“Don’t buy our brand new clothes; buy your neighbors’ old ones…” What?

As I read the sentence “while individuals have traditionally often seen ownership as the most desirable way to have access to products, increasing number of consumers are paying to temporarily access or share products and services rather than buy or own them” from last week’s reading (Adopting to the Sharing Economy, MIT Sloan Review 2015), I could agree a bit, but not entirely. Zipcar, Uber, and many businesses that support the so-called “Sharing Economy” came into my mind, but I never considered this business model or phenomenon to be a growing trend. People still like to keep their own things, uphold privacy, and enjoy having an alone time in their own cars as they go to work (instead of having a desire to open up the UberCommute function and pick up their neighbors on their way). I thought this mindset especially applies to the apparel industry, where people like to shop new clothes instead of wearing a shirt that has been worn by a complete stranger. Apparently, my assumption was wrong, and a very well-known apparel brand named Patagonia already started implementing this “buy less” campaign way back in 2011 with a partnership with eBay.

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Patagonia-eBay partnership in 2011

The partnership essentially created a platform for customers to sell their used, second-hand Patagonia products after signing a pledge, and surprisingly, Patagonia gains zero dollars out of this campaign. What were they thinking? Pro-environmental values and long-term brand recognition as an eco-friendly firm, probably. They sound pretty ideal, but this was an incredibly risky bet for Patagonia. What if the campaign only resulted in a significant loss in sales as customers stopped buying new Patagonia products? Even if it didn’t, what if the initial sales loss outweighed other benefits? What if their high-end brand image would get hurt? The list goes on. Well, if I could think of these questions within a few minutes after learning about the campaign, I’m sure Patagonia’s management team could have done so in mere seconds. Then, what was the company actually thinking before executing this plan and announcing it to public?

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My guess of Patagonia management team before the ebay partnership announcement

I believe their key to success lies in having a crystal-clear company value that appeals to many of its existing and non-existing customers with a decisive action beyond simple words. Countless companies claim that they support the environment, empower the poor in Africa (Toms is an example, although there is a controversy that they are using African children’s images for marketing purpose), or “do the best to serve the clients and customers (what many bankers say).” As everyone knows, it is easier to be said than done. However, Patagonia’s message of lowering the environmental costs of consumption by “buying less and sharing more” was clear and was executed through a campaign that generated no profit for the firm.

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In addition, Patagonia’s sharing economy movement continued with other initiatives such as the partnership with Yerdle, an online marketplace for exchanged goods. This collaboration enabled Patagonia’s pre-used Worn Wear collection to be exchanged with other items brought on the Yerdle platform by different users, and it created an immense synergy effect by promoting Yerdle’s capability of bringing in high-end brands and Patagonia’s commitment to providing durable and high-quality products for its consumers. This Yerdle & Patagonia partnership also served a key role in promoting the sharing economy movement along with major companies like Uber and airbnb, and it was a win-win situation for both the businesses and customers. 

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Yerdle-Patagonia Partnership in 2013

The Yerdle-Patagonia partnership was just one of the examples that Patagonia promoted in addition to its collaboration with eBay and solidified its brand as a true environment-friendly company. It began recycling clothes in 2005, where it started returning used polyester products to its suppliers in Japan to reform them into a new material. The recycled products for the company enabled a 40% reduction of greenhouse gas (GHG) emissions according to the firm, and such efforts have been continued since then while ensuring its cutting-edge product quality. Two particular examples that shocked me were Patagonia’s production of fleece jackets out of recycled bottles and going out of its way to use organic cotton. To me, one of the factors behind Patagonia’s successful brand making lies in its consistency, or a tangible proof that it was not using its environment-friendly aspect as a quick chance to boost its profitability.

