural baby products, from diapers and wipes to sunscreen. The reason, Bell and Shepard say: Celebrities like them shouldn't be the only people with access to "affordable [and] premium" childcare.
The company's executive team handles day-to-day business operations, but Bell and Shepard say they're consulted on every major decision, from what ingredients go into their products to the recent opening of Hello Bello's first production plant in Waco, Texas.
Initially, the brand launched in more than 4,700 Walmart locations across the U.S. Today, its products are also available at retailers like CVS, Kohl's and Albertson's. The company estimates it will bring in $200 million in gross sales by the end of 2021, roughly doubling its total from 2020, according to a spokesperson.
Most brands, Bell says, only meet some of the criteria that are important to parents: natural ingredients, eco-friendly and affordable.
"We were a little bit shocked that no one was attempting to tackle all of those things," she says.
How star power leads to low prices
For Bell and Shepard, starting Hello Bello felt like calling out their own privilege as celebrity parents, whose success meant they typically didn't need to worry about the cost of buying supplies for their kids.
"[We] didn't have to look at the receipt," Bell says of shopping for her kids. "And that wasn't lost on us."
But it was also an opportunity to create a for-profit business that manufactures affordable products in an otherwise unaffordable market. So, Bell and Shepard looked for executive partners with industry experience.
They found one in co-CEO Sean Kane, who previously co-founded The Honest Company with actress Jessica Alba. (The other co-CEO is television producer Jay McGraw, son of TV host Dr. Phil McGraw.)
"You've got to surround yourself with people that are 20 times smarter than you and have 20 times as much experience as you," Shepard says.
The company's prices are competitive. A 27-count of size 3 Hello Bello diapers sell for $7.97 on Walmart.com. Similar products from Huggies, Pampers and The Honest Company on the same website sell for $8.27, $9.47 and $22.61 respectively.
Bell and Shepard say the production plant in Waco plays a key role in maintaining that affordability, by keeping manufacturing in the U.S. In a press release announcing the plant in December, the company said such a strategy creates "logistical efficiencies," like reduced shipping costs.
Plus, as public figures, the couple can save on marketing expenses by touting the brand themselves. Together, Bell and Shepard have more than 18 million Instagram followers. The goal, both say, is to keep Hello Bello's prices as low as possible for as long as they can.
"That's not to say that we'll never raise the prices," Bell says. "But making it in America, not dealing with overseas supply chains, buying local raw materials...gives us the infrastructure to succeed with that commitment."
Why Bell and Shepard's strategy is working
Industry analysts say the strategy of focusing on affordability has worked so far. "The success of the Hello Bello brand is founded upon price competitiveness, sustainability and transparency," says Noam Dorros, director analyst at Gartner. "Their price remains affordable, which is paramount to its target market."
Hello Bello's products are also eco-friendly and plant-based, Dorros adds, which is attractive to the growing number of shoppers who want to know where their products are made and what ingredients are being used.
As the company grows, Bell and Shepard say they want to use its success to give back. Since its launch, Hello Bello says it has donated more than five million diapers total worldwide to families in need through it's "Giving" pledge — a relatively common practice in the industry, as brands like Huggies and Pampers also donate millions of diapers each year.
This year, Hello Bello also asked for nominations of inspirational mothers across the country, and according to its website, one winner was randomly chosen from each state that was represented in the nomination pool to receive a year supply of diapers.
The company's website also steers customers to nonprofits where they can support parents in need, and it recently started a community-sourced "Diaper Fund," which Bell calls the "GoFundMe of diapers."
"Anyone can go on and meet the needs of others, so you can support your local community, or people you don't know, and you can help them get the diapers that they need," she says.
Bell says it's all part of a mission-driven approach to the baby product industry.
"We wanted it to be this mission-driven company," she says. "Where no one would have to choose between their baby or their budget."
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