2013 Report on Cloth Diaper Co-ops - Real Diaper...
Transcript of 2013 Report on Cloth Diaper Co-ops - Real Diaper...
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2013 Report on Cloth Diaper Co-ops
Contents 2013 Report on Cloth Diaper Co-ops .................................................................................................................... 1 Introduction ........................................................................................................................................................ 2
Why WE (RDA) created this report ................................................................................................................... 2 Definitions and Scope ...................................................................................................................................... 3
Legitimacy and Legality of Co-ops ........................................................................................................................ 3 Sanctioned by manufacturer? .......................................................................................................................... 3 Legal? .............................................................................................................................................................. 4
Sales or use tax ............................................................................................................................................ 4 Federal and state income taxes .................................................................................................................... 5 Import duty and taxes .................................................................................................................................. 5 Product safety .............................................................................................................................................. 5 Intellectual property .................................................................................................................................... 7
Ethics: labor and environmental costs.................................................................................................................. 7 Labor ............................................................................................................................................................... 7 Environment .................................................................................................................................................... 8
Sustainability of cloth diapering ........................................................................................................................... 9 Quality concerns .............................................................................................................................................. 9
Cloth Diaper Warranties ............................................................................................................................. 10 Co-op Impact on Cloth Diaper Businesses ...................................................................................................... 10
We Advocate Cloth Diapering..................................................................................................................... 11 Co-ops Cost Quality .................................................................................................................................... 11 Co-ops Create Unsustainable Expectations ................................................................................................. 12 Co-ops Cost Businesses Time...................................................................................................................... 12 Co-ops Cost Communities Stability ............................................................................................................. 13 Co-ops Put People out of Business ............................................................................................................. 14 Cloth Diapering Communities ..................................................................................................................... 14 Buy According to Your Values ..................................................................................................................... 14
RDA Policy on Cloth Diaper Co-ops..................................................................................................................... 15 Supporting Low-Income Families with Cloth Diapering....................................................................................... 16 Acknowledgement ............................................................................................................................................. 17 Further Reading ................................................................................................................................................. 18 Sources .............................................................................................................................................................. 18 Real Diaper Circle Cloth Diaper Co-op Guidelines ............................................................................................... 19 Recommendations to Retailers on Cloth Diaper Co-ops ..................................................................................... 20 Recommendations to Cloth Diaper Co-op Participants ....................................................................................... 21
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Introduction Over the past year, cloth diaper co-ops have become increasingly common. The Real Diaper Association (RDA)
has been approached by a number of stakeholders about our position on cloth diaper co-ops and their impact
on the cloth diaper movement. As we delved into the details, we realized that a simple “for” or “against”
position would be inadequate to address the needs of our diverse audience. Additionally, co-ops themselves
exist in a wide variety of formats, some of which appear to be more problematic than others. Of course, some
co-ops are legal, sanctioned by manufacturers, and offer high quality cloth diapers.
This paper is intended to identify the specific concerns we’ve encountered with cloth diaper co-ops and to
provide guidance about co-ops to protect consumers and to continue to advance our mission to increase the
use of reusable cloth diapers.
This paper is NOT intended to malign cloth diaper users who choose to buy cloth diapers via co-ops. We will
continue to support ALL cloth diapering parents and caregivers by providing educational materials, training
and supporting volunteers within local communities, and working to change the systems that prevent families
from choosing and using reusable cloth diapers in whichever situation they choose.
Why WE (RDA) created this report
The Real Diaper Association supports end users through Real Diaper Circles led by volunteer Circle Leaders in
communities across the US and Canada. One of our Circles has a volunteer (not the accredited Circle Leaders)
who developed and taught a class within the Circle called “Co-op 101.” Somehow, this information was
interpreted as RDA running or at least endorsing co-ops run by our volunteers, which rumor spread and led to
some concerned emails and phone calls from our stakeholders. We were alarmed and embarrassed to be
perceived as directly harming the cloth diaper movement, the advance of which is the core of our mission.
The truth is that we hadn’t provided any direct guidance to our Circle Leaders on the subject. The Real Diaper
Association has long focused on being brand-independent, which slowed us down with respect to a response to
cloth diaper co-ops. We advocate the practice of cloth diaperING, not cloth diaper products. On the other
hand, as cloth diaper co-ops become larger topics of conversation within Real Diaper Circles, it became apparent
that we needed to understand this issue in depth in order to provide that guidance for our Leaders on how to
handle such conversations.
