Update 11/09/2012 There are many types of co-ops and I am in no way trying to make it seem that ALL co-ops are wrong or bad or dishonest or that ALL people who run co-ops are dishonest. However I stand by MY opinion that un-authorized and secret co-ops are dishonest and risky.
If you are new to co-ops then you may find this post informative. My hope was that it would give you something to consider. Authorized co-ops are a great way to save money on products, food, clothing, produce, cloth diapers and more. Just make sure you know what you're getting yourself into and who you're working with before ordering. Again, that's
MY opinion.
This post has been brewing for a while now, years to be exact, and while it may not be the popular opinion, it's my opinion. I hope it helps some of you gain a little better insight and understanding of co-op's, which are legit, which are shady and how co-op's affect and benefit or harm businesses small and large.
Let's start with what is a co-op?
Co-op's are group buy opportunities. An organizer will collect orders for a group of people for a product or product line and those participating will receive a discount on retail prices. Sometimes it's 10-15%, sometimes it's the wholesale cost of the products. The organizer usually collects the funds, pays for the order, gets the order shipped to them and then sends each person their products.
Sounds great right? Well saving money is a huge draw for most people to co-ops but what they don't know is that there are good and bad co-ops and ethically, there are many that you should NOT be supporting or participating in. So how can you tell which are good and which are bad? I'll go over the different types, in my opinion.
- The Authorized Co-Op: *legit and okay* An "authorized" co-op is an approved group buy. The organizer has a tax-id, just like a business owner would, sometimes they are business owners, and the company/brand publicly and knowingly sells at wholesale or reduced pricing to the co-op organizer.
- The Un-Authorized Co-Op: *in my opinion, dishonest* A retailer, person who had once intended on becoming a retailer, or person pretending they want to become a retailer, of a certain brand/product line, organizes a group buy (behind closed doors) and then presents their order to the company/brand. They receive wholesale pricing, as if they were an existing store or soon to be opening a store, and the brand/company does not know that they are running a co-op and selling the products at unauthorized prices.
- The Secret Co-Op: *in my opinion, shady and dishonest* The same situation as the "un-authorized" co-op mentioned above but in this case the brand/company knows they are selling to a co-op. The brand/company publicly claims to not allow co-ops but secretly they do, and in most cases they'd deny knowing they were selling to a co-op if confronted.
Small business owners typically have to buy into a brand/company with a minimum order amount, which ties up a lot of their funds, and then they are required to sell the products only at MSRP pricing. This means they are very limited as to the sales they can have, often even a discount of 10% is against policy and selling at less than the MSRP can result in that business owner losing their account with that company.
So, you can see that if consumers are able to purchase the products at wholesale through a co-op then they are less likely to purchase at full retail price, and the business owner who just invested $5000 into that product line is likely going to have a hard time selling/moving the product. This is not that big of a deal if the small business owner knows that co-ops are authorized by the brand, then they're knowingly taking their chances with that line. Companies who allow authorized co-ops often have much smaller retailer order requirements, if any, and less stringent MSRP pricing policies so that their retailers can compete with the co-ops fair and square.
How can participating in an un-authorized co-op or secret co-op hurt you?
It's my opinion that running an un-authorized co-op is dishonest. Knowingly giving your money, in advance, to a person you likely only know from online, who is obviously willing to do dishonest things, is not that great of an idea. I have seen co-op leaders collect funds, never follow through and drop-off the face of the earth with their groups money. Often co-op orders can take weeks to come in and sort. After 90 days you are no longer able to file a dispute with paypal which leaves you totally unprotected.
If you're participating in a secret co-op then the organize is being a little more sneaky and a little less dishonest. But in this case the company you're buying from is dishonest. It's likely that if your "secret" co-op is outed publicly online, your group order will be canceled, the existence of your co-op denied, and who knows how long it could take for your funds to be refunded to the groups organizer and then refunded back to you.
I encourage you to examine the fairness in secret and un-authorized co-ops. Imagine you had just opened up the small business you'd been dreaming of. You just invested a bunch of your money in a product line only to discover that a huge group of people were getting their order together through a co-op, and they are receiving those products at the same prices you paid, without them having to own a business or meet minimum orders like you. You'd be PISSED.
I encourage you to report any secret or un-authorized co-ops to your nearest retailer or to the manufacturer in question.
Lastly, let me just say, companies who "authorize" co-ops are not BAD. Often a new company will allow co-ops for a limited time to help get their products into the hands of consumers fast. Perhaps they need to move inventory and make room for new stock. The MAIN thing is that companies are up-front with their retailers when asked if they allow co-ops and that they're not secretly trying to "have their cake and eat it too."
What are your thoughts on co-ops? Do you care if they are secret or un-authorized or is it just about being able to save money and ignoring the fact that it's hurting legit business owners struggling to earn an income for their families?
Interesting, thoughtful post! As a follow-up, how do I determine if a co-op is honest? Can I just visit a retailers site and they will list legit co-ops? Are the "half off" style sites considered co-ops? Is this a different issue than the complaints people have about Zulily and Totsy selling at below wholesale? I've seen WAHM businesses say they are fulfilling orders for certain co-ops. This is clearly up front and legit, but from there, I'm not certain how to identify a "shady" co-op and want to deal with honest business owners. Thanks!
