10 Tips for Setting up a Merchandise Program for your NGO

We often get calls from non-profits wanting to get branded products (“merchandise”) to sell as fundraisers. It’s a great idea in theory, but like most things in life, reality can be cruel. We’ve crafted a list of 10 things to consider before launching into a merchandise program to help smooth the bumps along the way.

These points are designed for organizations considering merchandise sales – either directed at end consumers (retail style sales) or directed at internal buyers (e.g. setting up a bulk purchasing program for your different chapters or departments).

You might not have all the answers to the questions posed below – BUT between your organization and the merchandising partner you choose, make sure you  have all the answers or you’re bound to hit a few hurdles along the way.

1. Define the Purpose of the Program

• Identify the primary and secondary purpose of the program. For example, is the program designed to generate revenue, build brand awareness, build your contact list, or to consolidate purchasing to pass on savings to your end buyers?
• Caution: Many organizations start out with visions of their merchandise program being a significant revenue generator for their organization – and are often disappointed at the results. Some good planning will help set realistic targets and ID secondary benefits at the outset so you can meet the outcomes you set.

2. Create a Business Case

• Do the math. Sounds simple but it’s a critical step that many people miss. If you purchase a t-shirt for $8.00 and sell it for $20.00 you make $12.00, right? Actually, no, you don’t. You need to account for the time put into setting up the program, design time for graphics, time or $ spent ‘picking and packing’ (getting a product packed and shipped), hosting fees if the store is online, etc. Understand that the time for a return on investment may be longer than expected.
• Assess your systems. Do you have an online merchant account to accept payment? Do you know the tax laws as they relate to selling merchandise or accepting donations on a website? Think through the details, sweat the small stuff.

3. Identify Your Audience/Customers

• Who are you selling to? Are they ‘retail’ customers buying one item at a time or are you designing a program for your local chapters or branches to leverage bulk purchasing discounts? Are they a captive audience or a general consumer that you have to win over?
• Are they young &cool or old &conservative? Why would they buy from you, what would they buy from you?
• Where are they located – will you be shipping internationally?

4. Figure out your Assortment & Products

• Less is More. Volume buying leads to discounts and the fewer products you have to offer, the higher quantity you’re likely to sell of them – too many choices may result in only selling a few of each item – and you lose the savings in high quantity purchasing.
• Apparel is hard. If you’re looking at apparel consider that you will have to have different sizes, and potentially different genders or ages (mens/womens/youth) – managing inventory gets more complex. There are industry standard ‘size curves’ to help guide how many sizes you should get for the general population – but be prepared for anything, and ensure you can replenish your inventory quickly if one size or style moves quickly.
• Choose sustainable products. Get products that fit with your mission and that are durable and useful. The risk of doing serious brand damage by selling/giving away ‘bad’ product is very real.
• Make it cool. Gone are the days of printing an organization’s logo on a shirt and expecting it to get worn – consider creative designs, speak to your audience (e.g. hip/young, eco/older), consider limited edition print runs of t-shirts, or a design contest.

5. Create a Marketing Plan

• Products don’t sell themselves. Know how you get your message out – Do you have a good list of supporters and an easy way to connect them to the initiative? Will you email contacts, send a newsletter, a press release, blog, twitter?
• Refresh the store. Keep it up to date, add additional content and merchandising strategies like feature products to keep people interested and coming back.

6. Understand your Order Management

• Do you (or does your merchandise partner) have a good system to manage orders – tracking the details like colours, size, ship to address, etc? Ensure you have the systems to manage the orders & payments you receive.

7. Figure out who is taking care of Fulfillment & Logistics

• Picking and Packing. No one ever thinks about this part of it. Getting the right t-shirt or water bottle out of a case and into a package with the right address. It’s called picking and packing and someone has to do it – make sure you know who will manage this (and what it will cost).
• Shipping. How will you ship products? (e.g. UPS, Canada or US Postal Service) Will you allow customers to choose? Will you mark up shipping to cover the ‘handling/pick & pack’ costs or add those separately?

8. Identify who’s in charge of customer service and returns

• Who will pick up the phone when a customer calls to complain? Mistakes happen, whether it’s small (“I wanted a red shirt not a blue shirt”) or large (“I ordered 200 shirts last month and haven’t received anything”). Have a policy and a process in place for dealing with customer inquiries.

9. Find ways to managing risk & leverage the program

• Do ‘pre-sales’. Send out notice of the product you have for sale with a time bound order deadline (e.g. order by June 01 for delivery July 01). That way you only make as many products as are ordered and diminish risk of having extra inventory.

• Conduct a survey with prospective customers. Before you set up your program, survey potential customers to see if they’d buy and what they’d buy – plan your assortment around that.
• Identify other sales channels. If your products don’t sell to the intended audience, is there another way you can use them? For example, could those extra stainless steel water bottles be used as donor recognition gifts, perhaps the t-shirts can be given to event volunteers… Ask around your organization to identify what products are already being used to see if you can find synergies.

10. Timelines and Deadlines

• Be realistic about how long it takes to set a good program up. Allow 3-4 weeks to actually make the products (this is after artwork is approved). Add to that the time to develop a marketing/communications plan, and if needed set up a web-based store (probably another 4-6 weeks depending on the model you go with).

Merchandise programs can be tricky, but they can also be a valuable source of income for your non-profit. The point is you need to make sure the program is organized and delivered effectively. If you would like some assistance, we know just the people…us! We’ve supported a number of merchandise campaigns for groups such as the David Suzuki Foundation, AVEDA and Canadian Federation of Students. I’m happy to share our lessons learned. Give me a call at 1.604.732.3247 (toll free 1.866.606.3247).

In the meantime, here are a few good resources to consider:

Enterprising Non-Profits – provides grants and resources to non-profits organizations for technical assistance along the entire business development path.

Social Enterprise Business Plan Software – designed for non-profit organizations as an easy-to-use blueprint for planning a successful earned income venture, or social enterprise.

Social Enterprise Alliance – advocate for the field, hub of information & education, and builder of a vibrant and growing community of social enterprises