We are supported by a number of cloth diaper businesses who are concerned about the impact of cloth diaper
co-ops on the long-time viability of the industry. These members share our mission “to increase the use of
simple, reusable cloth diapers”. They have requested that the Real Diaper Association research the impact of
cloth diaper co-ops on the cloth diaper movement and provide guidance to all stakeholders based on our
findings.
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“Lots of co-ops have
buys from WAHMs, and
that is how I try out
their wares.” – survey
respondent, 9/13
Lastly, the co-op conversation often includes reference to the necessity of supporting low-income families with
cloth diapering. Despite the fact that cloth diapers can save families thousands of dollars even at non-co-op
prices, the initial investment in cloth diapers can appear daunting. Co-op cloth diaper prices can offer a lower
barrier to entry, which story we’ve heard over and over as we’ve researched the issue. The Real Diaper
Association has long supported simple, reusable cloth diapers especially with the focus of supporting families in
financial need. To continue to support this community, we need to improve our educational materials and
messaging to help families diaper inexpensively, safely, and sustainably.
Definitions and Scope
In this report, co-ops are defined as groups of people combining orders to access bulk quantity pricing for cloth
diapers. Co-ops can exist to purchase other products, but the scope of this paper is limited to addressing co-ops
for cloth diapers and cloth diaper-specific accessories.
This document constitutes the RDA position on cloth diaper co-ops and includes our policies for Real Diaper
Circle Leaders as well as guidance for potential co-op participants.
Legitimacy and Legality of Co-ops
It may be possible for cloth diaper co-ops to be legal, safe, ethical, and sustainable. However, there are many
ways for a co-op to cause trouble for their administrators and members and to negatively impact the cloth
diaper movement. One concern is whether and how the co-op buy is allowed by the manufacturer of the
product. Other concerns are legal issues surrounding co-op purchases.
Sanctioned by manufacturer?
Legitimate co-ops will be transparent with the manufacturer that they’re organizing a
group buy through a co-op and will also be transparent with co-op participants about
the products they are getting.
On the other hand,
Co-ops that obtain wholesale pricing dishonestly from suppliers put the group at risk if the supplier
learns of the product destination. In this case, the co-op organizer may be posing as a new, legitimate
retailer with the manufacturer, so may require secrecy from members so that the manufacturer doesn’t
find out that it’s actually a group of consumers buying at wholesale prices.
Meanwhile, secret offers from manufacturers to co-op organizers unethically undercut agreements with
authorized retailers, who frequently are unable to compete due to contractual obligations to honor
manufacturer suggested retail pricing (MSRP). In this case, though the co-op itself may be approved by
the manufacturer, the ethics of the agreement are questionable.
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Legal?
Many co-op organizers don’t consider their co-op to be a business as they neither manufacturer nor retail
products or because they don’t make a profit. Cloth diaper co-ops, however, are providing a service for which
they are taking payment (fee) and are therefore subject to business regulation. Examples of regulatory
expectations to which co-ops could be subject, depending on the municipality, include (but are not limited to):
registering the business name,
obtaining a business license,
complying with restrictions of the local Zoning Board,
reporting income on federal and state tax forms, and
registering with the appropriate state agency to get a resale license and pay sales tax.
The legal requirements described below are specific to the United States. Canada has its own taxation and
import fees and requirements, as well as regulations regarding product safety. Of course, Canadian co-ops are
subject to the legal requirements specific to their country and municipality, which are similar in spirit, if not in
detail, to the regulations described here.
Sales or use tax
Cloth diapers are tangible personal property, which are therefore subject to state sales or use tax. (Use tax is
simply the name for sales tax when it is paid by the end user of the product because it was purchased online or
out of state.) Each state has slightly different rules and rates for sales tax, and a few don't have any sales tax
(MT, OR, NH, DE, and AK). Also, a 2012 report from the National Diaper bank indicates that several states
currently exempt diapers from sales taxation (MA, MN, NJ, NY, PA, RI, and VT). You should always be careful to
check your specific state to confirm the need for a sales or use tax payment. The sales or use tax is paid to the
state where the final user of the product lives. So, if you’re buying diapers from a manufacturer in Washington
through a coop in Oklahoma and you live in Texas then the tax is due to the state of Texas using their rules and
rates.
In a cloth diaper co-op, sales or use tax can be collected and remitted in several possible ways. The setup can
depend greatly based on the locations and relations of the different involved parties:
1. Remitted by the manufacturer / distributor.
The sales tax would be collected from the end user by the coop administrator and paid to the
manufacturer or distributor along with payments for the goods themselves.