ReplyDeleteI lose 3/4 of potential local CD sales to online co-ops and overseas knock off co-ops. It's amazing I am able to sell anything at all
ReplyDeleteEven of I had found co-ops when I was doing my CD research I still would have gone with an official retailer. A co-op just seems a little fishy to me and who's to say you are really get the official product and not a knock off. No thank you. I'll support an official retailer trying to make a living...like my favorite store Abby's Lane!!!
ReplyDeleteAll so very true. Another missing point here, is that most of the shady and dishonest coops are not collecting and paying their TAXES either. This is becoming a big issue, and people should be way more concerned about whether or not to become involved with coops, legit or not. It has the potential to hurt jobs, jobs that people NEED these days. If there is no profit to be made, jobs suffer.
ReplyDeleteI, too, routinely lose business, many thanks to either straight from China knockoffs, or from illegitimate coops.
It's a shame that people would rather save a few bucks than support our very own country and help to provide jobs by paying retail price. :sigh:
Interesting post! As a WAHM cloth diaper maker I've always hesitated to provide product for co-ops, and it's only because I've felt uneasy about it, unsure of why. Now I can provide a post for people to read when they ask why I don't participate in co-ops. (I don't wholesale my diapers, just sell them individually, but still)
ReplyDeleteI was directed to two different co-op groups on Facebook through a cloth diapering company. They had just released their new prints and people were asking how to get just one (they only sell in packs with a certain number of diapers). They gave out the info, most likely for the exact reason you mentioned - to get their new diapers out there. I was interested because we don't need to buy/can't afford a large number of diapers, but I did really like a couple.
ReplyDeleteI joined the groups and watched what they posted for a few days. It was sort of disgusting - in my opinion. On some posts it was as if people were stumbling over one another to be guaranteed a spot on the purchases. Other posts were about how the orders they placed arrived incorrectly and they could not have them fixed because the middle person didn't speak English or the company was unwilling to replace/exchange the pieces. It seemed like it was happening frequently enough on both of the group pages that you never knew when your order would go through or not. I also found it kind of sad that some of the organizers charged as much as $5 per person just to place the order (it appeared like that price was based on the "excitement" surrounding the order). That money did not include shipping or packaging. As much as I would have loved to get just a few of those diapers I was oogling, it is so not worth stressing out to be first in line, chancing not getting what I expected and paid for or paying someone to place an order.
I would be 100% all for paying retail for the diapers (they were going to cost less than retail through the co-op, however after the hidden charges it most likely would have been even) and splitting the cost with some other parents who would want other designs in the bunch, sadly, that is not what was going on in those specific co-ops. I left both groups. I didn't even want to be associated with those sorts of activities. I love a great sale or clearance - who doesn't?? - but there was something not right going on there.
I have definitely passed on this info to people who've asked about them. It hurts small businesses/regular retail business and seems so shady. I do want to point out that it wasn't just diapers they were ordering, but all sorts of products. They also both often took surveys on what to order next then the organizer began the process of approaching the companies to find out what they could get.
This is a great post to get the info out there and make people more aware! I hope it gets heavily circulated!
I have purchased from co-ops before, as well as purchased items from the deal-a-day websites. I used to think it was a great idea, so those who couldn't afford the product could get a fantastic deal. That was before I got to know our local cloth diaper retailers, and learned more about how the cloth diaper world works from a retailer/manufacturer perspective. Never again will I buy from co-ops (unless specifically run by a wahm to purchase her product, since I know it is authorized by the maker/seller of that item). I also will not buy from the bargain sites, nor will I promote them. I prefer spending my money with a local retailer who is trying to support her family, as well as promote the use of real diapers. The customer service also can't be beat when shopping with a local retailer!!
ReplyDeleteI'm a believer in the free market. These things are annoying but they'll work themselves out. Vendors who sell to co-ops are going to hurt themselves in the long run, because retailers will find out and stop carrying their products because they can't compete with co-op pricing.
ReplyDeleteAs far as knock-off cheapie diapers are concerned, I feel that this is a separate issue. I'm a cloth diaper retailer and I realize that many people use cloth diapers because they are on a very tight budget. Those folks can't afford cloth diapers that cost $15-25 apiece. I'd much rather see those families buy used or cheapie diapers than disposables. I can't get their business, but I hope that Pampers and Huggies don't, either!
Really great explanation!
ReplyDeleteI have to say that while you make some great points on how they CAN be unethical you don't give any other option for those of us who are working with a limited budget and need to buy the china/knock off diapers just to be able to cloth diaper. I have tried buying used and sale name brands and have been burned by them way worse than the coop I am involved with. My son is allergic to disposables so I have no choice but to buy cloth but I can't afford to spend upwards of 25-30 for a single diaper.
ReplyDeleteThere are so many of us who cannot afford to buy a company's product at full MSRP and therefore wouldn't be buying it from your company to begin with. To take the opportunity to have some nicer things for our children or some "greener" products to keep our families and planet safer and healthier at a more manageable cost is pointless because of that fact. And to bash co-ops as a whole and say that they aren't an honest thing to be a part of is just making you and all of your commentors ignorant to how co-ops actually work. I have been apart of co-ops for quite some time now and have more more purchases than my husband would care to count without any problems. Anytime that I have seen someone else have an issue with a product not being up to par I have always seen the companies backing up their product and telling the host to have the defective product sent back, broken english or not. This entire post is incredibly biased and incorrect. It quite honestly makes you look uneducated in the matter and prevents me from wanting to read any further blog posts on this site. But, this is just the opinion of myself and possibly the thousands of people who are happily a part of co-ops.
