In Business, Creating Sustainable Enterprises & Communities

A GOOD WORLD GETS READY FOR ACTION

In Business, May-June, Vol. 29, No. 3, p. 18

A fair trade gift company prepares for market with products mostly generated from women in developing countries.

Amy Schilling

WHAT DO a rock climber, fashion designer, filmmaker, drummer, Peruvian ballet dancer, snowboarder and hip hop instructor all have in common? In this case, they're all working to build a World of Good. And no, it's not some new attraction at Disney's Epcot Center; World of Good is a for-profit, nonprofit hybrid business that imports and distributes fair trade artisan handcrafts (scarves, handbags, jewelry, house wares) from 34 countries around the world. In three short years, it has attracted a group of employees as eclectic and original as the business - all who share a passionate desire to try and make the world a little bit better and believe that World of Good is the way to do it.
It all began when Priya Haji, cofounder and CEO first conceived the idea for World of Good while in business school at the University of California, Berkeley. Knowing she wanted to make a global impact and knowing that empowering women was the key, Haji set off on a year-long global journey to develop her plan - what she discovered was herself. “As I met these women I thought - they could be me. It's an accident of birth. Why was I born in America? Why was I born to educated parents? Why was I raised with the opportunity to go to Stanford?' I can't answer those questions, but the one thing I can do is use my privilege in a way that makes life a lot better for them,” Haji said. The other challenge these women faced, whether they were in India or Mexico, was their lack of access to larger more stable consumer markets. Haji realized she needed to build a company that could serve as a bridge for these women as well as build a profitable business to serve as an example of using capitalism to create positive social change.
World of Good was founded in Berkeley, California, in 2004 by Haji and her business school partner, Siddharth Sanghvi. Haji convinced Sanghvi to leave a successful position as a consultant to come and work for no money, building a for-profit business selling handcrafts made by women in developing countries. For Sanghvi, it was a no-brainer, “When Priya came to me, I saw World of Good as an opportunity to do many different things while creating an entirely new way of doing business.” In the beginning, when it was just Haji and Sanghvi working out of a tiny incubator space, Haji was responsible for choosing the products and opening new accounts while Sanghvi processed orders and developed the brand. Within nine months, they had 40 accounts around the San Francisco Bay Area and were getting additional help from student interns to handle all the orders. In 2005, they won multiple business plan competitions allowing them to expand the business with the award money. Thanks to pioneering partner Whole Foods Markets as well as visionary investors, World of Good can now be found in more than 1,000 retail locations nationwide, has experienced 300 percent growth each year for the last two years, and employs nearly 40 people.

WHAT IS FAIR TRADE?
Fair trade is the idea that when we engage in free trade, we do it in such a way that the person behind the product is empowered rather than exploited. Fair trade began in Europe more than 40 years ago and was built originally more as a charitable model rather than a profit-making endeavor. The basic principles of fair trade include paying a fair wage in the local context, ensuring safe working conditions, building long-term business relationships, providing market feedback and business development support and ultimately, maintaining transparent business practices. The idea of fair trade was first introduced to the United States through the commodities market with fair trade certified foods like coffee, sugar, rice and bananas. Transfair - a nonprofit organization based in Oakland, California - is the governing body in the U.S. that monitors the certification of fair trade commodities.
In other categories such as handcrafts, furniture or textiles, there is currently no product-level certification available. The main reason it becomes more challenging to track individual handcrafts (as opposed to a pound of coffee) is because the majority of fair trade handcrafts - things like scarves, jewelry and small gifts - are made in the informal economy, the part of the economy that has no governmental oversight to prevent exploitation. For example, in the United States, when we pay the neighborhood teenager to mow our lawn, they don't really have any power if they aren't treated fairly. In the rest of the world, the informal economy tends to be a much larger portion of the total GDP within a country, and globally, women make up 60-80 percent of this informal economy. Not only does fair trade provide employment for these women, but these same women tend to invest their increased earnings in their children's education and nutrition. Studies have shown that as income increases, there are many quantifiable positive social impacts such as decreased infant mortality, longer life expectancy and lower health care costs. This is ultimately why creating improvements in this sector can have tremendous overall impacts on the poorest segments of a developing country.
So how does this complex global trade issue become transformed into a profitable business? First, by filling a niche in the market. World of Good's business model mirrors the 'Hallmark' model which requires little effort by the retailer but offers a large return in a category retailers don't normally specialize in. In natural food stores, World of Good tends to have annual sales per square foot revenues that are 5-7 times higher than the industry average. Second, Haji and Sanghvi knew how to build a team with a lot of experience. While the average age of a World of Good employee is under 35, some of the key management have a long pedigree of success.
Third, from the very beginning, World of Good was built on the principle that fair trade practices begin at home. Employees receive full benefits, 401(k) with social investment choices, ownership in the company and the opportunity to visit artisan groups. While expectations are high and the hours long, employees are encouraged to pursue other interests and the results have been very rewarding - the team is energized, dedicated and completely devoted to the company's success. Angeli Duffin, who started as one of the first interns while still an undergrad, has had the unique perspective of watching World of Good from inception, “It's been such an amazing experience. As in any start-up, it is an enormous amount of work but also very rewarding for me to witness the growth of a business that is actually improving people's lives. The momentum is gaining and it seems to be taking on a life of its own - what we're doing is bigger than World of Good now.”
Finally, consumer demand for products that are ethically sourced has been steadily growing. Sales of fair trade products in the U.S. have been growing annually at a rate of 40 percent per year for the past 3 years. With the advent of cause-marketing and the recent launch of Product (RED), companies are realizing that treating workers fairly and producing products ethically can have a huge impact on the bottom line.
Haji likens the growth of fair trade to that of the organics movement, “In the same way that organics helped us think about what's in our food or our products in terms of pesticides and impact on the environment, fair trade is helping us think about the person who's behind our food or our products. The United States is the world's largest consumer economy; the way we buy is affecting communities all around the world.” Fortunately for World of Good, Haji seems to have intuited this growing consumer trend.

Amy Schilling is on the staff of World of Good, Inc. - based in Emeryville, California. Visit www.worldofgood.com.