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Now, these initiatives are great, but did they actually help Patagonia? I’m sure they helped reduce some GHG emissions and helped the environment a bit, but what about the company? Did Patagonia get any tangible benefits beyond “brand building?” This was my biggest concern, and surprisingly, it did. According to Bloomberg’s article in 2013 (2 years after the 2011 Patagonia-eBay partnership announcement), Patagonia’s sales increased almost one-third in 2012 during the 9 months of “buy less” campaign, 6% in 2013 (the revenue rose up to $550 million from $400 million. Check this link https://www.bloomberg.com/news/articles/2013-08-28/patagonias-buy-less-plea-spurs-more-buying for anyone who doubts these numbers). Wow. I was shocked. Even if one discounts the opening of new stores during 2012 and questions the effectiveness of the campaign, there is no doubt that this initiative brought in a significant increase in revenue in a short span of time. People recognized Patagonia’s brand more and liked the quality, and the environmental-friendly value got them even more loyal to the company. What also made Patagonia’s strategy unique was its inclusion of customers in their initiatives, providing both monetary and social values to their users. I believe this subtle feature has separated Patagonia from other environmental-friendly brands’ mundane pro-environment projects and has contributed much to its success.

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My guess of Patagonia management team in 2013

One noteworthy comment from the Bloomberg article was the following:  “Patagonia is to corporate sustainability what Steve Jobs was to computers.” Patagonia’s novel  approach to promote its company value provided it a unique competitive advantage, and it will only benefit the company more as the sharing economy movement grows larger in the near future. What distinguished Patagonia from many companies with great values came with a coherent message supported by robust actionable initiatives that were not only planned but also executed in a beautiful manner.

Thank you for reading :)

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Jo Oh the Bro / Jobabes121

16 comments

  1. kennedy__bc · ·

    After finishing our in class discussion about the sharing economy on Wednesday I was left with very similar thoughts. It never crossed my mind that companies could socially benefit from the idea of trading clothes much less eventually gain revenue from it. Other note worthy companies I’ve heard of like Patagonia are Coca-Cola and Adidas both of which have also made huge strides into the sustainability market through things like recycling and philanthropy. I wonder if an increase in revenue, much like that of Patagonia, will be enough of an incentive for other companies to enter the sharing economy and sustainability market. It seems like a simple and obvious answer, yet I have the feeling that it is going to take larger social pressures by consumers for large corporations to make this leap into sustainability. Great post, love to know what you think.

    1. Jobabes121 · ·

      Thanks for the comment brother! I did not know about Coca-Cola and Adidas doing similar things, so that’s great to know. I think the increase in revenue shouldn’t necessarily be the overarching goal for these sustainability efforts. As I mentioned in the blog, what enabled Patagonia’s case very successful, I believe, has to do with their ability to engage customers in the sustainability movement, not necessarily the idea itself. If the revenue boost becomes the goal, I think the companies will not see the result and end up being exhausted with such efforts in the end without any brand making. The company image, authenticity, and consistency all play an important role for this, and the customers wouldn’t want to see every company pretending to care about the environment when their business model doesn’t care too much about it.

  2. murphycobc · ·

    When Patagonia started down this path a few years ago, I definitely had similar thoughts of “how can this be profitable!” But I think it speaks to their value proposition and their target market: they want to have sustainable practices because their audiences cares very deeply about that.

    It reminds me of a few years ago when REI launched #OptOutside on Black Friday. They closed their stores and said don’t shop, go explore. It spoke to their target customers who, as an act of appreciation, will go to their stores the next time they do need to make a purchase, and likely weren’t planning on shopping anyways but felt like the brand was loyal to their value system.

    1. Jobabes121 · ·

      Thank you for your comment! REI example definitely shows a similar mantra, and sometimes brand/value proposition brings a lot more value to the companies long time. Companies have to align themselves with their core customers’ mindset and values.

  3. realjakejordon · ·

    Someone once asked me in a job interview: “If your personality could be any company, what company would you be?” My answer was Patagonia. They’re driven, successful, in touch with their customers and what is in style, and most importantly they have a passion that they truly believe in. Before this article, I actually didn’t even know about their “buy less” campaign, but it makes me believe in them even more. Although it sometimes seems like we live in a pessimistic postmodern world, I think people will always gravitate toward a company that puts its unwavering values on display. Great read, Jo!

    1. Jobabes121 · ·

      Atta boy, I bet you killed the interview! Yes, I cannot agree with the statement that people will “always gravitate towards a company that puts its unwavering values on display.” Patagonia does it well with authenticity and creativity with consistency and customer engagement in their initiatives. Bro, I want a job as well lol.

