Since its inception in 1999, shopgoodwill.com, the first Internet auction site built and operated by a nonprofit, has blossomed from a $63,000-a-year operation to over $9.1 million in total sales in 2005. While the success of shopgoodwill.com follows a general trend that auction sites and online shopping have grown by leaps and bounds the last five years, the charitable retail landscape continues to be dominated by purchases conducted at physical store locations.
During the past 60 days, 41 percent of people surveyed have made a purchase from a charitable organization, according to an exclusive national donor study conducted by Opinion Research for The NonProfit Times. From a sample of 1,000 respondents, 30 percent bought an item benefiting charity from a consumer retail location, while 11 percent shopped at a charity’s retail location. Only 7 percent of respondents utilized a consumer retailer’s Web site and just 2 percent made use of a nonprofit’s site. A special event was the location of choice for 13 percent of all purchases. Some consumers reported multiple touchpoints.
The poll numbers show that the difference in Web site shopping can be attributed, in part, to a digital divide that is directly proportionate to wealth. Some 12 percent of those who bought on the Web earned $75,000 or more, a number that fell slightly to 10 percent when examining incomes ranging from $50,000 to $69,999. A paltry 1 percent of those who shopped on the Web reported income of $25,000 or less and the $25,000 to $34,999 range mustered only a 6 percent response of those noting a Web purchase.
The numbers tumbled even further when it came to purchases at a charity’s Web site. The $75,000-plus earners responded with 4 percent; $50,000-$69,999 fell to 3 percent; $25,000-$34,999 saw a 1 percent response and those making $25,000 or less rang up a big, fat zero.
As is often the case, education numbers followed suit with income results. College graduates saw an 11 percent response to Web purchases; college (incomplete) also tallied 11 percent; high school graduates clicked at 4 percent and high school (incomplete) lagged at 2 percent. college graduates were most likely to shop at a charity’s Web site, with 4 percent admitting so, while not a single member of the high school (incomplete) category utilized a charitable site.
The demographic breakdown found that women, at 42 percent, were slightly more likely to make a purchase than men, at 39 percent. Women outpaced men at consumer retail locations (32 percent to 28 percent) and at charities’ retail locations (12 percent to 8 percent). Men bounced back to edge women online at a consumer retail Web site (7 percent to 6 percent). Both genders rang in at 2 percent when it came to purchases made online at a charity’s Web site.
According to the figures, making a purchase from a charitable organization really takes root around the age of 35. While 18-24 and 25-34 made purchases at 33 percent and 39 percent clips respectively, 35-44 rose to 46 percent. The numbers peaked at 47 percent for those 55-64 and fell to its lowest point of 32 percent for the 65+ age range.
Who says that the younger generation has all of the computer savvy? The categories most willing to make a purchase to benefit a charity on the Web were 45-54 year-olds (10 percent) and those between 55-64 (9 percent). The 18-24 and 25-34 groupings each reported in at 8 percent, although 18-24’s were most likely to have bought an item at a charity’s Web site at 4 percent.
In the matter of race, 41 percent of Whites (non-Hispanic), 43 percent of Hispanics (any race) and 35 percent of Blacks made a purchase in at least one of the categories. Thirty-five percent of Blacks and Hispanics and 33 percent of Whites paid at a consumer retailer.
When it came to Web transactions those figures fell to 9 percent for Whites, 7 percent for Hispanics and 4 percent for Blacks. Online numbers dipped further when it concerned making a purchase from a charitable Web site. Only 3 percent of Blacks, 2 percent of Whites and 1 percent of Hispanics said they selected an item from a charitable Web site.
Further examination shows that of the people who purchased an item from any of the location categories, 82 percent went to a retail location. Of those who shopped physical locations, 90 percent did so at consumer retail outlets while 31 percent rung up their purchases at a charity’s retail location. Again, there is some overlap in the numbers, with some consumers doing both.
The buying compass points south when it comes to the region most likely to purchase an item from charity. Southerners made 36 percent of all purchases, while the West accounted for 23 percent. North-central states tallied 23 percent of all buyers and the Northeast brought up the rear at 20 percent.
The American Legacy Foundation ( ALF) in Washington, D.C., has made its stamp in the retail marketplace with its Sunburst jewelry collection, which benefits the organization’s Circle of Friends campaign. The sunburst serves as a symbol to support women who are trying to quit smoking and to encourage young people never to start the habit. The majority of the Sunburst jewelry sales have come through the nonprofit’s partnership with Avon Mark, Avon’s brand for young women.
“Avon Mark has created for us, a number of items that have been worn by celebrities as a part of our campaign,” explained Bernadette Toomey, executive vice president for strategic partnerships and development at ( ALF). “Jessica Simpson wore a Sunburst necklace in advertisements. We had a bracelet that Jamie Lynn DiScala wore and presently we have a charm bracelet that the actress Mena Suvari is wearing. Those items of jewelry have been featured in publications like Glamour and Elle, where a person could call a number or access our Web site and purchase a product.”