ReplyDeleteI have to say. It must be really nice for those of you who can afford full price. I know a lot of moms who just can't afford the high dollars retailers sell the merchandise at. Coops are good as long as you do your research first. Saying all coops are bad is a lame attempt at getting attention. Every coop I have run, was authorized with signed mailed in paperwork to each retailer. But my coop is still suffering because of your lame complaints.
ReplyDeleteSomething a lot of Co-Op shoppers forget:
ReplyDelete1) Most manufacturers will not honor warranty claims with a co-op
2) You cannot return or exchange anything
3) Nobody will be there before and after the sale to offer you advice or help
As retailers, especially for products with very little profit margin, we're here to help, to educate, to support, but mostly to engage in a great relationship with our clients.
Nothing is harder than having to tell someone (and we get these calls at least monthly), that we're sorry a snap fell off, or velcro is wearing out - but we cannot submit a warranty claim without a proof of purchase (manufacturer rules).
Moral of story - you can get good deals, but you also increase your risk of purchasing the wrong thing/size/color, as well as increasing the risk that you have nowhere to turn if something goes wrong.
So, what company is paying or suggesting and possibly threatening bloggers to continuously bash on Co Ops? I know Grovia is pissed because of a discontinued print being made in China. They are threatening small WAHM business with lawsuits because of this. So it is Grovia? Do tell us the real reasoning behind this.
ReplyDeleteI am a WAHM and a co-op host. Not only do I put HOURS upon HOURS into running my co-op. I also try and balance time between my kids, and my business.
ReplyDeleteI have never and will never run an unauthorized buy. But, the reality is not every mother can afford retail pricing on some items and diapers. Myself included.
My husband is a Disabled US Army veteran, and when he was discharged we had NOTHING. If it wasn't for me starting a co-op I don't know how I would have diapered my child. Any fees I charge go to supplies, or donations. I have donated well over 60 diapers, several wipe sets, 10+ wetbags, etc, all through the help of my members. I'm sure there are 100s of resellers, and I am sorry if it hurts your business.. But the reality is not everyone can afford it. I don't profit a penny.. And put hours into this.
Not all co-ops are scams, and I for one am as honest and transparent as can be. :)
My co-op experiences have been overwhelmingly positive and they've never been secret. Many have been through small WAHMs, but I've also participated in some with larger manufacturers whose own communications are monitored by at least 2 admins and shared with the co-op participants to provide transparency. I prefer to participate in Co-ops with established hosts, low participation fees, transparent shipping costs, and which still offer a level of savings from the retail price. If you're not a flexible consumer and you simply must have the specific items in the specific prints/colors and within a very short window of time - co-ops aren't for you. If you're willing to be flexible in order to save money, co-ops can be great.
ReplyDeleteVery interesting post and interesting timing as well. I just got asked to sell to a co-op and didn't really know how I felt about it. I I like the idea of selling to a small community (it has an actual store) but I still don't know. Definite good points and you shed a lot of light on co-ops in general. Thank you.
ReplyDeleteThere are about 7.038 billion people on this earth out of those people about 151 million are workers just in America and about 75,000,000ish are considered "middle class" this is not including other countries who also buy online. I would think that those people in that category are the ones who make every day purchases. I wonder what the percentage of those people utilize co-ops and does it really make an impact on small businesses. Now I just learned what a co-op was but what I’ve seen only small quantities of each product is being purchased through co-ops when retailers most likely selling much higher quantities.
ReplyDeleteWhen she states;
“Small business owners typically have to buy into a brand/company with a minimum order amount, which ties up a lot of their funds, and then they are required to sell the products only at MSRP pricing. This means they are very limited as to the sales they can have, often even a discount of 10% is against policy and selling at less than the MSRP can result in that business owner losing their account with that company.”
How can companies regulate what retailers pricing is and require selling at MSRP. It is called “Manufacturer's suggested retail price” that’s an emphasis on “Suggested” price. Retailers are out to make a profit, companies sell items at wholesale to get more quantities out the door where retailers turn around sale it at MSRP to make a profit. By saying that they are required to sell at a certain price or will lose and account with the company sounds bogus to me. If the company sells the product to the retailer and they make their money why would they care what the retailer does? If companies do regulate that way then that is ridiculous and they should use a different acronym then MSRP. Maybe Manufactures contractual required retail price MCRRP.
Per her About Me information it states” In 2007 I opened my own retail website where I sold natural and eco-friendly items for moms and babies.” It looks like to me this is biased one sided view as she herself is a retailer. Not saying that my point of view maybe as well, but I am neither a retailer or run a co-op or have even purchased from a co-op yet. I am in no way informed on all these topics nor have factual information but the article doesn’t seem to give good information as well. She does say some positive things and it’s not right to pose as a small business to buy for a co-op but there will always be “shady” people out there and you just have to be careful as that is the risk you take when buying online. I live in a place where it is very difficult to find these types of items and if I can get a good deal due to my high cost of living and excessive shipping charges I seem to find I’m going for it, but what do I know.
im sorry to say but so far ive not had a bad buy through a coop, and as a sahm i wouldn't have been able to afford to cloth at retail! especially since most of my local retailers sell high quality pricey diaps.. ill order my Chinese 3$ knock offs in a heart beat! id rather buy 50$ worth of knock offs to know that i like clothing then 300+, and honestly a tax id! what are they making.. what is it costing in their time. computer internet fees phone bills, packaging, etc etc! i think its a buyer beware world! search your coops find reputible ones there are shady ones but there are great ones too!
