Part two of greener can be cheaper

Co-op for raw materials

One of the biggest justifications for the higher cost of green products is the higher cost of organic or otherwise green materials.

One of the reasons for this discrepancy between the costs of standard and green materials is something called "economies of scale," a term that basically means that the more you use or make or grow or create, the cheaper it is per element.

The green world is no exception. But manufacturers seem to be forgetting this. Or ignoring it. Or perhaps just acting as though it doesn't apply to their product.

And that can be deadly to green businesses at all levels. Here's an example:

When a company decides to manufacture notebooks with recycled paper, they need to order the paper. Most green products have a limited run (more about why in a second.) So the company orders X reams of recycled paper, makes the notebooks. A price is set, based upon the materials and the perceived value of a green product at wholesale.

A wholesaler or a retail store gets the notebooks, and marks them up again to cover both the cost and the value-added of a green product.

They may also add in a factor to cover the cost of expected unsold product because of the higher sales price of green items. After all, they cost a lot more so people buy a lot less. That was the assumption from the start, when the run size was determined and the prices were set at each stage.

The problem is, that assumption is killing green products and green businesses!!

Let's start over.

The company who wants to make green notebooks finds other companies who are making green paper products. Together, these companies order a significantly larger amount of recycled paper. The paper manufacturer gives them a better price because it's such a large order(economies of scale).

The materials costs are now lower, so the price can be set lower. If the order for paper was large enough, it might be the same as or even lower than standard runs.

Now the notebooks go to the wholesaler or retailer. And because of the perceived value to customers and the lower wholesale price, they order many more. They may get an even better price. The cost to them is the same as a standard notebook, or at least close. Again, economies of scale.

A mark-up to cover anticipated unsold items isn't needed, because these notebooks cost the same as standard ones AND they have the appeal of being green. Easier to promote!

So now the price that the consumer sees is about the same as the regular notebook AND they have a good feeling, too. More notebooks sell, more are ordered and the cycle is in place.

Unless someone gets greedy and forgets that short-term gains equal long term losses, the notebooks sell, the costs remain low and the earth benefits. And we benefit.

For less.

Part one of greener can be cheaper

Step 1: Forget about the gimmicks.




A single baby blanket hand-tied with am organic hemp string before being adorned with a hand-lettered recycled paper diecut tag proclaiming its incredible greenness is cute...until you see the price. Is this product designed to improve sustainability for the average consumer or to allow the well-heeled shopper to congratulate themselves as they load this one perfect blanket into their SUV and head home to the 6000 square foot home for three people?

If the goal is to REALLY reduce waste and pollution and environmental abuse, a package of ordinary-looking baby blankets with an ordinary printed tag will reach far more people. Of course, the blankets can be green, whether that means organic or made without toxic dyes. And the labels and bags can be recycled materials. But because there is no need to shout, more people would buy them.

More demand would reduce the unit cost, as unit costs for manufacturing are higher for smaller runs. So even more people could buy green...probably many of them without even looking for green. And THAT is when green is real and not about show.

Making greener cheaper

Greener can and should be cheaper.

My previous posts on green marketing and overpriced goods lead to a lot of comments via e-mail. Some agreed, and gave examples of truly green marketing in Europe where the absence of overtly green images doesn't change the fact that the products ARE green. Another had attended a green trade show here in the US and complained about the explosion of green ink, and the even more disturbing fact that many of the items advertising green loving were not in fact green products at all!

Others complained bitterly, saying that of course green has to cost more -- a lot more -- because the raw materials and processes are so much more costly. Is that true? It may be in the short term, but that is largely because of the high retail prices, rather than an excuse for them. More about that later.

I want to explore ways in which green items can...and should be cheaper. And why manufacturers and suppliers using the green image as a gimmick are over-inflating the prices,using guilt or fear instead of value as a marketing message.

The next few posts will focus on the real costs of green production, building and sales. I would hope you would join in by commenting on the blog or by submitting guest articles. I want to hear from you. I want to open the floor to the why's and how's of green life and business. Will you join us?