The items were also featured repeatedly in the monthly Avon Mark magalog, a print magazine/catalog that reaches 6 million people, Toomey said. Magalog sales generated between $1.3-$1.4 million for the Circle of Friends program, the largest percentage of sales for the items, Toomey added.
In working to familiarize the public with the sunburst symbol, ALF has also made other items available at retail outlets in smaller quantities and for a limited time. The organization worked with apparel manufacturer Juicy Couture to produce a black T-shirt promoting ALF’s Circle of Friends Mini, an annual event held in New York City’s Central Park. The shirts were sold for one evening in Bloomingdales locations in New York City.
“Our main focus has been advertising in women’s magazines combined with the enormous exposure that Avon Mark brings,” Toomey said. “We’re just starting to track the popularity of our various items but there’s no doubt that Avon Mark’s audience has helped our sales tremendously.”
While a nationally known retailer can boost the exposure of a charity’s goods, some nonprofits have years of retail clout under their belts. Goodwill Industries International is a $2.1 billion organization with 65 percent of its income derived from its retail operations including thrift stores, e-commerce and salvage operations.
The organization is comprised of a group of autonomous members that together operate more than 2,000 store locations. They may not all look the same but they all sell donated goods that often cater to the population that loves a good hunt for bargains.
The demographic of its bricks and mortar store shoppers is women with children, middle-income, age 35-45, according to Renee Weippert, director of retail services at the nonprofit’s headquarters in Bethesda, Md. From that audience comes a base of repeat customers who shop two or three times a month. The Goodwill stores offer a constant turnover of stock, with entire stores turning over on a monthly basis, said Weippert.
“You can go through a rack where everything is $5 and there may be a Calvin Klein blouse in there,” Weippert said. “It’s that bargain hunter mentality where you’re looking for a one-of-a-kind item and that appeals to our shopper. The challenge is that if you don’t buy it right then, it’s not going to be there. You’re not going to find a small, medium, large or extra-large in that same top and that same color. It’s a very unique assortment that changes rapidly.”
Those types of bargains resulted in $1.59 billion in sales in 2005. Weippert said that sales figures consistently achieve double-digit percentage growth each year. The increase is coming mostly from stores’ expansion, improving on efficiencies and growing market share within the existing store base, she said.
Goodwill prides itself for being recognized as selling high-quality merchandise that are free of defects, but its reputation is not necessarily the main reason why people choose to donate items to the organization, according to Weippert.
“We’ve found that the number one reason that people donate to us is because of convenience,” Weippert said. “It’s not something where they recognize that they’re doing something to help a charity. We have high brand awareness and people associate our logo and our name with the retail thrift stores. Lots of people don’t know that there’s a charity behind that where those items that are sold serve more people through our education and career programs. In a lot of cases, they don’t make the connection that when they buy something they’re buying from a charity.”
That connection can be blurred when charities hawk non-mission-related items or provide other services within their retail store. In October, 2005, the National Autism Association (NAA) opened its first retail store in Marion, S.C. When interviewed by The NonProfit Times, NAA Executive Director Jo Pike expressed an interest in selling high-ticket items that were not mission-related. One of the items she mentioned was hot tubs. The idea was to cast a wider net for shoppers in order to raise funds for the organization. Pike’s vision did not fully come to pass and she has since left the organization.
An NAA board member has taken over the store and it is in the process of being moved to Nixa, Mo. The plan is to set up a storefront similar to the one previously in South Carolina. It will be attached to the shipping hub for its online sales.
“It was set up like a retail store with nice shelving,” explained Wendy Fournier, president of the NAA. “We carried everything that’s in our online store, including T-shirts, jewelry, nutritional supplements and books. There was also a library area where you can go in and borrow books. It was basically a little retail storefront — like a small Mom & Pop shop.”
Despite the physical store relocation, the NAA experienced strong sales thanks in part to its first full year running an online store. Sales grossed approximately $450,000, which was a product of purchases from shoppers located around the world. As a result of that success, the NAA is hoping to create an eBay-like store in addition to its current online business. People would be able to donate high-end products, whether it’s a corporate sponsor or private individuals, to be auctioned off to benefit NAA’s mission, Fournier said. Part of the thought is to procure non-mission related items that would appeal to a more broad audience of shoppers.
“That was part of Jo’s plan with the store down in South Carolina,” Fournier explained. “It was going to be more of a gift shop with unique items with the proceeds going to benefit NAA. Obviously that didn’t come to be. It may happen in Missouri but we’ll have to see if there’s a market there for it.”
Regardless of the frequency of large retail chains, they lack the sheer scope of audience provided by the Internet. The study revealed that when it comes to the Web, 19 percent of all buyers utilized the Internet to make their purchases. Of those who reported a Web-based purchase, a staggering 87 percent did so at a consumer retailer’s Web site, while 30 percent went to a charity’s Web site. Again, there is some overlap in the numbers.
Goodwill Industries of Orange County (GOC) in Santa Ana, Calif., oversees the online auction site shopgoodwill.com on behalf of 110 registered Goodwill agencies. The site is unique since the nonprofit built the site, including its programming, from the ground up.