ReplyDeleteSo the only way to be a GOOD co-op is to have a tax id? I'm in a perfectly good co-op. The hosts are honest and do things legit, but they don't have tax id's. They're just moms like the rest of us.
ReplyDeleteI have participated in Co-ops...i have not had any bad experiences. You have to get to know the people a bit, if you're comfortable then make a purchase. I mean, use your brain and your guts! Without coops there's so many things that i wouldn't have been able to buy for my children. Who in their right mind would opt to pay $25 or up for ONE diaper when they can buy really super cute awsome ones for $3? I mean , the whole reason we cloth diaper is to SAVE money. Times are hard! When i started I was on Maternity Leave and my husband had been unemployed for almost a year. The whole idea is to SAVE. The government takes so much away from us why not blame the govmnt and their taxes instead of the consumers trying to give extras to their kids and can't afford to spend full prices?
ReplyDeleteThank you for posting this Ms Geek. I own and run a small cloth diaper store in Texas. I am 4 years in, and have yet to take a wage. Those wickedly wonderful margins that people seem to think pad my nest and pay for the mythical Mercedes, actually in fact go towards costs like rent, wages, utilities, insurance etc.
ReplyDeleteI get told daily how wonderful it is to have a place where people can come in and see in person the products, get fitted for carriers, take a class etc. What keeps me in business is those people who then turn around and buy from me. What keeps me from taking a wage and expanding my product line, are those who come in an utilise my resources, and then turn around and buy on deal sites and co-ops.
My store is not here to gouge you. I am passionate about the products I sell, as are the girls who work for me. But I would also like to be able to take home a pay check at the end of the 60 hour week.
So please when shopping for your diapers etc, shop local where you can. Support that family who has gone out on a limb to provide a place for you to check out products in person.
There are MANY options for affordable diapers. You can get 2 Econobum full kits, which will last you from birth to potty training for $99. You don't have to buy the $20 diaper. Flats are also very economical. Not only are they cheap, but they also air dry in a heartbeat, therefor cutting down drying time and cost.
ReplyDeleteEmilyB, it's illegal in most countries to resell products without a tax id and to collect taxes.
ReplyDeleteWouldn't want the IRS or CRA (if in Canada) to come calling because they will certainly take everything.
Legally you are required to have a tax id within your state even if running a co-op as they would be required to collect sales taxes and pay their state the required sales tax. If they are not doing that, then I would think again about working with them.
ReplyDeleteAlso for those of you saying you could not afford the diapers, why the entitlement on having pockets and aios. I clothed diapered my kids with prefolds and covers. Very cheaply and saved lots of money. Sometimes pickers can't be choosers.
If you want to know if a co-op is legal go ask the company that is being sold. If they are not approved than seriously consider buying from them because you will not be covered under the warranty.
You can cloth diaper with prefolds or flats, snappi and covers for less than $150. I have diapered 3 children, I own a diaper business, and have never paid $20+ for a diaper. I used prefolds, flats, bought second quality diapers when they were on sale, etc. Saying not everyone can afford to buy $25-30 ea diapers is completely bogus, because there are MANY diaper brands that cost much less, are good quality, and come with manufacturer warranty. And many of my customers are at or below poverty level, but they can afford to cloth diaper using much less expensive options. Saying you can't afford to cloth diaper because diapers cost $25-30 is like saying you can't afford a car because Mercedes are too expensive.
ReplyDeleteThe question on MSRPs was answered in the article. If a retailer does not abide by the manufacturer's MSRP and sale restriction policies, the manufacturer will not sell to them anymore, plain and simple. The topic of this article wasn't about the imported cheapies but rather about the co-ops --and not all co-ops but rather the specific ones that don't follow the rules. Running a co-op is a business and income is supposed to be reported. Yes a tax id should be obtained and in order to buy products at the wholesale prices, reseller permits (term is different in various states) are also required as are business licenses to conduct business in your town etc. Whether you make a profit in the end or not isn't the issue, there are plenty of businesses out there that don't make a profit, but they have all the proper registration etc.
ReplyDeleteI'm a retailer and a mom of 2 boys on a budget. This is my take. When I walk down the streets of my town I love seeing the little toy shops, and little coffee shops and little book shops. I love that I can go in and get what I need and know that I am supporting that family. I love that I can go in and they know their stuff and can answer questions and help me find the best stuff for my family. If we stop shipping there then they will go away. This happened in my old town and it happened fast - about 5 years. It is now a ghost town. No small businesses or restaurants, people moving out, unemployment through the rough and taxes going through the roof to pay for the services with a fraction of the population paying. We left too. It was no longer the community we wanted to raise our kid in. I know what will happen next. They will except the walmart contract that is being pushed on them because they have no choice and then the other chains will move in. That's fine, but they won't be able to help me put together that new wiggle bike I bought the boys - like the local store would.
