How your non-profit can earn revenue with Web 2.0: Part 5 - Product sales

Summary

What bake sales once were to PTAs, online storefronts are to today's non-profits. Your online community members can also be customers... customers who may be delighted to spend their dollars in a way that supports their values and your work.

This blog post is part of our series on Social Media for Social Enterprise: How non-profits can earn revenue with Web 2.0.

What bake sales once were to PTAs, online storefronts are to today's non-profits. We're used to thinking about participants in non-profit web sites as members or supporters, people we are trying to reach with a message or mobilize around a campaign. But your online community members can also be customers -- customers who may be delighted to spend their dollars in a way that supports their values and your work.

Here are some of the forms that online product sales can take:

Schwag: Your site can earn money by selling promotional items (t-shirts, mugs, posters, bumper stickers, yo-yos) with your organization's name or a related message. (I'm waiting for someone to buy me an Obama Mama t-shirt.) This is a great way to get your message out and earn money at the same time. While you can earn more money by mass producing these items for sale, you can limit your risk (or test the waters) by using a print-to-order service like Goodstorm (a printing service set up to support non-profits, and recently acquired by Zazzle) or Café Press.
Educational materials: If your organization engages in education or issue awareness work, your web site can be a great way to sell or distribute educational materials like books, DVDs or CDs. Think carefully about how to weigh your revenue goals against your desire to get the message out: selling your products at high prices may limit their circulation. On the other hand, shipping stuff for free may make it hard for you to fund development or distribution.
Media downloads: Selling educational or cultural products electronically is a terrific way to earn revenue while limiting distribution costs. If your organization has produced a book, magazine, poster, DVD or CD, could you sell it in electronic form? Once you create an electronic version of any of these products, the marginal cost of each additional sale is zero: selling a thousand copies of your Christmas concert in MP3 form costs no more than selling ten. Again, think about the trade-off between revenue and mission: distributing media products electronically for free (or very cheap) is also a great way to get out your message.
Social enterprise: If your organization supports community enterprise, you can sell the products of that enterprise on your site. Tilonia.com is an online store specifically created to sell the products of the Barefoot College.
Mission-aligned products: Even if you're not directly involved in a community enterprise, you can still find mission-aligned products to sell on your site. For example, an organization promoting responsible forestry could sell recycled paper products. You can stock a warehouse and ship products yourself, or you can partner with a retailer or social enterprise, and earn transaction fees from each sale that is processed by or referred from your site.
Affiliate sales: If you don't want to deal with the costs of production, fulfillment and credit card processing -- or you want to test your visitors' appetite for on-site purchasing before you make an investment -- consider setting up affiliate sales. The Amazon Associates program is a great, unobtrusive way of generating revenue from books or other products you happen to mention on your site; linking those recommendations to an Amazon account earns you dollars and makes the follow-up process easier for your readers. The BookSense affiliate program is similar, but sends your visitors' business to independent booksellers. For a wider range of potential advertisers, check out Commission Junction, which runs affiliate programs for many major retailers.

Before you setup your virtual storefront, here are some issues to consider:

Do our visitors like to shop online? Unless your site visitors include a meaningful number of people who already buy products online, they're probably not going to start with you.
What products do our visitors want? If you're already selling products,you know which t-shirts or community products are most popular with your members and supporters. If you've never sold products before, do some market testing before you commit to production or sales.
How much will it cost us to set up our sales capacity? There are lots of e-commerce options, including Paypal, that make it easy to set up storefronts and complete credit card transactions. Be prepared to invest some money to make your storefront look good, and to make it easy for people to shop. Invest in airtight security for credit card transactions -- ideally avoiding any in-house handling of credit card numbers.
How much will it cost us to fulfill our orders? Look for products that have low marginal costs to produce or ship. Information products (like document, music or video downloads) are ideal because once you produce your first unit, every additional unit sold is virtually 100% profit. If you're producing physical products look carefully at the costs of both product design and fulfillment, and figure out the price point and sales volume that optimizes your profit margins.
Can we outsource production or fulfillment in a way that aligns with our mission? Outsourcing the production of your product or fulfillment of your orders can save you time and money, and keep your organization focused on its core mission. But be sure that you outsource in a way that supports your mission and values. Find out about the wages and labor conditions of your contractors; if you wouldn't feel comfortable seeing that information disclosed with your organization's name attached to it, look for another option. Better yet, look for contractors who actively reflect what you stand for: if you're a women's organization, look for women-owned businesses. If you're a development organization, look for partners in countries where you work.

I'll venture to say that most non-profits have at least a couple of good options for products they can produce and sell online. If you have loyal members or active supporters, you have a message that people want to hear. Figure out whether that message fits better on a t-shirt or in an e-book, and you're on your way.