  4. katietisinger · ·

    Thank you so much for following up with a blog post on this, it struck me in class as well. I think this is such a great example of being in touch with customers and innovating beyond just the product. I work for the Center for Corporate Citizenship at Boston College, and something I have learned from my time there is the importance of integrating corporate citizenship into the very fabric of the company and tangibly demonstrating its success. Patagonia is clearly doing a great job of not only integrating corporate citizenship into their core business, but also extending it to their customers. As we have talked about in class, our generation cares a lot about a company’s actions and corporate citizenship practices, and I think Patagonia is seeing success from recognizing that.

    1. Jobabes121 · ·

      Thank you for your comment! That’s amazing that you are working for the Center for Corporate Citizenship at BC (I did not know such a group existed until now), and it’s great to know that there are more tangible benefits that demonstrate such long-term, value-focusing initiatives’ success. I can’t agree more with the current generation caring more about authenticity and corporate citizenship.

  5. addisonBC2018 · ·

    This post regarding the sharing economy and the apparel industry immediately reminded me of the company Rent The Runway. In the past I was highly skeptical, for reasons similar to what you mentioned in the post, and couldn’t imagine renting an ‘unoriginal’ dress for an event. However, I recently tried out their service and loved it! I wanted a long-sleeve dress for a recent event, and didn’t see a reason to spent $100+ on a dress I wouldn’t use again until next winter. Instead this sharing service easily provided me with a great $30 rental I could use once and return! This experience really shifted my view of the sharing economy in regards to the apparel industry, and I’ve even had discussions with friends about the thought of renting a wedding dress at some point in the future – something that wouldn’t have even been considered 5 years ago!

    1. Jobabes121 · ·

      Thank you for your comment, and wow Rent the Runaway sounds like a very creative idea. Dresses are used during important days, and although it’s memorable and what not, you only use on a very rare occasion. Their business model certainly speaks to the growth of the sharing economy, and I bet there will be more to come in the future.

  6. Lucy Wilson · ·

    I would second Addison’s argument. I think a lot of the time, people are very hesitant to partake in the sharing economy as it relates to clothing. One of my concerns when using Rent the Runway or buying clothing from a second hand site such as Poshmark or Tradesy is how something will fit, especially because I don’t have the option to return it. Companies will need to find a way to assuage these fears before the sharing economy with clothing reaches its full potential.

    On a separate note, I really liked your discussion as to why the “buy less” campaign contributed to such a stark growth in revenue. One possibility that crossed by mind that was the “buy less” campaign reached customers that did not usually buy or could not usually afford Patagonia products. By providing them access to the brand, these new “customers” are more likely to consider Patagonia for purchases in the future. So while I’m not sure whether or not this factor contributed to Patagonia’s revenue growth, I think it helped to widen its customer prospects for the future.

    1. Jobabes121 · ·

      Thank you for your comment Lucy. Size and fitting do play an important role for online rentals, especially clothes, as they cannot be returned and even if so it would be a hassle. I cannot agree more with your point about the “buy less campaign” reaching customers who couldn’t access Patagonia’s brand new products. I think it certainly boosted its presence in the apparel market and gave them an affordable access to buy more of their products in the future. Quite risky way of saying “our product is really good, even if they are worn out!”

  7. Great followup post to dig more deeply into one of the issues from last week’s class. Great work!

    1. Jobabes121 · ·

      Thank you, professor! It was a great read as well. Definitely keep it for next year!

  8. roarkword · ·

    Patagonia really does take advantage of some advanced brand building techniques. Their belief in the net benefits of a trading program (even if it was initially believed to possibly cut into profits) went far beyond the leveraging of a social initiative, and by making their adherence to the program rigidly built into the identity of their brand, they tied their success to that of the program. Sometimes social initiatives can only have the success that Patagonia did if they stop rationalizing their business decisions along traditional metrics. Brand equity payoffs can occur in unexpected ways as shown by the rousing success that Patagonia experienced, and the positive associations they gain are almost impossible to buy!

    1. Jobabes121 · ·

      Thanks for your comment. Yes, their adherence to the campaign and consistency certainly made the initiatives and brand making a lot more stronger than other companies’ eco-friendly events or campaigns. As I see the success of very few companies, they always revolve around creating a mindset, platform, and trend. Their ability to incorporate customers in the initiatives made their effectiveness even better. Great point!

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