ReplyDeleteI understand that people have gotten the idea that MSRP is a voluntary thing. That nasty word suggested. Well.... you are kind of right. It is a suggestion. I could price higher then they suggest. Because the contract that I sign to carry them states that we suggest you price your product at X or we will revoke your account. So your right it is a suggestion - but 1 I must follow if I want to continue to carry the brand.
I also get a lot of people coming in EVERY day asking for help with diapers and carriers etc. I love giving help. It is one of the joys of my job. I get to help people who are about to give up on cloth because their co-op or walmart can't trouble shoot for them. But I can't do that if we can't keep our doors open. We hire local mom's. We work with families on WIC to help them afford diapers.
So as a community or a society we need to decide whether want a community with small stores lining the streets or boarded up buildings with walmarts and targets because we are sending the business to co-ops. I know which community I want to raise my boys in.
You are not entitled to the most expensive, fancy diapers because you exist. Live within your means. If you cannot afford $25 a diaper, then don't buy $25 diapers. By all means, keep defending your illegal co-op on the basis that you don't want to pay full price for something you cannot afford. But at the end of the day, you're contributing to an illegal trade, hurting small business and you'll have no warranty or support for the products you pilfered. You can cloth diaper your child for LIFE in NEW diapers for less than $100. There is no excuse.
ReplyDeleteI find it amusing that those participating insist that one of the diaper companies must be putting people up to writing blogs like this. It is the small businesses selling the product that are getting screwed. The manufacturer sees their cut regardless.
I think it's a cheap shot to accuse this blogger of being paid off just because you don't agree with her opinion. If she's wrong about what she's saying, then talk about why, but don't attack her personal integrity. If being a retailer and benefiting financially from customers makes her opinions invalid, then the opinions of anyone who has ever saved money by buying through a co-op would be invalid too.
ReplyDeleteI don't get this attitude that retailers are all lying when they talk about how co-ops affect their business. If I wanted to know how the environmental impact of mining affected a community, I would ask people in that community. Not the company doing the mining. If we want to know how co-ops are affecting retailers, why would we believe the co-op members who say it's not a negative effect while completely ignoring the retailers who say it is
She is not knocking legit co-ops! If your co-op is being honest with the companies they work with, and if those companies are being honest about working with co-ops, there's no problem, and she says as much! So arguing that legit co-ops are not bad is a red herring. I have yet to see someone try to make a case that co-ops that lie or companies that lie about working with co-ops are okay, and that is the point the OP is making.
To answer those who are asking about another option besides paying $25 per diaper... talk to your local retailer! Most independent retailers will bend over backwards to help you get what you need on the budget you have. I have seen parents get a stash of 24 diaper changes in flats and Wolbybug covers (they have elasticized flaps to tuck in a pad-folded flat, so not really much more work than stuffing pockets, AND they don't need to be unstuffed) for under $70. Even less if they're buying gently used.
As far as sales tax, anyone buying products for resale will not have to pay sales tax because they are expected to collect sales tax at the point of sale to the end-user and then remit that sales tax quarterly. If a co-op is not paying sales tax to the manufacturer and/or is not collecting and remitting sales tax on sales to the end users, they are operating illegally and could be held liable for all the sales tax that was due.
As far as MSRP, no, legally companies cannot require retailers to sell at a certain price. But they can - and do - make retailers sign a contract stating that they agree not to sell below a certain price. They legally can refuse to sell to someone caught selling below MSRP. So any retailer who wants to continue to be able to stock and sell a product must abide by the MSRP policy, and any retailer who sells below MSRP (except for sales, which usually cannot be more than a set % off, not longer than a set time period, and have to be approved by the manufacturer) is breaking the terms that they promised to abide by.
I don’t understand why anyone feels that co-ops need to have a tax ID. The coops are not "selling" anything or making money; they are allowing members to order as a group and receive a discount. Sorry to all the so-called and self-proclaimed honest retailers who order “Chinese cheapies” at these same low prices so that they can then put new labels on them, claim they were manufactured by said company/retailer, and jack the prices up so high that no one wants or can afford to order from them. I don’t have or want to spend up to 5 times more for an item to support someone else’s greed when I have my own family to support. If these retailers want to compete, then their items should be more reasonably priced.
ReplyDeleteI've never had an issue with any co-op. I'm actually very thankful for them, we are a paycheck to paycheck family and co-ops have allowed us to get things we wouldn't normally be able to afford.
ReplyDeleteI've never had anyone steal my money, or gotten the wrong order.
I think the benefits for co-ops far outweigh the perceived disadvantages. Not everyone has the money to pay retail. And asking people to pay money out of their pocket to put into yours (or anyone's) doesn't make sense, I shouldn't have to pay more just because someone else needs a job.
I will continue to order through co-ops. I will continue to use Dhgate and AliExpress to order things at well below cost. Sorry, but I have to. I'm a WAHM and I order supplies through co-ops. This allows me to keep my prices down so people can afford to purchase my items. I agree that there are some illegal co-ops out there. Most companies are well aware that their items are being sold to co-ops. Shame on the people who lie to retailers about how their products are being distributed.