Department of Homeland Security Green Disaster

In a ruling about a month ago, the Department of Homeland Security (DHS) announced that the I-9 Forms used to verify and document employee eligibility to work would be changing. Some of the acceptable documents had changed. The form content was rearranged. And because every employer in this country is required to use one of these forms for every single employee they hire, that meant that every existing Form I-9 and every existing set of instructions for the I-9 form would have to be thrown away and replaced with new forms and new sets of instructions.

There was a very short time between the final release of the new form and the requirement to use a new form, and no option to ease into the new forms. So lots and lots and lots of paper was thrown away. A small portion was probably recycled. And new forms were designed and printed. And new books and instruction sheets and templates and FAQ's were printed in anticipation of a February 2nd deadline.

And then, yesterday, February 1st, less than 24 hours before the deadline, the DHS reversed itself, saying that the new forms would not be acceptable, the new requirements would not be in effect, and that employers must continue to use the old forms and old instructions at least until April 3rd of this year.

The same forms that people just threw away. Replaced. That companies like G.Neil and HRdirect and ComplyRight just reprinted in the new and now potentially useless format!

So what we have is a green disaster on two fronts:

First is the green environmental disaster. Millions of sheets of paper have been disposed of and will now have to be printed. Millions more have been printed and now may never be used. And potentially millions more will have to printed again when the DHS makes up its collective mind in April. And besides all the paper, we have all the ink (potentially toxic) and the eletricity that was used to do the printing and the gas that was used to drive the disposal and the delivery trucks!

And we have a green money disaster. Companies, already struggling financially, had to dispose of unused forms and other paperwork surrounding this form, and buy for print new forms and new paperwork. And that costs money they can ill afford. Now they are being told that they must again replace the I-9 form, but this time with the one they had before. And will possibly need to buy all new stuff AGAIN in April! Just what businesses on the edge of bankruptcy need -- more expenses with zero return.

Developing green products that sell

On Friday, I went after the glaring failures I see in the green product world. And since I'm a firm believer in never pointing out a problem without also offering a solution, here are some ideas for creating or sustaining a green product line.

1) Do your research! The Internet is an endless resource for research. Start there. Find out what people are looking for. Join forums and read blogs. See where the push is for greener products. A preliminary search a few days ago revealed lots of new moms looking for organic or natural baby clothes that don't cost a fortune (babies grow too fast!) but offer some protection from the harsh chemicals now used in most infant wear. Is the need met? From the number of posts, clearly not. Remember, successful green marketing is not about telling people that they need something, it's about finding out what they need in a green format and providing it.

2) Mind your price points. Just because a product is green, doesn't mean it should cost more. And it certainly doesn't mean it should cost a lot more!! Work to source your materials and processing with an eye on the final retail price. We're living in a shaky economy. If you want your products to sell, they have to offer value as well as a greener benefit.

3) Skip the shouting! Just because your product is green, doesn't mean it has to look different! People like pretty greeting cards on white or colored card stock, so forget the brown cards imprinted with faded earth tones. Soy and vegetable inks are available in a wide range of real colors, and recycled paper doesn't need to be brown or grey!

Of course the buyer should know it's green -- but that could be as simple as a tag or imprint. It doesn't need to be in their face. Make it work for ordinary shoppers, too. Cartoon characters on organic cotton bibs and t-shirts instead of tired "save the earth" slogans will sell more product and thus do more for the earth by replacing non-green items with similar images.

4) Start with the purpose. If the purpose of making and selling green products is simply to show the world what a mensch you are, by all means, continue making them obvious, different looking and elitist. But if the purpose is to help the planet and make a difference, focus on how you can take ordinary, popular items we all buy and use and make them safer, greener, more organic, less wasteful. Offer that, in a familiar look, functionality and cost level, and you will be on your way to a green business success.

Developing new green products

Just because a product is green, doesn't mean it's going to be in demand.

This might seem like a serious "Well duh" moment...but the basics of product development seem to have slipped out the window when it comes to green products and services. Instead of looking at what people want, identifying an unmet need or refining an existing in-demand product to make it greener and better, there has been a headlong leap into Never-Never Land where just because it's green, it should be made and by the way, money is no object. For potential buyers, I mean.

