We just made what some may consider either a stupid move or a brilliant move, but it's definitely an interesting one -- we've opened a retail store. But that's not the part in question here. We've got solid product offerings that customers clearly want. No, what makes this launch unique is that we've decided to start out by letting people choose what to pay for their purchases.
Are we nuts? Why, yes, but that's the beside the point. In other sectors, namely music and restaurants it's shown to be quite a success, drawing a lot of media attention, building good will with fans and customers, and in the end, turning out to be profitable.
Will it be so in the retail sector? That's still to be determined. We're trying this, and the store will also serve as a place for people to bring product packaging that we normally collect via our Brigades, getting 2 cents per piece to the charity of their choice.
So what do you think will happen?
There's a number of factors at play here: The economy's in the toilet, which may cause people to pay lower prices, but could also lead to an uptick in brand affinity, because we're offering this option. Then there's the fact that we are a leader in upcycled products, making a tangible impact on the environment, which could cause people to pay more -- their small way of supporting a company making a solid effort. Others, not familiar with our highly competitive prices, may accidentally pay more then we normally charge anyway!
Then there is the very real possibility that people could do the very thing that business owners would fear most: Completely take advantage of this situation, paying pennies on the dollar for gear they clearly know is worth more. It's our hope that it's not the case, but we are being pragmatic about this experiment, doing it on a trial basis.
So what industries do you see this model working in? Do there need to be constraints put in place, or does doing that encourage people to pay the lowest allowable price? What do you think will happen at our store?
Tune in next week to find out...
Last updated: Oct 23, 2009
TOM SZAKY is the founder of TerraCycle, a New Jersey based company that makes fertilizer using worms and produces retail products from recycled goods. The firm was started while he was a student at Princeton University. Tom was named "The No. 1 CEO Under Thirty" by Inc. magazine in its July 2006 issue.