ReplyDeleteJust an FYI that in small businesses with a tax-id you are expected to collect sales tax on sales to others in YOUR state. Therefore if a co-op is selling all throughout the US and Canada there could be no local sales or very few. Saying that they aren't collecting taxes or filing is false. Do they all file? Probably not. Do all companies require tax ids when offering product to a co-op? No. Throwing around accusations about someones financial situation with the IRS is out of line. Nobody asks you to publish when you file your quarterly taxes, or how many exemptions you claim. You cant make an accusation on co-ops as a whole when you don't have cold hard proof. Also I am a retailer and I have contacted several companies when I have seen co-ops on all sorts of items. They claim that its not allowed and are so grateful we brought it to their attention yet the co-op goes on, product is shipped to the host, and so forth. So once again you cant put all the blame and accusation on a co-op and its host. If they have a company or company rep that allows it then you cant punish them. Life isn't fair. Instead evaluate the product lines you carry, who you want to continue to do business with. Also most co-ops that offer diapers do only offer the china cheapies, so for most retailers that shouldn't affect your business at all. Its all in the way you present and market a product to your customer. Sell them on why the $15 name brand diaper is better than the $3 diaper they can get from a co-op. Take ownership for at least part of the situation.
ReplyDeleteWow! I wanted to address a couple of the comments. Retailers do lose their wholesale accounts all the time for selling under MSRP. That is why certain brands are excluded from sales all the time. Companies are allowed to do this to maintain the brands image. They can not mandate what price a retailer sells at but they can (and do) cancel the account and will not sell to that retailer again.
ReplyDeleteAlso, taxes are one consideration but another is co-ops that lie or trick the manufacturer. These co-ops apply for wholesale accounts and tell the manufacturer they are opening a store but instead sell to a co-op. That is dishonest and unethical.
I will not do businesses (or co-ops) who have not gotten their business license and are not collecting sales taxes required. It is not optional. Taxes are the law.
ReplyDeleteI am fine with a legal co-op where the manufacturer knows they are selling to a co-op and it does not undermine the pricing required by the retailers. And all licenses and taxes have been done correctly.
However I would not choose to ever order from a co-op that has files applications with the manufacturer under false statements, or breaks the pricing rules they agreed to, or asks the members to not share the pricing they have sold the product for. If it needs to be a closed group in secret then that is a clue it may not be operating legally.
I prefer to buy from my local businesses that employee local families and pay local taxes. If I can not afford the price set by the manufacturers for that retail product then I will look for a less expensive way to buy products for my family.
And I choose not to use my local business as show rooms to research products using their employee time and resources and then buy elsewhere. That is simply wrong in my opinion. That is stealing from that business. Where I who I buy.
If you are in a co-op and have questions on whether it is "legit" just contact the manufacturer and ask whether they allow co-ops. If they do not, then you should report the co-op offering that brand. Most of the diapers out of China (Alva, Sunbaby, etc) DO allow co-ops. Many baby carriers do not. But if there is ever a question, just contact the manufacturer and ask. That simple! :-)
ReplyDeleteI am a retailer and before I was a retailer I bought from all of these things. My mindset quickly changed after taking on my small business.
ReplyDeleteMoney talks it is that simple. And what it says to both small business and manufacturers when a co-op sets up a bulk buy, under false pretenses, is that the small retailer is not a vital part of the economy and the city.
Yes I sell quality diapers that were ethically made, most within North America. If somebody cannot afford the diapers I sell, I refer them to the used swaps. Paypal protects the buyer in these situations when used correctly. When that does not work, I refer them to our local cloth diaper group. When all else fails, I suggest repurposing tshirts and wool sweaters found at local thrift stores. There are too many ethical and environmental ways to cloth diaper a child cheaply.
MSRP:
ReplyDeleteSmall brands typically do not have a lot of restrictions. Big/popular brands have VERY strick rules. Get caught once. you're out. Period. Some say no discounting. Others say, nothing below 10%. (they have a business to run too, and if nobody wants to retail their products, they go out of business).
TAX:
If you (person or entity) buy something, then sell it. You owe sales tax. (Collecting money and buying on others' behalf is the same thing. Running at 0 profit or a loss... still owe sales tax).
Technically, if you buy something out-of-state, you're required (in most states) to pay a USE Tax as well.
You're also supposed to pay tax if you sell your car, have a garage sale, etc... commerce, whether for profit or not, is taxed.
WHAM, etc.
I definitely sympathize with people in need. Most families do what they have to to get by. There is also a lot of good points by the "you don't need a $200 carrier and $25 organic AIOs with extra inserts" argument. There are a TON of families who have grown out of theirs, who are de-stashing, and/or want to sell/give theirs away.
At the same time, do be aware that most cloth diaper retailer are run by people in similar positions. When you participate-in and encourage others to use coops, you are definitely making a statement.
-Tons of CD retails quit and go out of business because they cannot afford to keep up with quarterly minimums advertising, taxes, business expenses, interest, etc. - Not placing blame. It's just a reality.
At some point, however, if we all move towards the co-op model, we will work out the retailers from the system... so the only to buy cloth diapers will be to choose from like 2 things at Target/Walmart... maybe a couple things on Amazon... and then find the co-ops.
What does that do for the Cloth Diapering Cause? How does this help spread the message?
I do agree (with the comment above) about Capitalism working itself out... this is a new-ish industry (in its current form), and there are definitely kinks to be worked out. A lot of the downward pressure on the price is from other retailers too... people get scared (or are just lazy or bad at running a business) an start mega-discounting.
free-tailers and co-ops just set a specific price expectation. When there is a price expectation, manufacturers do what they need to in order to reduce price. To do that, they need to reduce choice and/or quality.
