Supply Chain Shakeup   //   January 9, 2024

Citing unprecedented demand, Bobbie temporarily limits formula sales

Organic baby formula startup Bobbie will be pausing one-time online sales and limiting new subscribers starting in January, a decision that will help it preserve its existing customer base until it’s ready to expand production. 

On January 4, Bobbie sent a mass email to prior customers who had made one-time purchases, notifying them that temporary limitations on new subscriptions would start the following week. It will also pause one-time bulk purchases. The company will still sell its two-pack start bundles and maintain stock on Target shelves, while opening limited slots for new customers who want to subscribe.

“There is unprecedented demand for Bobbie and we’re working hard to unlock more supply,” the email read. “In the meantime we’ll be offering a limited number of Bobbie subscription spots on a weekly basis, and pausing all one-time purchases for a couple months.”

Kim Gebbia Chappell, chief marketing officer at Bobbie, told Modern Retail the decision was made after coming back from the holiday break and looking at subscriber data, inventory and production timelines. Bobbie saw 70% growth through 2023, Chappell said, including a flurry of new customers and subscriptions during the holiday season after advertising a buy one, get one free deal. This demand, paired with a four-month manufacturing timeline, led to company to decide to limit new business in service of its existing customers and its Target relationship.

“What can’t ever happen is we get to a place where we can’t fulfill our subscriptions,” Chappell said. “And if that means taking fewer subscription spot next month or for a weeks based on inventory, then that is what we are going to do.”

While some CPG and beauty brands have seen promise with subscriptions, Bobbie’s move shows that there can be growing pains. Created in 2019 and launching sales in 2021, Bobbie halted new subscriptions altogether in 2022 when the a nationwide formula shortage triggered an influx of business and doubled the amount of subscribers. At that point, it created a waitlist, while its revenue grew past $100 million.

But the pause in new businesses is poised to be temporary with a long-term plan to boost production. Bobbie raised a $70 million series C last year that brought its total fundraise to $142 million. This latest round facilitated the acquisition of Nature’s One, another U.S. based formula company that had been constructing a new manufacturing facility in Ohio. 

Chappell said that the facility is in the “final stages of getting up and running,” but it will provide end-to-end control of the manufacturing process including sourcing and canning. Once operational, it will give the company more control in how it can expand, with previously released estimates saying it will allow Bobbie to triple its customers to 15% of the non-WIC market. At present, Bobbie is manufactured at a facility in Ohio that has been making formula for over 35 years.

“It will give us supply chain resiliency, and more muscle in our manufacturing capabilities,” Chappell said. While she wouldn’t say how long the new subscription slowdown will last, it could be anywhere from a few weeks to a few months based on the communications sent to customers.

Theresa McEndree, CMO at subscription service Recurly that does not work with Bobbie, said the outreach to customers ahead of its decision is “a smart move,” especially around a product that is essential for someone’s child. Rather than jeopardizing long-term relationships, Bobbie is able to keep prior customers informed and coming back, McEndree said. 

“Subscriptions are about the relationship, and prioritizing those versus growth at any cost or just moving units,” she said.

The decision also shows the power of the subscription mode, McEndree said, with the ability to forecast need based on prior orders.

Manufacturing formula, Bobbie’s Chappell said, has a 16- to 18-week planning process that spans ingredient procurement, quality control and shipping. This longer lead time can lead to inventory fluctuations. But Chappell said Bobbie manage that by keeping a close eye on its figures and paying attention to when there are moments that need “inventory flexes.” 

“Formula is not like any other monthly subscription product that shows up to your door,” she said. “When your baby is on a specific formula and you rely on that delivery to show up on your doorstep every month, we can’t fail at that.”