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Is Crowdfunding the Answer to Getting Consumers to Spend on Sustainability?

Though consumers will surely agree that they don’t want to buy products made in unethical supply chains if asked, that conviction doesn’t always translate to what they’ll dish out their dollars for.

In order to escape this conundrum that has made some brands and retailers balk at spending more for more ethical products and processes if they’re not sure they’ll see a return, it’s going to first take shifting consumers into “pro-sumers.”

“The idea behind pro-sumerism is that there’s this sort of duality,” Neeru Paharia, an assistant professor focused on consumer behavior and decision making at Georgetown University, said during a Deloitte Press Room podcast. “We tend to occupy a role that’s more consistent with being consumers: We go to the store. We buy things. Things are already there they’re sorted out, they’ve been decided for us. We don’t really take on the role of the producer. The company takes on the role of the producer.”

What has started to evolve that traditional relationship between the consumer and the product, however, is customization. Now shoppers can seek out a dress, choose the sleeve type and the length they want and have it made to fit their measurements. In effect, they’ve become some amalgamation of both the consumer and the producer.

And when that happens, consumers tend to have a more vested interest in where the product they participated in making comes from, than when they’ve had no involvement other than pulling the piece from the rack or clicking a buy button.

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In collecting data for research, Paharia examined various scenarios where consumers were told they could buy something already made from one company or something made to order from another, and that each company had some unfavorable labor practices in their supply chains. What she found was that people were more likely to buy the already made product rather than the one they’d have their hands in.

“We don’t feel responsible because stuff has already been made. We don’t actually have responsibility for its production,” Paharia said.

That considered, the question becomes how to encourage consumers to spend a little more for something like fair trade product. And the answer may lie in merging made-to-order with ethically produced product—and having it all crowdfunded.

Taking the research a step further, Paharia presented test consumers with two options for T-shirts: one regular production tee from already made inventory, and one very similar fair-trade T-shirt for $6 more.

In one condition, consumers were simply asked to choose between them. But in another, they were told it was a crowdfunding situation, where they could choose the one they wanted and their purchase would go toward crowdfunding it. If the goal was reached, the consumer would end up with the tee the bought, and if it wasn’t, they wouldn’t be charged and there’d be no production.

“When we’re talking about inventory, we find that the majority of people, around 60 percent, are choosing the standard production. The regular option—they’re not choosing the fair-trade shirt,” Paharia explained. “But when we’re talking about crowdfunding, now we get a reversal. Now we’re talking about 60 percent of people are more willing to buy the fair-trade option.”

As such, it seems, crowdfunding could increase consumers’ interest in more sustainable options for their apparel.

“Now they’re not thinking about negative labor conditions. They’re thinking about buying a fair-trade short,” Paharia continued. “They actually feel happier, they feel more responsible, they feel more gratification. And they feel happier for having some impact and contributing to something that aligns with their values.”