Every dollar is a vote. Do what you will. I'm sure it will all work itself out in the end, but if you're going to go the Co-op route... be an informed consumer and understand that it's more than a "ooohhh... 40% off!" type decision.
Wow. This certainly is a heated debate. For me it comes down to ethics. You have to stand up for what you believe in. The issue with the china cheapies is the patterns or ideas where stolen. FuzziBunz patented the pocket diaper, bg came up with snap down rise and stretchy taps, rumparooz the internal double gussets. These ideas were plagiarize by companies in china. It isn't ok to copy music, purses, or anyone's idea, including cd. Plus we don't know who is making these items. What are their working conditions. I don't want to support slave labor to save a few dollars. I also don't want to risk my child's health by buying products that have not been tested. Is their life worth saving $40 or $100 on a baby carrier? I'm in several coop groups. I've never bought. I often end up having to give people advice on how to correctly use a product. It's a waste of my time but I believe in helping others no matter the reason. One thing I do see over and over is Paypal gift and don't mention coop in your comments. Why is this? Is it because they are doing something illegal? Yes they are. Forget sales tax, forget your protection. Those coops that insist on only gifting them pp money are stealing. They are stealing from PayPal. Who cares right? Who cares if you take home a pack of paper from work or spend company time surfing the Internet for something to do this weekend. Everyone does it right? Yes a lot do but it is stealing. It isn't ethical. What kind of person do you want to be? It truly does add up in losses for PayPal and your company when you aren't being productive. Another thing that really gets to me with these groups is those that say I can't pay retail yet spent $4x80 on cheap diapers. Your now lying. You now have spent what you would have for ethically made diapers plus you over spent when you could have spent less than 100 for full time birth to potty cd. Be honest with yourself. The comments that say retailers are over pricing things. We are pricing where the manufacturers say we have to. We make very little money per diaper sale. How many of you went to a retailers store to ask, touch and feel and went home to "think" about it. Only to buy elsewhere. Did you enjoy having a place to go to for a sneak peek, for help with questions, for unique products babiesrus doesn't carry? They can't stay in business without your support. How much time did you spend with that retailer? An hour or two? Show your appreciation and buy from that retailer. Shop local. When you are looking for a product search for it by name and your city. I am a retailer and appreciate every sell I make, but I truly wish those cross state or country sales were going to their local store. Something else I like. I like sales tax. No I don't like paying it but I like what it provides. A fireman that saved my moms life last summer, a police man that protected us from a burglary, a smooth road to drive my car, libraries to read books and take free classes at, hospitals to heal the poor, firework celebrations to see my kids eyes sparkle over. Taxes pay for your city to run. They help provide infrastructure. So you saved a few dollars by shopping with a coop. How much is lost because of all those shopping in a coop. Every vote counts, every tax dollar counts, every sale counts. What kind of person do YOU want to be. It may seem small but we all have to start somewhere. Be an ethical person. Shop ethically. Shop local. Shop small.
ReplyDeleteI am new to co-ops and I am just wondering why these people would spend the insane amount of time running these co-ops if they don't make a dime. They have to make money to make it worth their time, don't they?
ReplyDeleteI think this article and the comments contain some great information. My only issue is that if someone stumbles upon this and doesn't understand there are different kinds of co-ops. There are food co-ops, housing co-ops, financial co-ops, wholesale/buying co-ops (which you are referring to in the article), agricultural co-ops, and many different other types of co-ops.
ReplyDeleteI also think you need to stress again that not all co-ops are bad. Co-ops, in general, can be very, very good. The people who are most outraged by this article probably belong to unauthorized buying co-ops which I don't condone. I do understand that the context of this article seems to revolve most around the cloth diapering/natural living community and that is the type of co-op you were referring to. I just don't want people who are trying to research co-ops to be completely turned off by this post.
I have never had a bad experience with co-ops. I only wish I found them sooner. The majority of my stash came from a WAHM whose PUL is falling apart. She refuses to stand by her diapers...so buying local is NOT always th e best option, clearly.
ReplyDeleteI'd rather a $3 diaper fall apart and them refuse to stand by it than a $24 dollar diaper fall apart and she refuse to stand by it. Furthermore, my "local" cloth diaper store is 45 minutes away. I'm not going to drive all the way down there just to support a local business.
Really, all of you business owners should spend less time worrying about what others do and spend more time worrying about bettering your business.
I do feel a little bad about not supporting small business however we are a family that has come onto hard times this past yr...our son was in the nicu and our bills are outrageous..we had a large cross country move before he was born and have the costs from that and our house we are still dealing with as well.
ReplyDeleteSomeone stated oh you can buy cheaper prefolds etc etc...should we have to choose that option? I would rather pay the 3 per diaper and get what I like...I prefer pocket diapers and tell me where else can I get a cute print pocket diaper for even 5? I cant anywhere in the us...if I could I would much rather buy from them...I do what I do because we HAVE no other choice...disposables were not an option because they are entirely too pricey...cloth had to be the way to go but I didnt have a couple hundred to front for starting out with cloth diapering so when I discovered the "china cheapies" I went that route. Which I do have some hand me downs from other reputable companies and to be honest the china ones I have are pretty much the same quality. Bonus they are also super cute too! I think its too easy for people to bash other people for going the cheap route vs the support our country route. Unless you have been in my shoes and have played the lets pick which bill we pay this month game so we can eat you cant judge those of us who are struggling and doing the best that we can for our families.
