Goodwill recognizes the need to understand e-commerce. The nonprofit retailer says the challenge is its ability to generate enough revenue to fulfill its mission of providing employment opportunities to people in need.
Since 1902, Goodwill stores have been a destination for millions of people who want to get rid of their loose clothing and rummage through the racks for something that doesn't belong to someone else. But Goodwill still has a ways to go when it comes to online shopping. For more than a decade, the company has faced increasing competition from the likes of ThredUp, Poshmark and Etsy's Depop, its former clothing-focused online platform.
Goodwill is made up of 154 independently operated organizations, each with a chief executive officer who manages the inventory donated to local stores. More than 100 of those locations use an e-commerce auction site called ShopGoodwill.com, which was launched in 1999. Elsewhere, we're moving some of our donations to eBay.
Over the past year, a handful of Goodwills have contributed to a new online site, GoodwillFinds.
“There's so much competition in the market right now,” said Matt Keynes, CEO of GoodwillFinds E-Commerce. “So all the billions of pounds of donations that Goodwill receives each year are now a huge market for commercial companies to target.”
GoodwillFinds mirrors the look of many other major retailers' sites, with categories like women's and electronics, and the ability for shoppers to filter their searches by brand, size, and color. We also have unique sections such as heirloom quality finds and clearance.
When Goodwill executives discuss the site, they throw around some industry jargon and explain how they can improve the customer experience. They have sales goals, want to attract customers with “high lifetime value,” and monitor commission structures that can ultimately lead to a break-even point for the website.
But Goodwill isn't doing this just because it wants to move into the 21st century. Across the organization he employs more than 130,000 people, and last year he assisted 2 million people through his career navigation and skills training programs. These opportunities are funded through the sale of donated items.
Today, people can easily get paid by companies like ThredUp and The RealReal to unload scantily t-shirts and designer bags rather than donate them. Many believers say it's much easier to drop off a bag of goods at Goodwill than to deal with online shippers, but increasing competition poses a threat to nonprofits.
The U.S. used retail market totaled $174.1 billion last year, driven by increased consumer interest in purchasing sustainable options and ways to save money. That amount is expected to reach $258.8 billion by 2027, according to consulting firm GlobalData. Analysts say Goodwill's growth has been slower than that of its competitors.
“We’re kind of playing catch-up,” Kenneth said.
The stakes in getting it right are high. Last year, Goodwill assisted approximately 180,000 people through its workforce services.
Ronnie Hunter is one of them. Mr. Hunter returned to Chicago's Englewood neighborhood for a job in February after spending nearly 20 years in a state prison in Illinois. He knew about Goodwill stores, but he told me that Goodwill also offers a workforce development program where you can learn basic computer skills and get a nice shirt and tie to wear to an interview. It was a friend of mine.
Hunter was initially skeptical that it would be enough to overcome the hurdle of securing jobs. But after completing the week-long program and being mentored by Goodwill employees, he got a job at a local company reupholstering seats for trucking companies. His hourly wage is about $17.
Hunter still stays in touch with the Goodwill employees who helped him get his footing. “The employees there really work hard despite what you've been through and what you've been through,” Hunter said, adding, “When you walk in, you just feel so warm.” he added.
Goodwill's online strategy takes on added urgency as we continue to help people like Hunter. However, success is not guaranteed. Major retailers have spent years building teams and investing money in establishing sophisticated e-commerce operations that include machine learning and seamless distribution channels.
Goodwill's latest e-commerce venture has been in the works for several years. In 2019 and 2020, Goodwill executives commissioned market research to evaluate online opportunities.
Darryl Campbell, CEO of Evergreen Goodwill in Washington State and a founding member of Goodwill Finds, said, “In terms of e-commerce, we've seen this boom as a resale market since the morning.'' It was obvious.”
“For us to be able to compete in this rapidly growing and aggressive market, the Goodwill brand needs to have a more centralized online presence, an independent, 'here's a Goodwill brand' presence. “We realized that there was a need for that,” he said. Added.
Goodwill's decentralized model further complicates the challenge of gaining an online presence. In 1999, Goodwill of Orange County, California, launched the auction site Shopgoodwill.com. The site is still powered by 128 generous donations and has generated more than $2 billion in revenue.
GoodwillFinds, which has just 14 members, has sold $25 million in merchandise and has 500,000 subscribers since its founding last year, Keynes said. He said sales growth increased by 50% quarter-on-quarter.
Officials from both Shopgoodwill.com and Goodwillfinds.com said there are currently no plans to merge the sites. Goodwill's main website offers both drop-down options for those looking to shop online, with no instructions on which one to choose.
The charity is also tackling marketing challenges. Everyone knows about Goodwill. How does that become a top priority when people go online?
“These are the ultimate brand names in frugality,” says Patricia Hambrick, who teaches branding, marketing and sustainability at Boston University's Questrom School of Business. Goodwill added that shoppers “need to realize that they can actually get anything online.” Because that's not necessarily something you think about online.
As any retailer knows, building an e-commerce website that shoppers will want to come back to is not easy. And if it's for resale only, the hurdles are even higher. What Goodwill sells on its site is limited to donations and is generally anti-economic. In other words, people shed their winter clothes for spring cleaning and ditch their shorts when the weather gets colder.
GoodwillFinds has invested time and resources in teaching participating members strategies for curating, photographing, and writing product descriptions. Recent finds by shoppers include a 14K white gold diamond oval ring for about $1,900, a red Nike high-top for $46 and a Nintendo 64 for $95.
Items ordered from GoodwillFinds are shipped from contributing member locations, and each distribution center operates slightly differently.
Jim Davis, Chief Revenue Officer at GoodwillFinds, said: “The tools we're building are starting to become standard for us, and it's going to make that very possible.”
But it costs money. Mr. Keynes, a former Walmart executive and CEO of ModCloth and Lucky Brands, knows all too well the challenges of running a high-tech venture within a charity organization. Many well-capitalized, publicly traded online resale sites are not profitable. Kaynes said he believes it will take an investment of $15 million to $25 million to get Goodwill Finds to a level where it can compete.
On a recent afternoon outside a Goodwill store near Manhattan's Union Square, several shoppers said they didn't even know the nonprofit had a website.
Olivia Klemm, 23, who delivered five bags of donations, said she learned about the e-commerce site when she searched online for a Goodwill donation center near her. She said she might use the site when she wants to buy something specific, rather than just browsing.
“I'm going to go to Goodwill and try on things and see what I can find,” Clem said, carrying three tote bags filled with wooden spoons, cups and other items she bought after dropping off the donations. I like that aspect of it.”