2. Remitted by the coop administrator.
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The sales tax would be collected from the end user by the coop administrator and remitted to the
state(s) where the end users live. This would require that the coop is setup as a business entity with a
state resale certificate.
3. Remitted by the end user (consumer).
The sales tax is calculated and remitted by each individual end user as Use Tax. Generally forms are
available online with each state Department of Revenue and often can be filed and paid directly online.
How will the state know that you’ve procured these items and owe sales or use tax? Per U.S. Customs and
Border Protection (CBP), “States that require taxes to be paid on goods brought in from overseas periodically
audit CBP declarations to identify residents who entered the state from abroad with new items. The state then
sends a bill to those residents requiring them to pay sales / usage taxes.”
Please keep in mind, if no sales tax is collected and remitted to the states where it is due at any point in the
process, then the co-op and the end users are acting illegally and, in addition to the taxes due, each end user
and the co-op could face penalties and interest for failing to remit taxes properly.
Federal and state income taxes
A true co-op is a corporate entity with a board of directors and voting members. The entity files a tax return in
which any net income is passed on to its members. If no formal corporate entity is setup, when the co-op
host(s) is buying and reselling goods, it is automatically assumed that they are doing so as a sole proprietor (or
partnership), and they are required to report the gross income and deductions on a Schedule C with their
Federal 1040 (or 1065 partnership return) income tax returns. Similar reporting is required for state income
taxes, where those exist. Even if there is no profit, they should be reporting the activity. Any income earned by
a sole proprietor over $400 is subject to self-employment taxes.
Import duty and taxes
All imported goods, whether imported by individuals or commercial entities are subject to an import duty (and
other possible taxes and fees) when entering the United States if the value of goods exceeds $200. These duties
and fees are paid to, and monitored by, the U.S. Customs and Border Patrol. Statements on shipping documents
that underestimate the value or contents of a shipment are illegal and can results in seizure of products and
fines.
Product safety
There are a number of laws are intended to improve the safety of children’s products. If the manufacturer has
not handled all of the required safety testing and labeling, the importer is responsible by law and subject to
penalties for noncompliance, which could include fines, imprisonment, and/or product seizure. When
importing cloth diapers, all co-op hosts should be confirming the product’s safety compliance status with
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Under CPSIA, “Anyone who makes, produces or assembles a
product is considered to be a manufacturer... Under the law,
importers are also considered to be manufacturers and must
meet the same requirements.” -
http://www.cpsc.gov/PageFiles/113995/cpsiasbguide.pdf
respect to the legal requirements listed below (or those appropriate for their country), and should get the
manufacturer’s confirmation in writing.
Consumer Product Safety Improvement Act (CPSIA)
The Consumer Product Safety Improvement Act (CPSIA) is a law administered by the Consumer Product Safety
Commission (CPSC) that requires proof of safety for children's products in the U.S. It was created to protect
your baby from products that could be dangerous.
CPSIA requires that:
Cloth diapers containing PUL or snaps must be
tested for lead by a third-party CPSC-approved lab.
Products must include a tracking label including the location, date, and batch information.
Proof of compliance must be documented through Children’s Product Certificates.
“The law requires manufacturers or importers to issue a Children's Product Certificate…and that the certificate
be provided to the CPSC, upon request.” - http://www.cpsc.gov/en/Business--Manufacturing/Testing-
Certification/Third-Party-Testing/FAQs-Certification-and-Third-Party-Testing/
Flammability Testing
Certain fabrics (such as cotton velour, cotton fleece, cotton sherpa, bamboo fleece, hemp fleece, bamboo
velour) are also required by the CPSC to be third-party tested for flammability.
Care Labeling
Per the Federal Trade Commission, “The Care Labeling Rule requires manufacturers and importers to attach care
instructions to clothing and some piece goods.”
Business Liability Insurance
Legal businesses should carry liability insurance policies to cover the products they sell. Co-op hosts and
administrators could be at risk if a product malfunctions in a way that harms a baby (such as a needle being left
in a diaper post-manufacture).
Manufacturer Testing
It’s worth noting that there are several safety concerns related to cloth diapers that can’t be caught currently by
the above laws. Here are some examples:
diapers including microfiber against baby’s skin.
Some baby furniture manufacturers have added cloth diapers to fill out their product lines. Without
experience in this industry, some manufacturers have designed and sold cloth diapers with microfiber
directly against the baby’s skin. This fabric is far too absorbent for this use and could cause significant
rashes and skin irritation.