Oh please - as a previous co-op organizer please don't tell me that you are all running coops that you've presented to the company as a coop and not as business trying to pretend your ordering for your non-existent store. Most of the brands and yes MOST is accurate that we see in coop groups do NOT allow coops. They are being done because your lovely coop organizer is not presenting the honest truth to them about where the order is truly going. And coop participants have no idea how it runs behind the scenes so no, you would not know if your coop is legit or not unless you call the company and ask directly (if you dare to know the truth) - does your company allow coops?
ReplyDeleteTight budget? We're ALL in tight budgets. Does that mean it's ok to be part of something that hurts small businesses and that is often times not legit? Is that the example we want to give to our children - hey yeah it's totally ok because we're special...we're on a tight budget so it's all good.
Don't complain later when you see stores closing down because you didn't think it was important to support your local small businesses or your WAHM businesses. Hey, you were on a tight budget...sooooo.
I'd rather save, sell what I'm not using anymore, or do without then to support deal sites and coops at the expense of small business which are the freakin' backbone of this country.
So, if you're looking for whoa is me because I work so hard on my coop or because I am on a tight budget so I'm above what's right....look elsewhere.
Not loving what you read or what the blog post is about...truth hurts.
Even more interesting than the article was the debate it caused! Wow! I have never ordered from a co op but literally just looked into some an hr or two ago. Before I got excited, I started my research. One of the most popular co op I saw seemed a little sketch. They REFUSED to say where the co op products were being bought from... that seemed weird to me so I went to try and see why. I went on wholesale websites to see what a typical wholesale purchase cost and came with. I find 50 diapers, 50 mf inserts and 50 charcoal bamboo inserts in adorable prints for an extremely low $85 FREE shipping. These prints looked nearly identical to the ones on that "secret" co op board. ...anf lo and behold they cost more, tacked on fees, didn't come with inserts and didn't charge percentages.
ReplyDeleteMy point...
If you are going to support china when you shop, (I'm not hating this is an actual point) then why would you not just order from them directly? Seriously? Does sun baby or alva cost too much?
I can personally attest to the amount of work needed to make a good diaper. Scrape up the extra dollar or two to stop freaking slave labor. Cmon guys...
And when you can, buy from mamas who are destashing, wahms, and small local chains.
Really? People value a cloth diaper at THREE dollars? Somebody designed the fabric, made the fabric, treated the fabric, shipped the fabric, cut the fabric, cut the elastics, made the elastic, made the lining, made a tag, sewed it on, made the snaps, made the sewing machine, made the serger, fixes it when it goes wrong, makes the thread, dyes the thread, distributes it, and then. ..they take your order, communicate with you, package the item, ship the item and alllll the people that affects in between....and you value that at THREE dollars? All those people that needs to feed? The normal china asking price is too high? I lovvve a good deal but its kind of sickening to me to pay $3 for all that. I sew and crochet baby things. I don't cut corners, I buy USA whenever possible and I'm ok if you don't choose to buy, I usually have a nice list of orders so I'm ok with it...but its sad that some ppl would think I would have to change THREE dollars to be in their budget. I can't even make them that cheap.
I don't know, this whole thing is weird. People are getting all bent out of shape here. I once ordered from a co-op and it didn't go all that great. I ordered two wet bags that somehow got lost, then when they were finally found one of the zippers broke before I ever got to use it, then one of my diapers never came in and it took forever for the co-op organizer to collect votes from the other mamas on whether to put a new order through or cancel so I could be refunded my money. The decision ended up being made around the time my baby was born so I got behind on the messages and was never refunded the money for the missing diaper. I don't have anyone to complain to really because the girl organizing it is just another mama like me. She lives out of town and made special trips here to deliver my order and lost wet bags. She didn't do it to make money, she did it so we could all get a deal. I made that one co-op order and that was it. To hear people griping about others living outside their means with the chinese cheapies is a bit ridiculous. That would be akin to me saying my husband's hugely diminished income designing houses is the fault of anyone living in a subdivision or repo'd house because they refuse to give my hubby the business. Really? I'm not going to sit here and blame all of you for my having to now scrimp and save for everything I buy, including groceries. That's crazy. I don't think the big argument here was the intent of this blog post. I think y'all need to cool off for a bit.
ReplyDeleteYa know what's funny? I keep reading on forums posts from WAHMs that are complaining about how much they *should be* charging. $60-$80 per diaper. Yeah. WOE is me.
ReplyDeleteAnyway, I know there are some really excellent WAHM stores out there but there are some bad ones too. I've twice won giveaways from WAHMs. One had re-labeled some Alvas and the other makes the diapers herself. I waited FOREVER to receive the diapers. In fact one of them I won before Christmas and it's now March and I'm still waiting to receive it after many reminder emails. If these giveaways are any indication of their customer service, well, they stink. I haven't complained to them of course because they were free diapers but for goodness sakes, they got their advertisements and follows on twitter, facebook, pinterest. That was the whole point, right? They got their free advertising and are now refusing to pay the fee. I've also ordered from some stores and waited a long time for my order and received product that should have been sold as seconds but I paid full price. I didn't complain then either because I was too exhausted from my stressful pregnancy.
Not everything is black and white. Many of us are (obviously.lol) whiny these days. Most of us are just scraping by. Why attach each other for it. It's senseless.