Monday, February 12, 2007

cost of goods

I want to buy some duffle bags for my kids. Nothing fancy, just big bags to pack for vacation. Because I am a cycling geek and gear connoisseurs, I am of course aware that BailyBag Works in Portsmouth NH, makes duffle bags. So I check the site and do a double take at the price a $100 bucks? I'd pay that for a backpack or messenger bag for me, but for some rarely used items that my kids will probably lose, a $100 is beyond my price range.
I can get a similar appearing bag at target or walmart for $20.
How much better can one bag be than the other? How much do you really want to support independent business? The whole "vote with your dollar" debate is now encapsulated in front of you with one purchase.
Buying a Bailey Bag you support a local small business. You also shoulder a larger chunk of the true cost of the goods purchased. The bag from the giant retailer, comes from oversees where corporations get gov'ts to bear huge chunks of operating costs, where employees wages and opportunities are ??(I can't pretend to know but I can guess a lot worse than here) The bag gets sold in a store where any operating cost (health insurance, retirement benefits, etc) are being driven down or passed onto the state gov't to handle.
But this also highlights a huge issues with economics in America. Only the wealthy can make a choice not based on the bottom line. If you have a family and a normal paycheck you are struggling to cover all the costs of everyday life, never mind save for college, new car, vacation, etc. So cost is always the overriding factor. Quality 2nd. Ethics or Style distant stragglers for 3 or 4th. But it appears that small business is forced to shoulder a larger share of the cost of goods that the large mega-retailers. In many cases a mega-retailer is selling products for the price small business has to pay wholesale. This is not so much economies of scale as it is the economics of monopoly. Check this story from a while back in Fast Company to see what I meanThese choices also have the Darwinian effect of limiting your future choices. You are short on cash and go to Walmart. Money goes out of your community-away from small business. Small businesses close, and you have no choice but to go to the last man standing.
There used to be 2 small grocery stores within walking distance of the house I grew up in plus 2 other stores that had a more limited supply of groceries. 30 years later one is left and it sells mainly booze. You are getting in your car to food shop. Same formula for a lot of retailers.
Think about furniture? It went from something made by craftsmen meant to last a lifetime or more to disposable particle board shit that barely outlasts a 2 year lease? Run down a list of main street retailers from book stores to hardware stores and they are no replaced by strip mall box retailers. Main Street is history.
Why is there a penalty for trying to support local business? and how long can the average person pay it?
Think about non-essential goods like bikes or skateboards. It would be great to buy your kids Independent Fabrication or A.N.T. bikes, but who can afford that? Even if 4 bikes from Walmart get thrown in the trash in a year you are still $1000 ahead of buying one indy-crafted bike or even reputable bikes from an indy bike shop.
It was supposed to be the invisible hand, but it seems more like the invisible subsidy that helps these mega-retailers succeed. You cannot have fair competition in when goods of similar value compete with such an uneven playing field.
The economic divide in this country which seems to encourage small boutique business that survives on the super rich and the rest of us who get what we can afford at target or walmart, is only growing and appears to undermine the essential concepts of independence and opportunity that made this country.
And to summarize. Bailey Bags are not too expensive. Their cost represents the true cost of producing goods in America in a small business. Bailey is good. Do not get it confused. My point is it is fucked that companies that are fucking up life for working people get endless local, national, and international subsidies and handouts. My second point is it pisses me off to be put in situations where for financial reasons, I support companies that I would prefer not to.
Another perspective on this was coined "conflicted consumers" by Harvard Business Review last month.

1 comment:

Calvine said...

Good for people to know.