Non-Profits Hurt By BlueSky Brands / AB&C Group Closing
“The products in the National Wildlife Catalog are being sold by National Wildlife Direct, a subsidiary of BlueSky Brands, Inc. National Wildlife Federation has licensed its name and logo to BlueSky Brands and receives a 5% royalty fee for the sale of each catalog item. National Wildlife Direct contributes a minimum of $1 million a year to National Wildlife Federation.†As stated on National Wildlife Federation’s website at www.nwf.org/shopping/
If you are a non-profit, would you consider this to be a great deal? A 5% royalty from each item sold and a commitment to contribute $1 million a year to your cause. Just think, no longer do you have to worry about marketing to your customers, selecting and sourcing merchandise, maintaining an e-commerce site, and running operations with a call center and warehouse. For many non-profit companies you’d be silly to walk away from a deal like this. But as Howie Mandel on NBC’s Deal or No Deal says, “Did you make a good deal?â€
What happens to your business when the parent company of the service provider, in this case BlueSky Brands, closes the doors? The monies that were budgeted and expected in the fiscal year won’t be available, not only for this year but possibly future years as well. For many non-profits, this type of loss directly impacts their bottom line which in turn impacts their ability to support their programs. The purpose behind direct-to-consumer sales for many non-profits is to generate revenue; in most cases unrestricted revenue which can be used within the non-profit organization in any manner they prefer. Losing revenue, particularly in the case of National Wildlife Federation, of $1 million a year, has to be devastating. A similar situation has happened with Winterthur except the revenue impact is unknown.
Not only is the money lost, what happens to future business? BlueSky Brands and AB&C Group are shut down at this time. Customers can’t place orders, the website has a message posted that it can not process orders at this time and to please check back for updates. Essentially, National Wildlife Catalog is at least temporarily out of business until further notice. Will customers hang around for National Wildlife Catalog to recover? In today’s economy and given the competition for consumer dollars it is not likely.
If you are a non-profit, is this a path you would have taken? It certainly looked good, a company willing to pay royalties and contribute $1 million a year, take over your whole catalog and operation while your company focuses on its core competencies. In an article in Catalog Success dated 11/17/06 by our good friend Larry West:
“Although payment terms were undisclosed, expect a lot of money flowing from BlueSky to the nonprofits. For such organizations, a fairly predictable cash flow without real investment risk is a Godsend, especially since it has become tougher for both nonprofits and for-profits to generate respectable profits and ROI in recent yearsâ€.
The article referred to the licensing deals of Winterthur and NWF catalogs to BlueSky Brands. In 2006, all indications were this was a great deal.
Does this mean that all licensing and third party fulfillment deals are doomed for failure? Absolutely not. In fact a number of our clients use third party providers successfully, particularly non-profits. The rule of thumb here is regardless of a great deal in place, you still must be on top of your business and service provider.
What do you think? Deal or No Deal.
Tocky Lawrence a Vice President of F. Curtis Barry & Company, a multichannel operations and fulfillment consulting firm with expertise in multichannel systems, warehouse, call center, inventory, and benchmarking; Learn more online at: http://www.fcbco.com.
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