The Invisible $540 Billion Market

So here we are, less than a week away from Christmas, and nearly every poor soul who’s had to navigate the maze of drooling zombies, drunken Santas and overzealous soccer moms with a tendency to show their teeth if you even consider reaching for the last “Tickle-Me Elmo” on the shelf is now showing signs of fatigue.

Fortunately for this holiday shopper, the internet provides an efficient and extremely convenient alternative to the dreaded mall.

Of course, over the past few years, I’ve tried to purchase only “green” gifts for family and friends. And most of these can only be found on the internet, anyway.

(Hey, if you’re going to talk the talk, you’d better walk the walk. Right?)

I have to admit, though, this year’s search for the latest in solar-powered security lights, rain barrels and small kitchen composting units wasn’t a complete joyride.

You see, despite the overwhelming evidence that the LOHAS community is growing by leaps and bounds every year, many of the companies that supply this premium-price-paying psychographic are still coming up short.

It’s almost as if a good majority of these companies are still being run by those with good intentions—but not an ounce of business sense.

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If you take a look at some of these online stores that peddle “green” products and services, you can’t help but wonder how they stay in business.

I’m telling you, I’ve seen websites that looked like they were designed by 10-year-olds using 1990’s software. I’ve seen online stores with more than 50% of their inventory labeled as “out-of-stock.” I even found one website charging $20 to ship a pair of organic cotton underwear. And when contacted about this, they said it was a mistake and someone entered the information incorrectly. But weeks later, it still wasn’t fixed.

This isn’t rocket science, folks. Yet few of these retailers can actually get their act together long enough to stay in business beyond one fiscal year. And since we’re talking about supplying a young, vibrant market worth about $230 billion in the US and roughly $540 billion worldwide, that’s just pathetic.

Of course, there are a few companies that do get it. And as for them—well, I’m sure they couldn’t be happier to profit in an environment so free of any real competition.

Look at Whole Foods (WFMI:NASDAQ), for example.

Here’s a company that took the early lead in organic retail.

By consolidating all those little mom and pop stores that could never compete with conventional food retailers (or offer much in the way of reasonable costs or selection), Whole Foods Markets quickly became one of the most profitable supermarket chains in the country.

Wild Oats (OATS:NASDAQ), Whole Foods’ number-one competitor, also took advantage of this cluttered market early on. And now Planet Organic (POH.V) is doing the same thing in Canada.

By consolidating all those smaller, less-impressive (at least from an investment point of view) organic retailers, the company is quickly becoming the next organic foods powerhouse to compete with conventional food retailers—and actually make a pretty impressive profit along the way.

Another publicly-traded LOHAS firm that continues to prove itself as a leader in this market is Gaiam (GAIA:NASDAQ).

Here’s a company that’s been supplying the LOHAS market with all its “green” needs for years. And those who invested early in this one have made a fortune.

Just take a look at the company’s stock performance over the past two years:

Not bad for a company that makes a big chunk of its money from Yoga videos and organic cotton baby clothing!

I realize that there are a lot of people that don’t even know this stuff exists. But we do – and we’re cleaning up every step of the way.

Until next time . . .

Jeff Siegel

Managing Editor, Green Chip Stocks