The result has been a glut of poorly thought out, overpriced products that quickly move from the feature shelves to the clearance bin. Some examples I've seen recently include:

Recycled paper notebooks directed at kids priced at $8.99 each, displayed within a foot or two of shelf after shelf of regular notebooks selling for less than a dollar each. To make matters worse, the recycled ones offered covers in shades of brown and subdued earth tones. The regular ones featured today's most popular movie, TV, cartoon and music images. Needless to say, three weeks later the recycled notebooks sat alone in a clearance bin with a still overly-hopeful $4.99 price tag.

Organic cotton t-shirts in a local discount chain store were featured at "only" $24.99. For a t-shirt. At a discount store. The non-organic counterparts sat only inches away at $6.99 each. And again, the images on the recycled ones were self-consciously "earthy", while the standard fare featured pithy sayings and fun popular culture images. Again, the former soon filled the clearance racks.

So what's going on here? What mistakes are being made?

1) The real focus in these products isn't on BEING green, but on looking green. Never mind that recycled paper could be used in notebooks that feature bright colors and popular characters. Or that t-shirts could be made of organic cotton and offer pithy sayings instead of "Look at me, I'm green" self-congratulatory announcements. These products aren't meeting a need -- they're attempting to use ordinary objects as political statements. Is that what consumers want? Apparently not!

2) The price points are out of line. People looking for green products, as well as those who will choose greener ones given equal choices, may be willing to pay a small premium for green. But when the green version is two, three or even four times as much as standard counterparts, the sell becomes difficult if not impossible. The cost/benefit ratio is just out of line, especially in a tight economy.

3) Little or no effort has been spent to research the realities of green shoppers. If any ordinary product was released with zero research on the willingness of potential shoppers to hand over their hard-earned cash in exchange for a product, the company making such a poor business decision would be ridiculed. Instead, certain so-called green manufacturers are lambasting the consumer for a failure to buy! And anti-green factions are lapping up the weak sales as "proof" that green is just a fad. Meanwhile, the consumer searches in vain for affordable, quality products that use a bit less, pollute a bit less, reuse a bit more.

Selling a green product is no excuse for forgetting the rules of supply and demand.

More Monday on the steps green product and service providers need to take to create sales success.

Don't give up on green

Your budget is so tight, it's screaming out in agony. You're looking for places to cut costs, and that new green initiative looks like it's a good place to do some trimming.

In reality, the green products and green practices are one of the last places you should look to for cuts!

Why? Here are a few good reasons from the business buzz...

Green is here to stay. In a world where population and energy use is on the rise due to increased industrialization and consumption in places like China and India, statements like "Save the earth" or "Reduce, Reuse and Recycle" that used to sound like feel-good platitudes or tree-hugging ad slogans have become very real directives. If we are to survive as a planet and a species, changes in our throw-away mentality are a necessity. There just isn't enough to sustain us all given current practices. The changes will have to be made soon, and barring the invention of Star Trek-style replicators, will be permanent.

Green is in demand and that demand is growing. A recent survey of restaurant owners and operators showed that the green fad has become the green mandate. Customers and employees alike are insisting on safer, greener cleaning products, greener ingredients in the food and greener practices in the restaurants they frequent. And as spending slows, businesses can no longer afford to ignore that loud voice of the green consumer. If they want a share of that shrinking spending pool, they will have to provide a greener dining experience. That means more demand for everything from green soaps and disinfectants to green paper goods, dishes, and take out containers. Even job applications and labor law posters are showing up in green versions.

In the long run, green will cost less. As we shift from a more throw-away, wasteful economy to a green and aware one, the overall cost for green products will drop below that of more wasteful ones. That means more demand in that on-the-fence segment who wants a greener choice but will not (or cannot) pay a premium for it now. And the increased demand will further reduce the costs of products created using efficient practices and recycled "raw" materials. Getting in on the trend now means you'll be able to reap the benefits in the short and long run. Waiting until the shift is complete will be too late.