Goodwill Tries to Figure Out Online Commerce

Goodwill knows it needs to figure out e-commerce. At stake, the nonprofit retailer says, is its ability to generate enough revenue to fulfill its mission: providing job opportunities for those in need.

Since its founding in 1902, Goodwill’s locations have been go-to spots for millions of people looking to get rid of their lightly worn clothes and rifle through the racks for other people’s stuff. But when it comes to online shopping, Goodwill has a ways to go. For more than a decade, it has faced mounting competition from the likes of ThredUp, Poshmark and Etsy’s Depop, online platforms specializing in previously owned clothes.

Goodwill is made up of 154 independently run organizations that have their own chief executives and control the inventory that is donated to stores in their regions. More than 100 of them use an e-commerce auction site called ShopGoodwill.com, which was started in 1999. Other locations have offloaded some of their donations on eBay.

Over the past year, a handful of Goodwills have been contributing to a new online site, GoodwillFinds.

“There’s so much competition coming into the market now,” Matt Kaness, chief executive of GoodwillFinds eCommerce, said. “So all the donations — the billions of pounds of donations that Goodwill gets every year — is now a massive market that for-profit players are targeting.”

GoodwillFinds mirrors the look of many other major retailers’ sites, with categories like women’s and electronics and the ability for shoppers to filter their searches by brand, size and color. It also has unique sections like Heirloom-Quality Finds, and clearance.

When discussing the site, Goodwill executives toss around industry jargon and explain the ways they’re improving the customer experience. They have sales targets, want to attract customers with “high lifetime value” and are monitoring the commission structure that could eventually help the website break even.

But Goodwill isn’t doing this just because it wants to move into the 21st century. More than 130,000 people work across the organization, while two million people received assistance last year through its programs, which include career navigation and skills training. Those opportunities are funded through the sales of donated items.

Nowadays, people can easily get paid — by businesses including ThredUp and the RealReal — to offload their lightly worn T-shirts and designer bags, rather than donate them. While many devotees say it will always be easier to drop off a bag of goods at Goodwill than deal with the online consignors, the increasing competition poses a threat to the nonprofit.

Last year, the total U.S. market for secondhand retail was $174.1 billion, lifted by consumers’ growing interest in buying sustainable options and finding ways to save money. That’s expected to reach $258.8 billion by 2027, according to the consultancy firm GlobalData. Analysts note that Goodwill is growing more slowly than its competitors.

“We’re kind of playing catch-up,” Mr. Kaness said.

The stakes of getting it right are high. Last year, Goodwill helped nearly 180,000 people through its job services.

Ronnie Hunter is one of them. In February, after spending about 20 years in state prison in Illinois, Mr. Hunter returned to Chicago’s Englewood neighborhood with the goal of getting a job. He knew about Goodwill stores, but it was a friend who told him that Goodwill also offered a work force development program where he could learn basic computer skills and receive a nice shirt and a tie to wear to interviews.

At first, Mr. Hunter was skeptical that it would be enough to help him overcome the hurdle of securing employment. But after completing a one-week program and then receiving mentorship from a Goodwill worker, he secured a job at a local company that reupholsters seating for transportation companies. He earns about $17 an hour.

Mr. Hunter is still in touch with the Goodwill employees who helped him find his footing. “Those employees over there really go the extra mile despite what you did or what you’ve been through,” Mr. Hunter said, adding, “You walk in, it’s such a warm feeling.”

Continuing to help people like Mr. Hunter makes Goodwill’s online strategy even more urgent. But success is far from assured. Major retailers have spent years building teams and pouring money into establishing sophisticated e-commerce operations that involve machine learning and seamless distribution channels.

Goodwill’s latest e-commerce venture was in the works for a couple of years. In 2019 and 2020, Goodwill executives commissioned market research to gauge the opportunity they had online.

“It was clear as day that in terms of e-commerce, this was a booming market for resale,” said Daryl Campbell, chief executive of Evergreen Goodwill in Washington State and a founding member of GoodwillFinds.

“We recognized that the Goodwill brand needed more of a centralized presence online — kind of a stand-alone ‘here’s the Goodwill brand in this space’ — in order for us to be able to compete in this really rapidly growing aggressive market,” he added.

Goodwill’s decentralized model makes the challenge of gaining an online presence more complicated. In 1999, Goodwill of Orange County in California started Shopgoodwill.com, an auction site. That site still operates with 128 Goodwills contributing and said it had brought in more than $2 billion.

GoodwillFinds, which has just 14 members, has sold $25 million in merchandise since it started last year and has half a million subscribers, Mr. Kaness said. He said sales growth had increased 50 percent quarter over quarter.

Executives at both Shopgoodwill.com and Goodwillfinds.com said there were currently no plans to merge the sites. On Goodwill’s main website, a drop-down option features both for people looking to shop online, with no direction on which one they should choose.

The charity is also contending with a marketing conundrum. Everyone knows Goodwill for one thing. How does it become top of mind when people go online?

“They are the ultimate brand name in thrifting,” said Patricia Hambrick, who teaches branding, marketing and sustainability at Boston University’s Questrom School of Business. Goodwill, she added, needs shoppers “to get an awareness that they actually have anything online because that’s not necessarily where you would think.”

As any retailer knows, it’s not easy building an e-commerce website that shoppers want to go back to time and again. And one dedicated to resale presents even more hurdles. What Goodwill sells on its site is limited to donations, which are generally countercyclical. In other words, people drop off winter clothes during spring cleaning and give their shorts away just as it’s getting cold.

GoodwillFinds has invested time and resources into teaching its participating members strategies for curating merchandise, taking photos and writing descriptions. Recent finds for shoppers included a 14-karat white gold diamond oval ring for about $1,900, a pair of red Nike high-tops for $46 and a Nintendo 64 for $95.

Items ordered off GoodwillFinds are shipped from the contributing member’s region, and each distribution center operates a little differently.

“Trying to create a normalized customer experience across that environment has proven to be challenging,” said Jim Davis, the chief revenue officer of GoodwillFinds. “The tools we’re building out are starting to normalize for us and make it very possible.”

But that costs money. Mr. Kaness, who previously was an executive at Walmart and chief executive of ModCloth and Lucky Brands, is well aware that operating a tech venture within a charitable organization is difficult. Many of the well-capitalized, publicly traded online resell sites are not profitable; Mr. Kaness said he thought it would take $15 million to $25 million of investment to get GoodwillFinds to where it could compete with them.

Outside a Goodwill location near Manhattan’s Union Square on a recent afternoon, several shoppers said they were unaware the nonprofit even had a website.

Olivia Klem, 23, who dropped off five bags of donations, said she had learned about the e-commerce site when she went online to search for the nearest Goodwill donation center. She said she might use the site when looking to buy something specific rather than just browsing.

“I like the aspect of going to Goodwill and trying things on and seeing what I can find,” Ms. Klem said, holding three tote bags packed with items like wooden spoons and cups she had bought after dropping off her donations.