Where next for online charity retail?

We are all well aware that many charities are struggling financially—public fundraising, trading income, foundation income, investment income and income from the private sector have all been hit significantly as a result of the pandemic. So, what can we learn from this and what are the opportunities for charity retail to support and sustain charity income in the future?

Firstly, it’s important to look at what’s changed. A recent report by CACI indicates that the pandemic has accelerated shifts in consumer behaviour by five years, arguing that there has been a step change in ‘online spending, a growing sense of ‘collective wellness’ … greater focus on the community, increased loyalty to smaller, independent brands, a deeper self-awareness on how our choices impact the environment, sustainability and each other.’

Personal spending patterns have also shifted. Footfall in shops, including charity shops, has obviously decreased dramatically. However, not only are we buying more online, the ethics of the brands we buy from have risen up the agenda. Younger generations in particular demand affinity with the brands they buy from. More and more, we’re seeing ‘values’ come before ‘value for money’.

Another factor to consider is of course the environment. There has been an upward trend in platforms trading goods to prolong their use, through recycling, reuse and recommerce. A recent piece by McKinsey noted that in fashion, the future lies in ‘an industry in which resources and products stay in use for as long as possible before being recycled or regenerated into new products, again and again.’

And yet charity shops, who once dominated the second hand space, and whose retail products are in their essence ethical and sustainable, are not at the heart of this movement.

So what are the opportunities for charities in all of this? Below, we take a look at four opportunities in online retail, and at some customer priorities when buying from and selling for charities online.

Four opportunities in online charity retail

There are a number of emerging models in the online retail space which, with the right support, charities could harness and develop further. All of these demand a collective approach, with charities sharing in a single platform for online goods trading.

The meaningful marketplace

What is it? A marketplace for the buying and selling of second hand goods with a percentage of the profit going to charities. This type of marketplace offers a mechanism for consumers to align their buying and selling with the causes they care about. I recently ran an informal survey of 104 people, to sound out their opinions on online shopping. This exploratory survey is by no means scientific, but it does detail the priorities of some people I know. In this survey, 9 in 10 respondents said they would consider buying from charities online if they had the option, and 4 in 5 said they would consider selling goods online for a charity. Some similar examples we can learn from here are Ebay for Charity;  Oxfam Festival Shop; Asos Marketplace; Save the Children; Traid on Depop; Shopiago; Zipsale.

Pros: This is a decentralised model with logistical costs spread across innumerable sellers—whilst a centralized model would require much more of the logistics to be owned by an umbrella organisation. This model could also give people more control over the charities they support. Sites like these could help us learn more about the distribution of charity donations and help consumers to make informed decisions about who they support.

Cons: Getting consumers onto these marketplaces requires upfront investment and some people are put off by the hassle of selling goods online, even if some of the profits go to charity.

The local broker model

What is it? This model involves goods being sold by an umbrella organisation, with the profits being sent to local charities of a consumer’s choosing. This is very much like Hive, a book site that gives back to local book stores. Gone for Good also has a localised model. The focus here is on helping people to support their local charities, rather than being given the option to support those further afield.

Pros: A model like this could help put smaller local charities on the radar, particularly those that can’t afford expensive physical retail estate. It could help communities connect with and become aware of local causes and it offers a centralised model for presenting and marketing products, taking some of the logistical burden off charities themselves.

Cons: The reliance on a central mechanism for selling goods and processing payments would require a larger upfront investment.

The charity outlet model

What is it? This model would be a platform for selling unsold, excess items from retailers, and directing profits to charity. Organisations doing similar things in the private sector include  Optoro, Blinq and Refashion. It would enable retailers to align their buying and selling with the causes that they care about, whilst also having the opportunity to shift large amounts of unsold stock, boosting their sustainability credentials.

Pros: This model may open up access to much larger volumes of stock and resulting sales, compared to second hand trading and one-off items. Some the costs associated with second hand trading, such as the need for the cleaning of stock, would also be reduced. This model may also allow for new types of collaboration and skill sharing between the private and charity sectors. Plus, the pandemic means that there are currently higher volumes of unsold stock than normal.

Cons: Retailers are suffering with the impacts of the pandemic and many are seeking to profit from the sale of unsold stock through outlets and international markets.

The makers movement model

What is it? This model is a marketplace focused on hand made and up-cycled items, with makers selling items and giving a percentage of their profits to charities of their choosing. Think Etsy but for charity. Some organisations doing interesting things here include Thames Hospice,  YR Customisation and UTME Uniqlo. This model capitalizes on the recent uptick in home-based craftsmanship during the pandemic. It offers the dual benefit of encouraging creative pursuits, which have been shown to improve mental health, whist raising vital funds for charities.

Pros: There is the potential for this type of marketplace to sell high quality items and ‘one off’ editions, driving desirability and brand value.

Cons: This is possibly a smaller market than the others and shares similarities with the meaningful marketplace model.

Routes to success

Many of these opportunities would require a collective approach or an umbrella organization leading the development. They would however also require a lot of investment in technical development, market leading customer design and user experience. My recent survey highlighted some priorities for people when buying and selling online that charities should take into account when considering online retail.

• It needs to be ‘hassle free’. When asked what would put you off from selling items online and giving some of the proceeds to charity, 4 out of 5 said ‘the hassle’ and half said they’d be put off by having to organise delivery of the items.
• There needs to be flexibility in the proportion of the profits going to charity when people are giving up their time to sell their items themselves. Whilst two thirds said they would give 50% or more to charity, there were responses that varied from 10% to 100% of the profit.
• The experience needs to be second to none. When asked what would prevent you from buying from charities online, two thirds chose ‘difficulty navigating, filtering and finding what I’m after’ and half said ‘poor browsing experience and uninspiring layout’. Another recent survey by Accenture highlighted that four in five consumers were more likely to shop with brands that provided relevant offers and recommendations, while four in ten were likely to view items that were recommended to them based on information they had shared with the brand.
• Quality matters. When asked what would encourage them to buy more charity items online, two thirds chose ‘if the clothes were high quality’.
• Cleanliness matters. Two thirds of respondents also said they’d be encouraged to buy from charities online if they knew the clothes were cleaned properly.
• Having a choice of charities matters. Nearly half said they would be encouraged to buy from charities online if they could choose items from multiple charities. A further four in ten said they would be encouraged to buy online if they had the option to choose which charity they supported.

So where to go from here? We think there are numerous benefits to charities embracing new models of online retail. One of the main benefits to taking a collective approach would be to help charities to avoid spending a fortune on their individual commerce sites. Some of these innovations could also support charities to get more digitally savvy, providing wrap around support on how they can better promote themselves and their products online, and they could help some charities to have a new or greater presence in online retail. Finally, these models would help charities to reconnect and realign with their customers, and enable people to sell more and spend more for the benefit of the causes they care about.

We’ll be continuing to explore the opportunities of online retail, if you’re interested in partnering with us or if you have some reflections to share, please get in touch.

The pandemic has accelerated shifts in consumer behaviour. This blog by @NPCthinks shares four new and innovative models that could help charities develop their online retail offering: Click To Tweet