German and UK co-ops to co-create ethical online marketplace

A German co-op is putting its weight behind what will be the UK’s first co-operatively owned online marketplace. Fairmondo DE, the German ethical online retailer, is collaborating with...

A German co-op is putting its weight behind what will be the UK’s first co-operatively owned online marketplace. Fairmondo DE, the German ethical online retailer, is collaborating with Fairmarket, formerly known as EthicalBay, on its sales website.

Fairmarket will relaunch as Fairmondo UK, a stand-alone multi-stakeholder co-op, this autumn. It will comprise founders, workers, users and investors under a combination of Fairshares Association and Somerset rules.

Crucially, it will use Fairmondo DE’s codebase at no charge. This means most of the site build and design will be free to Fairmondo UK.

Early next year a crowdfunding campaign will finance translation, development and management of the site. The aim is to be up and running by Christmas 2016.

Felix Weth, chief executive of Fairmondo DE, said 98% of its general assembly voted to join forces with Fairmarket. “Fairmondo was from the beginning intended to become a global platform,” he says. “It’s a crucial part of our global strategy that in each country, Fairmondo will be a co-op owned by its local users and employees.

“When we discussed with the team of Fairmarket, we found that we share much of our values and vision, so they seemed the ideal partners for the UK. It’s also a great chance to strengthen our capacities by co-operating and addressing some of our common challenges together.”

“We’re in the process of building a business plan with Fairmondo DE,” says Bob Thorp, co-founder of Worth Cooperating, the Bradford-based worker co-op behind Fairmarket and Fairmondo UK. “We’re likely to be looking for substantial amounts to take the project through to a sustainable income stream that supports the day-to-day costs of keeping the site online and growing. Fairmondo DE have raised in the region of €700,000 (£500,000).

“Building the organisation will be as challenging as building the website,” he adds. “It’s a ground-up approach rather than top-down.”

Fairmondo UK will accept the core principles of Fairmondo DE, but it will develop an offer that reflects issues and principles that are important to the UK membership. It is looking for investor-stakeholders from the co-operative and ethical movements to help shape the project.

Mr Thorpe adds: “This is a collaboration between what will be two interdependent co-ops. We’re not aiming to build a single global co-op but a series of co-ops operating in defined territories.

“Once we have a platform built for English language territories we can pass on the benefits to other co-ops. This is the essence of co-operation; helping others build alternative, transparent, mutually beneficial ways of doing business.”

Graham Mitchell, founding director of MC3 and part of the Fairmondo UK team, says Fairmondo DE has made significant investments in the software that powers its platform. “They’re being extremely generous in sharing that asset,” he says. “More importantly even than this, they’re sharing their insights, their knowledge and the expertise that’s been gained through thousands of hours of work.”

According to its statutes, knowledge created by Fairmondo must be open. Mr Weth says: “We believe it’s much better for society to share knowledge than to shut it up and create artificial limits.

“It can help for the detection of security weaknesses and allows any developer around the world to help us improve the code. We hope that, in the long term, Fairmondo can also contribute to the open knowledge movement.”

Fairmondo DE and UK will share a brand, core principles, features and styling but be free to devise and test new features. “Co-operation is not about uniformity,” says Mr Thorpe.

“Initially, we expect to be very close in all respects. But as our member base grows it will increasingly influence the brand and the offer. What’s important is learning what works and what doesn’t and being sufficiently agile to make and test changes quickly.

“Fairmondo DE also has considerable expertise and experience building member participation and engagement along with successful crowdfunding.”

Fairmondo has more than 2,000 members and generates about 20,000 visitors and €10,000 (£7,400) of transactions per month, but has yet to transfer its success in community building into economic success. “We’re still a good deal away from being profitable, as are many startups in the field in their first years,” says Mr Weth.

“Yet we managed to accumulate over two million products on the platform, the large part being books. This is a good basis for this year’s Christmas campaign. The greatest challenge remains accumulating enough resources to improve the software and make it easier for sellers to upload their inventory, and to do better marketing.”

He says web retail is a difficult sector. “Many ethically sensitive consumers in Germany try to avoid buying online. The masses of online shoppers seek comfort and cheap prices.

“At the same time, a marketplace only works if it reaches a sufficient scale. That’s why we see a market almost completely dominated by two big players.

“I still believe our strategy of using ‘the magic of the crowd’ can make it possible to enter that market, by using tools like crowdfunding, the help of many motivated volunteers and by making users owners of our co-op.”

Fairmondo DE is open to all professional sellers that sign up to its principles of creating a fair business model, promoting responsible consumption and contributing to the fight against corruption. It favours and promotes ethical or fair trade products through side bars, sliders and its fee structure. 

Fairmondo UK will begin by testing the marketplace for co-ops, social enterprises and small sole traders, a move which reflects the difference between the German and UK markets.

“In the UK we have a more developed co-operative sector capable of providing a broad range of sellers and products,” Bob Thorpe explains. “This gives us a bigger user base to build from and more skills and experience to gain traction.

“Fairmondo DE led with books and quality products such as chocolate, coffee, craft goods. These should be part of the offer but in the UK we have a broader range of non-perishable products for an online offer.”

Fairmondo UK will not only provide new items but also shareable, rentable and free options for durable goods. There will be local dimension, favouring nearest first when returning search results, so people can support their local economy.

Profits will be redistributed to stakeholders, reinvested in the co-op or used to develop other co-operative enterprises or charitable organisations.

“We don’t expect all professional sellers to be co-ops or social enterprises as there are many other businesses working ethically,” says Bob Thorpe. “Our starting proposition is that the marketplace itself, i.e. the website and company that operates it, can be owned by the people who use it.

“Compare this with Amazon, where individual sellers don’t own or have any democratic control but increasingly their business livelihood is in Amazon’s hands. The marketplace should work for the people who make and supply things and wish to exchange, not for the market or the marketplace creators.”

Mr Mitchell adds: “By democratising and opening the marketplace in this way, the ethical values, principles and practices of the market and of the traders in that market and the goods and services they provide are open for scrutiny. We hope and expect that this will engender a valuable dialogue which will broaden and deepen our understanding of what it means to do business ethically and sustainably.

“There’s a real opportunity here to make a sea change in how ethically produced goods and services are marketed, bought and sold. Our proposition to investors is that they can work with us to make ethical consumption truly mainstream. We believe this will be an attractive proposition not only to those people looking to put their money to good use as a social investment, but also to investors seeking a financial return.”

Mr Weth says: “Our most important instrument is co-operation. We need much more of it, within the co-op scene as much as with other organisations and networks that work for a fairer economy. I’m happy to see that the team of Fairmarket is very open to co-operation and has already created promising contacts to potential partners in the UK.

“I hope that we can support them with our learnings and that through developing one common software we can mutually strengthen each other. Given the experience they bring, the fact that they can learn from our mistakes and the much more developed state of our software today, I’m optimistic that they’ll have an easier start than we had in Germany.”

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