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experimental fabrics.
A recent fabric introduced to the market through co-ops before appearing in major brand cloth diapers is
charcoal bamboo rayon, which has alleged (though unsupported by hard evidence) benefits. How does this
fabric react with urine or stool? What’s stopping the nano-particles from being absorbed into the baby’s
skin? Is it possible that known harmful particles can be included in the extruded fibers during the
manufacture process? Has sufficient testing to be done to understand the long-term effects on babies using
this fabric?
Manufacturers who stand behind their products spend a lot of time developing and testing new cloth diaper
product configurations. Companies that are focused on the cloth diaper industry and on developing reputable
name brands that seek customer loyalty can be more reliably safe than those that offer unbranded products
at high volumes or that work primarily on product lines outside of the cloth diaper segment.
Intellectual property
After all that design and testing effort, manufacturers are protective of their work. Another legal issue for co-
ops (and other importers) is whether the cloth diapers they’re purchasing infringe on intellectual property of
other manufacturers. Both patterns and designs have been found to be copied in the past couple of years.
Manufacturers are taking legal action against factories that make cloth diapers which infringe on their
intellectual property and against the retailers and co-ops that sell them.
Ethics: labor and environmental costs
There are a number of other ethical and sustainability questions to be addressed beyond the legitimacy and
legality of a co-op. While some consumers are concerned only about the above issues, most families
demonstrate some willingness to pay extra for products that support their values, whether those be a concern
for the livelihood of the people involved in providing the product or stewardship of their environment. This
section will help those families understand the ethical choices they’re making with respect to their cloth diaper
purchases.
While these ethical and sustainability choices can be broadly applicable to all our purchasing decisions, they are
included here in the interest of creating a comprehensive source of information for cloth diaper consumers
considering participation in a cloth diaper co-op.
Labor
Is it possible to pay living wages and ensure acceptable working conditions (both in manufacturing and
distribution) below a certain price point?
Let’s take a look at the $2 diaper, which must cover the following costs:
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Materials, such as the fabrics (probably multiple types), the snaps or Velcro, the elastic, and potentially
some packaging. Keep in mind that these materials themselves will have to have been manufactured by
someone (also including labor costs) from their petrochemical origins.
Cutting, sewing, assembly of diaper and package.
Third-party safety testing to comply with CPSIA and labeling to comply with FTC requirements.
Shipping to the US.
To ethically support living wages for workers in the factories that co-ops are buying from, many questions must
be asked:
Who are the workers in the factory?
The Bureau of International Labor Affairs publishes a list of countries and industries that utilize child labor or
forced labor. For example, per the 2011 report, the production of cotton and textiles in China can involve
child labor and the production of cotton and garments there can use forced labor.
What is the average pay of workers at the factory, both on producing your products and on the other
products produced there? Does this constitute a living wage (not a necessarily just meeting minimum
wage standards)?
For instance, the Fair Wear Foundation’s 2010 report on wages in China, the legal minimum wage only
covers ~60% of monthly expense needs for workers in China’s garment industry.
What are the working conditions in this factory?
Here, you’d need to get a trusted insider to give you the details they won’t necessarily show you on a tour or
in company photos. Making these kinds of connections within factories overseas can be very difficult, which
is why it’s easier to work locally where you can have some measure of oversight.
Knowing who is making your diapers helps, which is much easier to do locally. Reputable cloth diaper
companies that outsource manufacturing to China do much of this research for their customers, but ensuring
living wages and good working conditions for workers usually causes diaper costs to rise above $2 per diaper.
Production for many products has moved to China, where materials, labor, and other costs have been low for
the past decade. Regulations and costs are rising now in China, though, and the competitive advantage of
manufacturing in China is fading fast. (See Shaun Rein, The End of Cheap China: Economic and Cultural Trends
that Will Disrupt the World, 2012.)
Environment
The price of products can be reduced when some of the costs are externalized, such as properly disposing of
waste or complying with pollution limits. Manufacturing in the US and Canada costs more due to regulation of
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wastes that cause air and water pollution. When manufacturing is outsourced to a country without those strict
regulations, it can be done more cheaply, but at the cost of the environment and the health of the workers
and community in which the factory is located.
Additionally, many families choose cloth diapers to lessen their impact on the environment. It’s worth noting
that the carbon footprint of diapers increases the further they travel to your doorstep.
