Business Models, CSR, Explorations, Strategic Innovation, Web

As part of Net Change Week at MaRS, Patrick and I were offered the opportunity to work with a non-profit called Social Purchasing Portal on helping them address some of the challenges they were facing in a variety of areas.

The Social Purchasing Portal is a program whose primary goal is to create social value through the supply chain. They do this primarily through helping those with employment barriers (single mothers, at-risk youth, people with disabilities, etc.) find work with suppliers and then in exchange promoting those suppliers to socially conscious buyers. As we delved deeper into their issues it became apparent that their true problem was sustainability. While their model had proven its ability to have a profound impact on the local community, it was not able to sustain itself in absence of government funding. The issues leading to this lack of sustainability that manifested itself in the following ways:

• Revenue – As mentioned previously, the SPP relies on grants without consistent channels for revenue.
• Resources – There is currently considerable overlap in resources allocation among the local centres. The local managers are spread incredibly thin, helping with placements as well as performing business development for a plethora of vendors.
• Program Engagement – There is little opportunity for the SPP to provide value past the initial transaction. From the buyer perspective, the impact they are making through their purchases is often invisible.
• Service Value – Given the employment practices of the suppliers, buyers are often concerned about quality. In addition, there can be high switching costs to change suppliers on a personal and organizational level.
• Branding – The name Social Purchasing Portal connotes a function quite different from their organizational purpose. In addition, there is considerable variance between the branding of the local SPPs.

Basically, the crux of their problem was that they were excellent at creating partnerships that benefitted the community, but were unable to derive any revenue from the value they were creating. As Patrick observed, their situation was a little bit like setting up two of your best friends, only to see them run fall in love, get married, live happily ever after… and never talk to you again. This became the key insight to drive our solution.

The Social Purchasing Portal was essentially operating as a dating service, but without any membership fees or advertising revenue. They needed a new metaphor. Since they were facilitating transactions, the logical decision was for them to move to a market metaphor.

Revenue
The key to creating a consistent revenue stream for the Social Purchasing Portal is to become a facilitator of transactions, which is something the Internet does quite well (see PayPal, eBay, Craigslist, Amazon). Since the users of the Social Purchasing Portal have opted into the program in the hopes of making a difference, it makes sense to empower them to help rathern than force them to so instead of simply charging transaction fees, which may present a barrier for some buyers, upon registration, all buyers are given the option of donating a percentage of each purchase they make to the SPP, which can be increased or decreased on a transaction to transaction basis during the checkout process.

Additional revenue streams will occur through providing escrow services (which could help mitigate some of the perceived risks) and certifying suppliers who aren’t operating in any of the current centres as well as certifying national-level suppliers (we are recommending the addition of a national business development person to deal with national organizations).

Resources
In addition to consolidating under a singular technical platform, eliminating parallel efforts on behalf of the local development teams, the implementation of the marketplace will remove the burden on the local SPP managers of trying to learn and sell a series of individual suppliers to potential. Instead, they can focus on selling the marketplace.

Program Engagement
In order to keep buyers engaged, reward them and incent them to continue to transact through the SPP, a form of social currency based on community impact was introduced, allowing buyers to track their impact on an ongoing basis and incorporate it into their marketing messaging or CSR programs. In addition, suppliers will be able to update their profile pages and by extension their buyers with the first hand stories of the people that are being impacted by the program. In addition, the platform merchandises the various suppliers and provides a frictionless browsing and search experience.

Branding
The Social Purchasing Portal was open to us taking a stab at developing a new brand that could help unify the organization on a national level and better represent their mission. We felt the brand needed to fulfill four criteria:

• Connote the mission of creating social value
• Communicate competitive prices and quality from the suppliers
• Provide something that can act as a seal for suppliers and buyers to communicate their values and involvement.
• An easily obtainable and memorable URL

With that in mind, our recommendation was Third Win. Ideally, every transaction should be a win-win situation. However, what differentiates the SPP is that the community wins, hence the “Third Win.” Also, thirdwin.com was shockingly available.

Service Value
By incorporating user feedback and supplier ratings, buyers can better evaluate suppliers. In addition, the option of escrow can provide a greater feeling of security. Also, by participating in the program, buyers are able to use the Third Win seal to communicate their values to their customers with a variety of tiers available depending on their achievement based on the social currency.

With these strategies implemented, Third Win will not only have the opportunity to sustain itself, but also to grow and help transform the national business landscape through a mutually beneficial ecosystem.

Moving forward we see several options for future expansion for Third Win:

Broaden the certification system -Currently, suppliers are only evaluated on their hiring practices, there is a great opportunity to create a more multi-faceted ranking system to include environmental factors, community leadership and others to allow buyers to shop not just based on product, but on the impact of the suppliers.

• Consumer purchases – Currently, many of the suppliers already operate in both B2B and B2C contexts, why not invite another segment in to enrich the marketplace?
• Co-operative bulk buying – Often local and socially conscious products and services have difficulty competing due to their lack of scale. However, if the Third Win platform could be leveraged to allow for bulk buying, the competitiveness of businesses could be increased in a radical way.
• Allow buyers to request proposals – This would be a feature that could help attract buyers to the marketplace as well as increase platform engagement with both buyers and suppliers.
• Extend the certification – Given the proposed nature of the Third Win seal, certification could be extended from beyond just companies to products.