The big idea: Patagonia, a privately held company with a deep commitment to the environment and the four Rs of reduce, repair, reuse and recycle, invested in a fifth R — reimagine. It developed the business justification for a new online portal, Common Threads Partnership, which redirected buyers of new Patagonia clothing to an online, auction-style platform that facilitated direct sales of used Patagonia clothing. Would Patagonia’s bottom line take a hit when potential buyers found a similar but used article of clothing for half the price? And how much sales commission should Patagonia request from eBay, its development partner?
The scenario: The Common Threads portal was an integral part of Patagonia’s evolution as a producer of environmentally sustainable clothing that would stand the test of time. Quality, durability and classic styling were all part of building this brand and market position. A long-standing goal was to formulate a consistent, scalable process for producing new man-made textiles from recycled, proprietary high-performance clothing or even, perhaps, from other manufacturers’ clothing.
Part of the company’s forward-thinking vision on its goal to reimagine was preventing clothing from being made in the first place. In fact, the launch campaign for Common Threads included a stark, catalog-style image of Patagonia outerwear, captioned with the phrase “Don’t Buy This Jacket,” supported by statistics illustrating the deleterious environmental effects of clothing production. From a core-values perspective, avoiding or redirecting sales seemed a natural fit for Patagonia, but would it reduce or enhance company profitability?
The resolution: Common Threads was launched with click-through enabled directly from Patagonia’s Web site. There, visitors were asked to sign a pledge to reuse, repair and recycle clothing whenever possible — and they also could enter eBay’s main site. Patagonia, for its part, invested capital in the portal’s development, which was customized to meet the needs of the owners and buyers of used Patagonia clothing, and advertised the project and the associated online pledge. Only eBay captured commission fees from the used-clothing transactions — Patagonia did not. Over the first several years, about 5 percent of visitors to the Patagonia Web site clicked into Common Threads, and 250,000 signed the pledge. Brand awareness and engagement soared.
The lesson: Patagonia’s success with an endeavor that required significant investment — and could have hurt sales — may have appeared to be a gamble from the outside. But when viewed as a natural evolution of the company’s DNA, the successful implementation was something more — an inspirational call to action.
Wilcox is a business professor and associate dean at the University of Virginia Darden School of Business. Goldberg is a Darden alumna (MBA ’03) and management consultant at Goldberg Strategic.