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.
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?
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.
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.
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.
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.
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 :)
Jo Oh the Bro / Jobabes121