Coronavirus outbreak is giving this Philly-area business a big boost

Nationwide, the manufacturing sector is taking a drubbing. Airlines are canceling flights. Schools are closing, and major events are getting canceled.

The coronavirus has spread a gloomy chill throughout the worldwide economy. Yet there is a neon-colored bright spot shining forth in suburban Philadelphia: Scrub Daddy.

The manufacturer of the sunshine-shaped smilin’ sponge, is cleaning up.

Orders are soaring for the Folcroft, Delaware County-based maker of household cleaning products, even as it endures some setbacks.

“It’s a disaster, for sure, but we’re actually the beneficiary of it,” said Aaron Krause, the company CEO, inventor, and self-styled Daddy of the Scrub Daddy.

“So many people are going to the supermarket cleaning aisles and clearing out the shelves. It’s given us a huge boost in sales.”

Walmart has increased its orders of Scrub Daddy products by 20%, he said.

“That’s not something we expected,” said the entrepreneur, a multiseason winner on Shark Tank, the hit TV series on ABC. “Hopefully this coronavirus thing dies down and we’ll see a lull in the summer.”

Scrub Daddy, Krause said, is now the third-largest sponge manufacturer in the nation. “After 3M and 3M,” he said. “They make Scotch Bright and O-Cello. Then, in third place, it’s Scrub Daddy.”

Since Scrub Daddy’s founding in 2012, Krause and his investor-partner Lori Greiner have sold more than $270 million of the day-glo hued sponges, a urethane foam that changes textures depending on water temperature. The privately held company’s biggest vendors include QVC, Bed Bath & Beyond, Walmart, and “all major chains and every major retailer,” said Krause.

The company occupies 80,000 square feet in two buildings at its corporate headquarters in Folcroft. It manufactures its proprietary “high-tech polymer” foam at industrial plants in northern New Jersey near the Meadowlands and in Cologne, Germany. With the exception of Africa and Antarctica, it has distributors on every continent. Scrub Daddy also manufactures some plastic products in Taiwan.

“One of the things we’ve been focusing on is diversifying our supply chain,” Krause said. “We already were attuned to labor problems in China so we moved to a facility in Vietnam. Also, the trade war created an impact, but we didn’t suffer from it.”

Krause has had a few setbacks triggered by the fast-spreading coronavirus.

Scrub Daddy had contracted with a Chinese factory in Wuhan — the epicenter of the global outbreak — to manufacture its new soap dispenser called, wait for it, the Soap Daddy.

“Sadly, the Soap Daddy product is completely on hold. The factory was literally shuttered and the Chinese government told people not to go to work,” Krause said. “I hear a skeleton crew is coming back in the next couple of weeks and we hope to start production then.”

The Soap Daddy was supposed to have seen its debut at the annual international housewares show set for March 14 in Chicago. The four-day convention, officially known as the Inspired Home Show, was canceled this month.

“I couldn’t stop them from cancelling the biggest marketing event of the year,” he said. “I had 15 people who were going to be flying out to Chicago and a giant trade booth there. The whole thing is a disaster.”

He estimates that he’s taking a $50,000 hit, maybe more, on the cost of his trade booth and nonrefundable fees.

Still, Krause is taking the blow in stride. He’s trying to stock 10% to 15% more inventory “to buy us a few months or a quarter at the most” if the North Jersey plant is idled due to an outbreak.

He has another new product — sourced from Vietnam and already on some American store shelves — that he says will “probably be as big as the Scrub Daddy.”

He calls it the Eraser Daddy 10x with Scrubbing Gems, which, Krause said, lasts longer than a competitor’s product with a similar name.

“The first shipments were already on the water when the coronavirus came on. It’s already in Bed Bath & Beyond,” Krause said. “If Vietnam is hit by the virus and they shut down, we may end up in negative inventory status.”

And if consumers become paranoid and avoid venturing out of their homes, Krause plans to go to directly to them.

He’s preparing a “bulk pack” for QVC, the television shopping channel.

“We’ll cater to the increasing number of people who’ll be shopping from home,” Krause said. “We’ll make sure the entire line is available on Amazon and QVC and deliver it right to their houses.”