For many socially conscious consumers, it’s not enough that a company has a great product — it should also have the right mission powering it.
Take the clothing and accessories brand TOMS, for instance. The company operates on a “one-for-one” business model, which means that it donates one pair of shoes or glasses to communities in third-world countries for every pair sold to a first-world consumer. On the back of this social commerce model, the company now sees about $500 million in annual sales and has become one of the most recognizable names, particularly to millennial consumers in the footwear industry.
And while millennials may be the most likely to let their consciences guide their purchasing decisions, research indicates three-quarters are more likely to buy products from companies that support their favorite cause — more than 60 percent of the general population pick products based on where they come from and what the companies that make those product support.
While socially minded entrepreneurs may have the best, and biggest, of intentions, execution is often a challenge. Businesses often struggle with ethically sourcing the products to giving back the money in a way that it gets where it needs to go — all while still serving the needs of customers.
These are challenges that Daniel Jones, who founded Bext360 in 2016 and serves as its CEO, is all too familiar with. Bext360 is a fair-trade coffee supplier for retail coffeehouses that uses social commerce to give back to communities from where the coffee is sourced. The company will make its grand debut in July of this year, when it announces the first five local coffeehouse chains, located in the Denver and San Francisco areas, that will partner with Bext360 in its community-based coffee enterprise.
In a recent interview, Jones told PYMNTS how the fledgling Denver-based company pairs blockchain technology to track shipments and logistics with a message that resonates with the emerging social consciousness of modern consumers who care about where their products come from and if their money is actually benefiting the farmers who harvested the beans that wind up fueling their cups of coffee.
Where it comes from …
Believe it or not, despite the obvious differences in the composition of an Ethiopia-sourced double espresso latte and a diamond bezel Rolex, ethical coffee farming and mineral mining have a lot in common.
And, as Jones explained it, sourcing for both industries gets particularly complicated and costly when getting into the fair-trade mix.
“There are a lot of small-scale artisanal miners, and there are a lot of small-scale farmers when it comes to minerals and coffee,” Jones explained. “Fair-trade coffee has been around for a long time and is becoming more and more popular, but to actually execute fair trade, there’s a lot of overhead and a lot of things you have to be careful to get it right.”
That overhead includes not just tracking the harvested beans, but also being able to track the payments back to the farmers where the coffee is sourced, in countries such as Colombia and other South American nations. After all, meeting fair-trade regulations and standards is all about making sure that the right hands get rightfully paid for their work.
And in order to do that, using technology like blockchain tracking, mobile wallets and digital payments go a long way — something that Bext360 has built its supply chain model around.
“I’m sure most people can picture people using carbon copy paper to try to keep track of payments in those areas because there are no banks or anything like that, but our technology allows it to be instantaneous — because it’s all digital, it’s much easier for everyone to keep track of, and even farmers in these small countries rely on cellphones,” Jones said.
The company also uses using blockchain technology from Stellar.org to handle tracking and payment logistics, which also enables them to share with consumers where the coffee beans traveled along their journey. The Stellar network enables the company to create real-time records of the time beans were harvested, their value and which farmers need to be paid for their harvest and to pay those farmers on the spot. Previously, records were often kept via pen and paper and often lost or altered, meaning it could take farmers months to be paid.
“Blockchain just makes it simple,” Jones explained. “If our customers want traceability, we can provide them with payment details, where the ingredients came from, and we ensure that it can be seen and understood with transparency.”
… And where it goes
But for many consumers interested in making sure the money spent on their caffeine kick is going to the right place, just sourcing the beans ethically isn’t enough.
Nearly two-thirds of consumers aged 18 to 34 and more than half of consumers aged 35 to 44 are more likely to buy products from a company that contributes to a charity, according to a recent survey.
To appeal to that young base of consumers and meet its own ethical standards, the company gives back some of its profits back to the communities that grow and harvest the beans. These donations often take the form of charitable community projects such as schools and other public works in the area.
Doing so, Jones explained, helps the customer see exactly where their money is going. With each purchase, Bext360 notifies customers via email or text message exactly what percentage of their purchase was donated, what the donation helped fund and the status of the fundraising campaign. Customers can also opt in to be notified as the project progresses, including when the fundraising goal is complete.
The idea, Jones said, is to keep customers invested in how their coffee purchase is more than just a cup of coffee, which in turn makes them that much more likely to go back and buy another cup to support the project. If customers at the first locations in Colorado and California respond to Jones’ social commerce as he expects, the company plans to expand sales to larger coffee corporations such as Nestle or Starbucks in the coming years.
“People are becoming more socially conscious of where their products come from and what those dollars actually contribute to,” he said. “I think that’s a positive thing, obviously not only for our business, but in general, and I think that’s a trend that’s going to continue to grow and one that we’re working to find an efficient way to satisfy.”
When it comes to international commerce, tracking and logistics are always important ingredients, and when a company and its customers demand that their cup of coffee gives back to those who helped make it happen, they become especially crucial. But with the layering in of blockchain and mobile technology, tracking the storyline of a cup of coffee you can feel socially sound about may soon be as simple as consuming it.
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