Purpose to profit: Considering next-generation retail platforms

brownBy Tatyana Brown, MEM/MBA ’16

This article was written in response to a seminar given by Terry Yosie, PhD, President & CEO of the World Environment Center, in an EDGE Seminar on Oct. 2, 2013 at Duke University’s Fuqua School of Business.

How can businesses leverage the nexus of evolving information technology, online retail, consumer personalization, social gaming, cause marketing, and purpose-driven brands? Our recent EDGE Seminar with Dr. Terry Yosie, President and CEO of the World Environment Center, prompted me to reconsider sustainability as business model innovation. With consumer goods, the next two decades may witness an evolution in corporate web retail platforms as a way to build brand loyalty.

We’re all shoppers: imagine you need a new shirt. You visit the website of your favorite brand or retailer and log into a personal account. The right-hand sidebar says the shirt you just picked will help an NGO that is collaborating with the brand to help farmers in India switch to sustainable cotton and support their families. Maybe you see green leaves or numbers estimating your (considerable) 2013 social purchasing impact. Perhaps it is holiday season. The site suggests other items based on past purchases, so you buy someone a gift. You’re glad to learn that the company is on track to meet its 2015 sustainable threads target. It feels good to support building local capacity through fair business.

This customer may be a niche segment, but it’s growing. In 2010 more than half of Millennials bought a product tied to a cause, as did two out of five Americans.[1] Independent third-party platforms like We-Care.com and GoodShop.com offer accounts that allow shoppers to trigger automatic merchant donations. They track both numerically and visually the amount raised for consumer-selected charities and exert social pressure by showing points toward consumers’ “goodness” rankings. Brands and retailers aren’t scoffing at the opportunity: from 2008 to 2013, We-Care.com and GoodShop.com merchant membership grew by over 317% and 250% respectively, with over 2,500 and more than 2,800 current members.[2]

Web retail portals present new opportunities for businesses. For one, third-party platforms are rudimentary. The detailed product information available to brands and retailers should enable private portals to offer a more polished, personal, and meaningful experience than third-party sites (and capture market share). At the same time, such platforms will allow merchants to strengthen connections with consumers who would not typically use sites like We-Care and GoodShop. “Nike is a health brand, not a footwear and apparel brand,” said Dr. Yosie, illustrating the increasing corporate use of emotional marketing. Relationship portals would build a whole new level of connection between consumers and CSR projects.

Creating responsible consumer portals also poses risks. For one, businesses need to be careful about navigating a new frontier of accountability. To maintain credibility, relationship portals must be based on authentic, transparent communication about the nature of corporate relationships with NGOs, nonprofits’ effectiveness in building local capacity, amounts donated, and whether this is an efficient use of consumers’ money. Success will depend on frequent site visits, so these platforms will not be practical in all sectors.

Nevertheless, innovative corporate-NGO partnerships may indicate bright spots for apparel, personal care, and household goods. For instance, could the U.K. retail giant Marks & Spencer track clothing donated by individual customers to Oxfam? Could it simultaneously share powerful personal stories about this partnership and corporate progress toward zero waste? Burt’s Bees is now transforming its CSR focus from local charity to sustainable agriculture while looking to source more organic ingredients. Could it more effectively communicate its successes on scaling pilot projects in partnership with multinational non-profits like the World Environment Center?

In the home improvement industry, business strategy is beginning to reflect stronger focus on long-term relationships. Lowe’s is positioning to transform its business model from one-time transactions to building project- and trust-based customer relationships that span comprehensive home improvement. A year after its launch in 2011, the online platform MyLowe’s generated 18M new key fob swipes and accounted for 1.5% of total sales.[3] Websites of Lowe’s key competitors, peer retailers, and leading brands demonstrate early steps to link messaging on corporate sustainability efforts with guidance for making better consumer choices. Parallel competitor efforts already include Home Depot’s “Eco Options” and “HelpfulEarthChoices” at ACE Hardware.

“Everybody is watching Unilever’s Sustainable Living Plan – and its marketing for consumers to reduce water and energy use,” said Dr. Yosie. My question is: can Lowe’s stem market share erosion by systematically connecting its ENERGY STAR and WaterSense products to corporate sustainability goals and tips for consumers to save money by reducing energy and water use?

If the recent explosion of consumer interest in having a personal relationship with food is any indicator, more shoppers could soon feel the same about their shirts. The 2010 Cone Cause Evolution Study indicates that 80% of Americans are likely to switch brands, given similar price and quality, to the one that supports a cause; 61% would try an unfamiliar brand; 46% would try a generic or private-label brand.[4] Over a lifetime, the cumulative purchasing decisions of cause consumers may even take a modicum market share from Amazon. Or perhaps Amazon will deploy its own version of a responsible consumer portal?

For a video interview with Terry Yosie, see EDGE Chats: Terry Yosie, World Environment Center.

[1] Stacy Palmer. “Mothers and Young People Are Most Likely to Buy Products Tied to a Cause.” The Chronicle of Philanthropy. September 16, 2010. http://philanthropy.com

[2] Diane MacEachern. “3 Ways to Give to Charity While Online Shopping.” The Daily Green. November 24, 2008. http://www.thedailygreen.com; We-Care.com. http://kidsinneed.we-care.com/about; GoodShop.com. http://www.goodsearch.com/about

[3] Lowe’s Companies, Inc. “Form 10-K.” 2013. http://www.lowes.com

[4] Cone Communications. “Cause Marketing Remains Strong: 2010 Cone Cause Evolution Study.” http://www.conecomm.com

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