What does a donation cost?
A donation stops being free the moment an employee touches it.
If you have ever watched #SharkTank, the sharks like to ask “what’s your customer acquisition cost” A super relevant question.
In thrift, the donation acquisition cost is a very real thing.
In my current world, we pick up donations with our own trucks and accept donations at our stores. Each store has a truck that does pickups for the benefit of that store. That’s a big contrast with my experience with Goodwill, where almost everything was brought to us by donors.
When providing pickup services, there is the cost of two employees, the vehicle, fuel, insurance, and all the other stuff around keeping a commercial vehicle on the road. Then there is all the coordination in the background.
Those expenses add up fast and are important to understand. We recently began breaking out what we call logistics expenses from other store expenses. Not surprisingly it’s a big number.
We have some refining to do, for now, it looks like our cost to pull in someone’s driveway to accept a donation is about $80. It varies between stores because of population density and travel challenges. Knowing that allows us to better determine which donations we can pick up and which we can’t.
Interestingly when we include dropped-off donations with picked-up donations in our count the overall average cost drops 80%. We love donation drop-offs!
Simply put, what we pick up has to substantially exceed our cost.
In our area, Goodwill, which has stores everywhere in Chicagoland, has stopped accepting furniture. As a result, the number of people trying to donate furniture to us has exploded beyond our physical capacity. We already sell more furniture than one might expect in a home center type second-hand store.
What are we doing to better manage this substantial cost?
We are forced to say "thanks but no" a lot more often. People that want us to pick up a donation have to submit a request including pictures. Estimated revenue has to substantially exceed our driveway cost.
When someone stopped at a store to inquire about donating we used to pass out our donation scheduling website. Now we start with suggesting they drop off at the store.
We have partnered with ReSupplyMe as an alternative pick-up method. They are a donor fee-based service that picks up almost anything. We decide what to accept from them. We hope this service gives potential donors more options and reduces our expenses. We are still testing this idea out.
We actively encourage drop-offs every chance we have.
Even if all donations are dropped off there is still a direct measurable cost. Even if you only measure labor, it's dedicated donation labor hours divided by donations. Multiplied by hourly labor cost. It might be more than you think. You can get really detailed and include the cost of the square feet dedicated exclusively to donation drop-offs.
Everything has a cost. Understanding and managing them build success.
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