Fair Trade Commerce Analysis

Part
01
of one
Part
01

Fair Trade Commerce Analysis

DoneGood is a pure-play marketplace within the ethical products industry that enjoys an established market foothold, a powerful investor network and opportunities for substantial, near-term expansion amid the growing popularity of ethical products, the shift to online retailing and the movement towards Environmental, Social, and Corporate Governance (ESG) investing. However, DoneGood faces an inherent cost disadvantage due to its rigorous brand selection process, and may find that its bright prospects are somewhat undermined by the company's limited awareness outside of the US, the potential for growing competition from other online marketplaces and economic headwinds.

Strengths

  • One of DoneGood's most significant, current advantages is the company's established and quickly growing market foothold, despite its relatively recent founding in 2015.
  • For example, DoneGood has managed to triple its community of customers since 2018 to over 100,000 users.
  • In conjunction, the company established relationships will more than 200 brands, became the retailer for thousands of different products across nine separate categories, facilitated the sale of over $1,000,000 in goods and reached an annual revenue of $15 million.
  • Perhaps one of the biggest contributors to DoneGood's early success is another of its core strengths as a pure-play participant within the ethical products industry.
  • Specifically, DoneGood is unequivocal in its commitment to selling products only if they are "good for people" and "good for the plant," and memorialized this mission by becoming a Certified B Corporation and member of 1% for the Planet.
  • Not only has the company has received widespread acclaim in the media for its values and associated reputation as "The Amazon for Social Good" (e.g., Forbes, The Washington Post, The New York Times), but this clear alignment with the ethical goods industry makes the brand an appealing and easy-to-use option for the growing population of consumers who are interested in purchasing fair trade and other ethical products.
  • Finally, DoneGood also benefits from its powerful network, including its founder's connection with the Obama Administration as well as its suite of reputable investors (e.g., Harvard i-lab).
  • This network has helped DoneGood raise just shy of $1 million in seed funding since its founding, while also providing DoneGood with access to the insights and experience of those who are connected to the social and business pulse of America.

Weaknesses

  • Amid these substantial advantages, DoneGood also faces several self-made challenges, including its arduous brand acceptance process and limited awareness among global markets.
  • Specifically, DoneGood has a thorough, multi-step process for screening potential brands, which includes "aggregating data from independent certifying organizations," completing separate, proprietary DoneGood research/interviews and collecting feedback from the DoneGood community.
  • While this rigorous process adds credibility to DoneGood's position as an ethical brands marketplace, this certifying process also creates inherent overhead costs within the company's operation, limits DoneGood's speed/agility in accepting new brands and may even deter brands from joining the DoneGood community.
  • In parallel, DoneGood has largely focused on developing its consumer base in the United States, with SEMrush reporting that almost all (98%) of the company's web traffic comes from consumers in America.
  • Although the US is one of the larger markets for fair trade product sales and represents one of the more lucrative opportunities for ethical products overall, DoneGood is currently missing revenue opportunities in other substantial (Asia Pacific) and premium-priced (Europe) geographies for ethical goods.

Opportunities

Threats

  • Meanwhile, increasing competition within the ethical goods industry as well as the current recession have the potential to somewhat undercut DoneGood's prospects in both the near and long term.
  • One of the largest, ongoing threats to DoneGood as well as other participants in the ethical goods market is the "fragmented" nature of the industry's competitive landscape, which increasingly includes multinational conglomerates with deep resources and decades of competitive experience (Nestle, Pepsico, Target, Patagonia, PVH, The Children’s Place, Etsy, Eileen Fisher).
  • The sheer volume of competitors results in a "highly competitive and volatile environment," that is only likely to intensify as ethical products rise in popularity.
  • Although DoneGood has sidestepped some of this competition by functioning as a marketplace rather than as a producer of ethically-made items, it currently faces direct competition from similar ethically-focused retailers (e.g., Good On You, Project Just) and may struggle to adapt to additional competitive pressures in the event that the largest online marketplaces such as Amazon further expand their Corporate Social Responsibility programs.
  • Moreover, in the interim, it is unclear to what extent the US and global recession have the potential to impact consumer spending on ethical goods and other premium-priced products.
  • It is generally acknowledged that luxury goods often take "a considerable hit" during recessions, which may threaten or at least weaken demand from some of DoneGood's existing customers and/or limit the company's ability to expand its members for the foreseeable future.
Sources
Sources