The online apparel retailer’s filing for Chapter 11 bankruptcy protection has drawn several potential suitors, including rapper West and music executive Damon Dash, Karmaloop ...
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Flowers for Good started about six years ago, he says, and at one time generated 30% or more of the retailer's revenue. Now it contributes no more than 10%. He says that percentage fell because the e-retailer entered into so many agreements with nonprofits—it currently works with 55—that it can't invest heavily in building relationships with all of them.
Some organizations promote Organic Bouquet with links and marketing messages, and Organic Bouquet in turn promotes their events or upcoming programs on social media or sometimes with an e-mail, though not daily, McLaughlin says. "That's just because we've accepted too many charitable organizations," he says.
This year, McLaughlin plans to pare the list so Organic Bouquet can reinvigorate the program by concentrating on fewer causes, he says. "If you're working really closely with one nonprofit it can be really financially rewarding for both partners," he says. For example, People for the Ethical Treatment of Animals, or PETA, and the Nature Conservancy both have consumer audiences numbering in the millions, he says, which means Organic Bouquet gains exposure to potentially that many of what he calls "like-minded" customers.
Occasionally web shoppers e-mail Organic Bouquet with complaints about some of the nonprofits the e-retailer supports. McLaughlin won't say which ones, but says he takes the feedback into consideration and looks into the complaints with the nonprofits if warranted.
"All partnerships reach out to new customers or reinforce our positions with current customers," McLaughlin says. In addition to reaching new demographics through nonprofits, the arrangements usually generate links directing traffic back to Organic Bouquet's web site, which raises its rankings in search engine results, he says.
During the Gulf of Mexico oil spill in 2010, for example, three of the nonprofits Organic Bouquet supports were involved in the cleanup: The Nature Conservancy, the National Wildlife Federation and the Ocean Conservancy. The retailer marketed a Gulf Relief Collection of products—two wreaths, a fruit gift box and some fresh flower arrangements—and donated $10 to the causes with each purchase.
It promoted the products and the causes through e-mails and social media, he says, and the nonprofit groups did the same. For example, the National Wildlife Federation posted on its Facebook page, which has more than 125,000 fans, a description of the offer and link to OrganicBouquet.com. The offer raised Organic Bouquet's revenue for a month nearly 15%, and the merchant donated more than $5,000 to the nonprofits. "If done the right way, it can generate a lot of money," McLaughlin says. OrganicBouquet.com had 2011 web sales of $2.2 million, Internet Retailer estimates.
Fredricksen says zeroing in on a few causes, rather than giving to every cause, shows consumers that a retailer is sincere about supporting those causes. Consumers get suspicious when they can't easily understand the connection between a cause and a product or retailer, he says. Retailers should also be careful to avoid arousing suspicion with their pricing, McLaughlin says. They shouldn't, for example, charge one price for a dozen roses on the main site and $2 more for the same roses on a section promoting the nonprofit work. Consumers are often unwilling to pay a premium just to support a cause, Fredricksen says.
Learning that lesson cost online tickets reseller Tickets for Charity, a for-profit business, $1.2 million. Tickets for Charity resells to consumers tickets donated in full or in part by sports teams, music labels or companies. The retailer sends all the proceeds to a charity of the donor's choice—providing the donating businesses with a tax write-off. Tickets for Charity makes money on the $17 to $19 service fee it charges per ticket, says CEO Jay Whitehead.
In 2009 Tickets for Charity paid $1.2 million to the Rolling Stones' record label for concert tickets, then tried to resell them above face value, thinking that goodwill-filled consumers would be willing to pay the premium since the money was going to a charity selected by the label. The effort was a total loss, he says: few sold, and the retailer lost essentially all it paid for the tickets. "So we know for a fact that in order to sell a ticket for charity, it has to be the same or lower price and the same or higher quality," he says.
Once Tickets for Charity began proving to sports teams, music labels and corporations that it could sell their excess tickets effectively—by staying competitive on price and quality of service—more organizations began signing up to use the retailer as a way to cut losses from unused tickets, Whitehead says. Doing so simply took time, gumption and $24 million in financing over the years, he says. It expects to turn its first profit this July. Now Tickets for Charity plans to begin selling other "ticketizable" products, such as spots in a summer camp run by professional athletes from one of the sports teams it already works with, he says.
Generating returns from supporting good causes is not for the faint of heart. But dogged e-retailers that wisely select charities, plan to fit donations into their web strategy and prove the value of their efforts can help spread the wealth, including to themselves.