“It sets Goodwill apart from any other charitable organization because we really are cutting edge with the way that we’re managing our business,” said Joan Dornbach, vice president of marketing at GOC. “It’s helped with our corporate identity as an organization because we’re not Grandma’s Goodwill.”
The auction site is showing 54 percent annual growth in sales with 16,000 unique visitors per day that average more than 30 minutes per visit. Of the approximately 1.5 million items posted, nearly 1.4 million have sold, with an average sales price per item of $20. Buyers representing all 50 states and various countries, including Canada, South Korean, the United Kingdom, Australia and Japan have spurred the site’s success.
Dornbach said that even though shopgoodwill.com has a very active buyer population, if you mention it to most people, they have most likely never heard of it. Since Goodwill generally does not have the budget to implement a significant advertising campaign around the site, Dornbach said, it focuses on maximizing the revenue from its donated goods. In an auction setting, the market often jacks up the price, thereby increasing revenue by engaging a more active global market.
“Although some of our buyers are regular Goodwill customers at our retail stores, probably the lion’s share of active buyers don’t shop at Goodwill stores,” Dornbach said. “They’re really looking for collectible, one-of-a-kind things that are hard to find that you may not find at a Goodwill store depending on what day you’re there. Also, most people don’t have the time to come to our store every day, which is what you would need to do to keep up with our rapidly rotating inventory. If you’re shopping online you’re going to be following that auction on a regular basis.”
The fact that physical retail locations are outpacing the Web by a significant margin comes as no surprise to Dornbach. One of the initial issues facing shopgoodwill.com was how to both keep and increase the flow of buyers to the site. Thus far, word-of-mouth has been significant enough to result in a more than 90 percent sell through of the items listed.
The participating Goodwills don’t only list items that are expensive, rather they examine online retail trends to see what’s hot at the moment. In addition to the current hot items Goodwill also has had success listing vintage items, jewelry and musical instruments — items that attract a different market than most of its thrift stores.
That doesn’t mean that all of the unique items are exiting Goodwill’s physical stores in favor of the Web. Dornbach assured that people who shop at the physical retail stores are still going to find the same things in the stores that are online since it hasn’t listed all of the items that could potentially sell for more money online. Though the people who really want those items are not shopping in the stores at the same level at which they do online, she noted.
Dornbach cited the example of the Goodwill in Albuquerque, N.M., which ends up with a lot of specialized Southwestern art. Those types of pieces allow it to list fewer items at higher prices. Instead of hoping that the right buyer pops into the New Mexico location when that art is available, it can now appeal to someone outside of its local area who might appreciate that style of art.
While Web purchases in the overall study lag behind retail outlets, Dornbach forecasted the continued growth of shopgoodwill.com. Its sales for January, 2006 rung up $824,695 compared to $652,364 in January, 2005.
“We think we’ve really just hit the tip of the iceberg here in terms of our vast resources and the potential of posting them online,” Dornbach said. “Even though we have several Goodwills that are doing over a half-million dollars in business, it’s still low as compared to our potential.”
Other nonprofits are beginning to take notice. GOC has received numerous calls from smaller organizations asking to use its site or inquiring as to where it bought its program to construct shopgoodwill.com.
“We built it and we’re leaving it closed as shopgoodwill.com because that is the one feature we feel strongly that we have more control, which lessens the risk for our buyers,” Dornbach said. “It’s only Goodwill sellers and no individuals so the risk of fraud and other issues has been almost eliminated or at the very least, greatly reduced.” NPT
Nonprofit Retailing – A Family Affair
As families grow, suffice to say that purchases increase. So too, does the likelihood that the family will make a purchase from a charity. Households with one member represented 14 percent of all buyers, those households with two members were 29 percent and those with three or more members topped the chart at 59 percent (numbers are rounded), according to the exclusive national donor study conducted by Opinion Research for The NonProfit Times. Those without children tallied 54 percent of purchasers and Households with any number of children contributed 46 percent.
Welcoming families seems to be commonplace at many charitable retail stores. The Salvation Army’s Eastern Territory identifies its thrift store demographic as middle-income families looking for bargains, according to Majer Dennis Gensler, general secretary of the Adult Rehabilitation Center’s command. The Salvation Army has even gone as far as naming the stores “family stores” rather than the traditional “thrift shops.”
The Eastern Territory supervises nearly 300 retail shops that generate sales in the ballpark of $140 million per year, Gensler said. At this point, none of the sales from the Eastern Territory have come from online purchases, he added.
There are some locations that actively advertise but more often than not shoppers come to the organization’s stores due to word-of-mouth advertising. Eastern Territory stores have been “lax” in the area of advertising and it’s probably not doing the advertising it could be doing, Gensler said.
Appealing to families takes more than just getting them into the door. Oftentimes it’s a matter of educating shoppers about how a charitable retail operation functions.
“There has been an ongoing concern by some shoppers that the prices are a little high or they question why we’re selling something that was donated to us,” Gensler explained. “They expect us to give the items directly to those in need, which we also do. We’ve found that we’ve had to explain to people just how The Salvation Army operates and how the stores fit into the big picture. Once they’re aware of how we operate they usually turn their attention back to the variety of merchandise we offer.”