How an Online Yarn Seller Kept Dozens of Businesses Alive

(Bloomberg Businessweek) -- Luigi Boccia and Jared Flood ran their online yarn business, Brooklyn Tweed, for nearly a decade of ups and downs before the novel coronavirus upended life. Convinced that they needed to do something to buoy their network of suppliers and retailers, as well as their own venture, they raced to develop an idea that would make a difference.

“We felt it was our duty to do whatever we could—and to use whatever resources we had—to help everyone in our community, from sheep breeders to knitters," says Boccia, co-owner and operations manager. 

The business: Portland, Ore.-based, Brooklyn Tweed sells wool yarn and knitting patterns, as a wholesaler to yarn stores inside and outside the U.S., and directly to consumers. The 10-year-old, 10-employee company's annual revenue ranges from $1.5 million to $2.5 million. It sources all its wool domestically. “Everything we do happens on U.S. soil,” including dyeing and spinning, says Flood, founder and creative director. Boccia equates domestic sourcing with the “search for the Holy Grail; when you find a dye house or a mill, you get giddy and excited.” 

The payoff: From March 18 through May 15, Brooklyn Tweed pumped more than $300,000 in store credit to more than 100 retailers, mostly in the U.S., through what it called its Apart Together program. “We wanted to give out the maximum amount without starting to lose money,” says Boccia. Some shops called the initiative “a lifesaver,” he says. “They told us: ‘We wouldn't have been able to make it without you.'” It helped Brooklyn Tweed, too, because it prevented the company from losing a substantial share of its customers, Boccia says. “This wasn't virtue signaling.”

Below, Flood and Boccia describe their initiative in order to help other businesses devise similar plans:

1. Get more customers to shop online. Let them pay less. 
Individual shoppers bought yarn through Brooklyn Tweed's website or through a local yarn store's website. (The company explains the mechanics in this blog post.) With each sale, a customer could then choose to give a percentage of the purchase, in the form of a store credit, to a local shop. That business could, in turn, use the credit to buy yarn from Brooklyn Tweed or pay to pay off old invoices. 

Flood and Boccia were aware that some knitters were earning less because of layoffs or reduced hours, so they offered discounts of 10% to 30% on their merchandise. Depending on the discount level chosen by a given customer, shops got a certain percentage of store credit. For example, if a customer paid full retail price, the shop got 30% of the amount in store credit. If a buyer took a 20% discount, the shop got 10%.

2. Don't force brick-and-mortar operations to create websites. 
Some small yarn shops that stock Brooklyn Tweed lacked (and still lack) websites. Flood and Boccia made it easy for yarn buyers to designate a specific shop to help on Brooklyn Tweed's site, regardless of whether the shop had an online presence. The goal was to encourage a small business to keep selling through the pandemic, rather than taking on additional expenses, says Boccia. Shops got creative by doing curbside pickups or contactless deliveries and by putting on virtual trunk shows, he says.

3. Trust goes a long way.
Rather than ask shops to add special features to their websites or send spreadsheets to Brooklyn Tweed, Flood and Boccia relied on an honor system, confident that their retailers would be honest about how much Brooklyn Tweed owed them in store credits. “Trust is at the base of our partnerships,” says Boccia. “Even a handwritten tally worked for us.”

4. Know your limitations.
The concept won't work for every industry, particularly those that sell perishable food. But businesses with more inventory than demand could benefit, says Boccia. “Practically speaking, you're creating a stimulus,” he says. “We've been jokingly calling this a yarn stimulus.” If supplies are limited, do it for a limited amount of time, he suggests. Brooklyn Tweed consulted with its accountant and limited the initiative to two months.

5. Research other initiatives. 
Businesses in other industries have offered comparable promotions, including film distributor Magnolia Pictures, which gave its virtual ticket sales to local theaters that customers picked during March. The Japanese publisher of the knitting magazine Amirisu is donating more than half of sales for its issues to local yarn stores that readers select. Amirisu credited Brooklyn Tweed for the idea in an email blast to advertisers. Hill Country Weavers in Austin, Tex., which carries Brooklyn Tweed yarn, recently launched its own initiative. 

Despite the tightening of already squeezed margins by pandemic realities, businesses that care about the fabric of their communities "have the ability to act like people, not just as businesses that worry about the bottom line," says Boccia. “There is much more to be done. And nothing is going to be business as usual for us moving forward.”

For more strategies and advice for Main Street business owners, check out our Bloomberg Businessweek Small Business Survival Guide.

©2020 Bloomberg L.P.

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