Ecomonkey: Environmental Sustainability for the Mass-market
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Until recently social and environmental sustainability remained something of a niche market: whilst it was good to be seen as environmentally friendly, there were few people who took their commitment seriously and the range of green goods and services available to consumers was restricted. Environmental sustainability was a nice idea, but outwith the small group of dedicated environmentalists, it simply wasn’t a priority.
These were some of the thoughts which crossed green entrepreneur Philip Immirzi’s mind as he watched an EU funded pilot for a green reward card fail to capture the imagination of consumers in the 1990s. “It had a budget of millions, bespoke terminals and all that sort of stuff,” Immirzi explains. “Initially they tried only rewarding things that were green, but they found that the take-up was restricted.” Perhaps it was just a case of wrong place at the wrong time, but Immirzi believes the scheme learned some valuable lessons.
One problem, he explains, was that they had set their green criteria too tightly. In order to be successful, it was necessary to incentivise people not just for “buying green”, but for their participation as well. It was this belief that formed the kernel of his Ecomonkey venture.
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Ecomonkey
The idea behind Ecomonkey is simple: green points are awarded to users for their participation in the reward scheme, with more points being given for the products with a higher environmental or social sustainability rating. In this way, users are awarded both for there participation in the award scheme, but are offered a further incentive for more sustainable behaviour. The business model is essentially a cost per transaction one, with each transaction generating a commission from the supplier used. This is then passed on to Ecomonkey's users, in it's entirety if they buy green rated products.
One of the first steps in building such a system was to develop a simple means of classifying products, brands and retailers according to how green they are. Using published sources and filtered Google searches such as GreenSpy that use corporate responsibility and environmental sustainability criteria, Ecomonkey developed a simple colour-coded system based on three categories:
| Red | The bottom half | The general category for products, brands and retailers, which do not exhibit an acceptable level of environmentally sustainability. |
| Orange | Good | Products which are more sustainable but do not lead the market in terms of their sustainability. |
| Green | Excellent | Products which lead the market in terms of environmental sustainability. |
This is used to derive a tripartite classification involving products, retailers and manufacturers, meaning that users have greater choice, e.g. to purchase a green-rated product from an orange-rated retailer made by a red-rated manufacturer.
Building Relationships
Ecomonkey's business model relies currently on affiliate marketing, with the commissions offered by its retail partners providing the basis rewarding its users. To this end, Ecomonkey is reliant on the relationships it has with its retailers and in particular good quality XML product feeds it receives from them. for
A large number of retailers participate in the site, from small less well-know ones such as My Greener Home and Noflysonus all the way through to large companies such as John Lewis and B&Q. Yet from this range of retailers it’s the smaller companies that tend to play a more active role in the business. Whilst Immirzi has had to approach many of the larger retailers on the site himself in order to secure their participation, it is often the smaller ones who have been more enthusiastic and open to building relationships, with many contacting Immirzi to request their inclusion on the site.
In addition, Immirzi explains that smaller retailers tend to offer considerably more commission than the larger ones. “It’s not uncommon to receive a commission of between 10 and 15% from smaller retailers, which means that buying the same product from a smaller retailer can mean a bigger incentive for users - the green points are effectively a discount.” This also levels the playing field for smaller retailers, who have higher customer acquisition costs and may price their products more expensively.
Starting Up
Immirzi began thinking about setting up Ecomonkey after being made redundant from Scottish Natural Heritage. Having worked all his life in environmental sciences and acquired an MBA, he wanted to direct his energies elsewhere. Issues such as green capitalism and corporate social responsibility were never far from his mind and, always interested in trying new things and taking on new projects, the idea for Ecomonkey was born.
The original idea drew inspiration from consumer carbon offsetting initiatives. Consumers are encouraged to pay a little bit extra to offset the carbon emissions generated when buying a product or a service, e.g. a flight or an electricity supply package. The extra cost is passed onto bodies who plant trees or invest in renewable energy. A degree of altruism is necessary to pay the extra. Immirzi felt that there was considerable mileage in using companies' marketing budgets creatively to incentivise green behaviour, but at no extra cost to the customer. Moreover, the Ecomonkey scheme has been designed to appeal to consumer's innate self interest. leaving it to them to decide whether to redeem their points or donate them to charity.
Open source software has also been a key factor in the success of the venture. The site runs on a customised open source CMS framework, Drupal which means that there are no licensing fees to pay. For those looking for a ready built open source e-commerce platform, there are a number available: osCommerce, ZenCart and Virtuemart, being some of the main contenders [1]. But none of these provided the breadth of functionality that Immirzi required. The big advantage of using open source software, according to Immirzi, is that the software can readily be customised to suit the specific needs of a particular business, while providing 80% of the day to day website functions. Which is appealing to large companies as it is to cash-strapped start-ups!
The Funding Gap
Ecomonkey has been relatively fortunate in that it has not had to rely on any grants or awards thus far in its development. Although Immirzi has been slightly sceptical towards seeking funding: "the bureaucracy involved is time consuming and then waiting for uncertain funding can slow down the development process, not to mention trying to fit your great green idea to the application criteria", he recognises that capital is required to take the business to the next level and is actively looking for funding. Another issue is that many of the funding initiatives available for start-ups may ask to see a clearly defined strategy showing how the business will develop. At the early stage of a business start-up a more iterative approach is sometimes advantageous, trying out new ideas, scrapping failed ones and tweaking the business model.
Advice to Green Entrepreneurs
Immirzi is optimistic about the future and sees an increasingly bigger role being played by environmental sustainability in the mass market. Businesses whose core ethic is to incentivize ethical behaviour with respect to environmental sustainability, such as Ecomonkey and those in the Green-Tech sector, offer numerous opportunities to entrepreneurs. Ultimately, it is by taking advantage of these opportunities that they will help bridge the gap between theory (the intellectual level debates about environmental sustainability) and practice (the behaviour of the mass-market).
It seems certain, however, that by starting a business specifically focused on sustainability, there are a number of challenges that will need to be overcome. For this reason, Immirzi offers ten tips to budding green entrepreneurs.
- Chose the advice to accept and when; but don't be in a hurry to dismiss advice, it might come in handy later!
- Don't let your ego get the better of you and don't fall in love with your great green idea (for too long): be prepared to take a different direction.
- You might be green when you set out, but you'll have to develop a thick skin quite quickly.
- Don't waste time preparing the perfect Business Plan: the chances are you'll be recycling it soon. It’s important to write things down, because you will always need to communicate ideas.
- Don't stay in stealth mode any longer than you have to.
- At the beginning you will need to become a master of everything: take an interest the minutiae, but without losing sight of your overall aim.
- Don't overestimate the size of your green market, its growing, it may well be growing much faster than other markets but so is your competition and the playing field is very uneven.
- Your great green idea is being copied while you are still thinking about it: you need a bagful of good ideas to take to market.
- Don't spend all of your first lump of money before you've secured the second.
- Don’t let yourself be pigeon-holed: Green is only a “niche” if you want it to be.
References
- ↑ Ecommerce pack: Shopping Cart Software, Review of the best Open Source online e-commerce applications, SiteGround n.d., http://www.siteground.com/shopping_cart_reviews.htm
