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Beyond the Bottom Line: Fair Trade in Potomac

One Potomac resident is doing what he can to better the world through fair trade and great handbags.

Ed Edmundson has been chosen for Huffington Post's Greatest Person of the Day feature. This story will be featured on the Huffington Post website on Jan. 25.

 

Making the rounds during the Internet start-up craze in the 1990s, Potomac resident Ed Edmundson worked to help develop the product marketing and business development strategies of convergence communication companies such as Eatel and Geocities.

Now, Edmundson is one businessman in a growing trend of entrepreneurs working to better the world through the business of fair trade. But Edmundson takes that trend one step further – he hasn’t pocketed a dime in eight years.

After the dot-com bubble burst in the mid- 1990s, Edmundson wanted to start a business on his own terms. Ten years after his self-imposed exile from the corporate world, Edmundson spends his days designing handbags while sipping coffee and overseeing stock orders from his phone, before picking up his daughter from school.

"I was just burned out," Edmundson said. "I was exhausted -- I wanted to do my own thing and I wanted to stay in the Internet space, and I needed something that was portable."

His answer was Earth Divas, a fair trade business that imports handmade, natural fiber accessories “made by women for women” mostly from Nepal.

The purpose of fair trade businesses are to foster better working conditions and promote job sustainability for workers in developing countries. The movement aims to pay workers real wages for the back-breaking labor they often do. From a purchaser’s perspective this often means higher prices for goods, but a balance is found in knowing that the money paid goes back to feed families in developing countries rather than into the pockets of a corporate giant.

Edmundson purchased the business, originally named Hemp Sisters, in 2004 and grew it from a family hobby business to a website dedicated to wholesale fair trade. Earth Divas was certified by the Fair Trade Federation in December 2011. Edmundson works directly with his artisans to collaborate on his product and pays them as much as possible on an hourly wage. On top of paying out typical wages, Edmundson doesn’t take a salary and returns 100 percent of the business’s profits to the workers, taking what he does beyond the realm of typical fair trade practices.

"Once I started doing this, it was like this is not going to be anything that's ever going to make me rich, and I can't take money, I don't want the money," he said. "I don't want to be 65-70 years old and be ready to call it a day and look back a say that I didn't do anything worth while in my life.”

Earth Divas products are carried everywhere from local mom-and-pop health food stores to national chains like college bookstores and even Whole Foods Market. You might see the brightly colored, handmade bags on the shoulder of a college student or on the arm of a soccer mom on a grocery run.

His passion for his business makes the effort a success, but for at least five years Edmundson said he's been losing money. To get buyers interested, Edmonsdon had to price products well below what they cost to produce.

"I've had to kind of buy my way in,” Edmundson said. “They just weren't ready for this product. They weren't used to it."

His slow build to profitability started to pay off in 2008 when the company made a profit for the first time. He then sent all of that money back to Nepal as a holiday gift to his workers. According to Edmundson, about $7,000 was paid back to his artisans as a holiday bonus and as regular bonuses throughout the year. He also hosted a holiday party that year for the workers to celebrate their success.

But then everything went south. Fuel charges went up, the dollar went down and material costs for hemp, cotton and wool doubled. Backed partially by his wife, who works to support the family, Edmundson says Earth Divas has only made a profit one year since he began the business in 2004.

"I've said that if it doesn't happen this year I'm done. And I've been saying that every year for the past five years. For some reason I keep doing it," Edmundson said.

"I know that when this business reaches $1 million a year it will be self-sustaining and that's my goal in life -- to get it to the point where I don't have to put money into it, that it will be able to function on its own without me doing everything. And we're getting there."

From a business perspective these losses may just be because Edmundson was early to the start-up fair trade game. From Walmart to Overstock.com, fair trade is just beginning to hit major online retailers everywhere.

"The whole concept of fair trade products is moving into the main-stream and eventually it will be carried by the mainstream retailers," Edmundson said.

It's not just the concept of fair trade that's making a movement into mainstream acceptance and support, according to Melissa Carrier, director of Venture Investments and Social Entrepreneurship at the University of Maryland business school. The do-gooder theme of social entrepreneurship and nonprofit ventures is increasingly visible in the for-profit realm.

Known as social enterprises, these businesses continue to have defined social objectives like environmental protection or reducing poverty, but operate as a for-profit business.

Common methods of incorporating the social objective into a business model include the give-back strategy like TOMS Shoes, which donates a pair of shoes for each pair sold, and workforce development.

Patrick FitzGerald, MBA Lecturer for the Wharton School of the University of Pennsylvania and Huffington Post blogger, recently suggested that all potential social entrepreneurs look at the questions of profitability and business sustainability.

Multiple recently-launched and socially-conscious businesses have proven that a non-profit mission running under a for-profit model have excited investors and consumers alike, FitzGerald wrote.

"The world needs many more social entrepreneurs for sure," FitzGerald said. "After all, it is actually possible to serve two masters: the mission and the bottom line."

 

 

Editor's note: In a previous version of this post, we misspelled Ed Edmundson's name. We apologize for this error.


Elizabeth Anne Johnson January 26, 2012 at 01:51 PM
I love this areticle and would like to see more like it!!!

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