Sustainability of cloth diapering
For years, members of the Real Diaper Association have anticipated a potential threat to the long-term success
of cloth diapering, specifically that cloth diaper products will be produced at such low quality that users are
discouraged by their poor performance. These users could be led to generalize the poor performance of this
subset of diapers to all cloth diapers, then cease using cloth diapers, and malign all cloth diapers within their
network. Worse, if these cloth diapers are offered to users at such low cost that existing quality manufacturers
can no longer compete, the cloth diaper industry could collapse, and the availability of good quality cloth
diapers could vanish.
Quality concerns
Stakeholders of the Real Diaper Association have reported activity that indicates this threat could be becoming a reality. Poor quality diapers are beginning to flood the market via some cloth diaper co-ops. Per a survey conducted in September 2013 by the RDA, ~12% of co-op diapers purchased were of low quality, causing ~10% of co-op participants to decide not to participate in future co-ops.1
While we are not seeing that ALL cloth diapers from co-ops are of low quality, even this level of difficulty is causing a drain on the time of volunteers (and even local retailers) to support users of these diapers, as co-op participants are usually distantly removed from the manufacturer of the diapers and unable to obtain support from them. These volunteers are also reporting that users are giving up on cloth diapering following their experiences with these low-quality diapers. (Additionally, we are concerned that quality will continue to erode to well below current levels, which will be described in more detail below.)
1 An additional 17% of co-op participants say they won’t participate in future co-ops for other reasons, including
dissatisfaction with co-op fees or timelines of buys, concerns about safety of cloth diapers sold through co-ops, or a
preference to support local retailers.
“I do not agree with cloth diapering co-ops. They hurt the cloth diapering industry. When families purchase low quality cloth diapers and have a bad experience it gives the whole cloth diapering industry a bad name.” – survey respondent, 9/13
“While I think it's a good thing in the sense that it can allow moms who have monetary constraints to cloth diaper, I think it also increases the chance that they will give up more quickly than they would with better brands because they are more likely to encounter problems with co-op diapers.” - survey respondent, 9/13
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Cloth Diaper Warranties
Cloth diaper users obtain protection via warranties if a product is defective. Most diapers sold through co-ops
(though not all) come without warranties. Without that warranty, non-functional diapers are the risk of the
buyer, who will have no recourse if they receive a defective product through a co-op.
The feedback loop of warranties also helps ensure long-term quality. When manufacturers or retailers back
their products with a warranty, they have opportunities to gain insight into product defects and can make
necessary improvements.
Co-op Impact on Cloth Diaper Businesses
In our research and interviews for background to this Real Diaper Association study, we have found several
concerning impacts that co-ops have on cloth diaper businesses:
1. Co-ops cost quality. Co-ops make cloth diapers a commodity, resulting in an inevitable reduction in
quality.
2. Co-ops create unsustainable expectations. Co-ops often operate illegally, creating expectations among
consumers that legitimate business costs are optional.
3. Co-ops cost businesses time. Co-ops result in less support for end-users to learn to use cloth diapers,
which can mean that co-op buyers come to local businesses for support without buying products from
those businesses.
4. Co-ops cost communities stability. Co-ops remove all possibility of living local economies as consumers
spend their money overseas rather than locally.
5. Co-ops put people out of business. When all of the other consequences of co-ops feed together,
legitimate, local businesses that support cloth diaper communities cannot survive.
You might not care at all about the cloth diaper industry, but you probably do care about the communities that
local cloth diaper stores build. You probably do benefit from the support of cloth diaper businesses of all kinds
not only through their membership donations to Real Diaper Association but as they participate in the Great
Cloth Diaper Change and other RDA events in your community. They provide space for classes, locations for
events, donations of products, and funds through sponsorships and memberships. If those businesses can’t
survive changes to the cloth diaper industry, RDA’s ability to support cloth diapering is limited as we have fewer
donors and local volunteers.
Real Diaper Association is not an industry association, but we do depend on business owners in the cloth diaper
industry to support the organization and the work we do. We recognize that strong cloth diaper businesses
“With the money I spent on co-op cloth diapers I could have bought a respectable stash of name brand cloth diapers that come
with excellent customer service/troubleshooting.” – survey respondent, 9/13
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mean a strong Real Diaper Association, a strong and growing cloth diapering community in the U.S. and
Canada, and more babies using reusable cloth diapers.
While we recognize that co-ops for imported diapers are just one aspect of the larger question of imports, we
want to focus on co-ops in this report. We cannot completely separate co-ops from other imports because they
share too many issues. The legality and legitimacy of co-ops is an issue with co-ops alone. The ethics of labor and
environment can be issues with any imports as well as with domestic products. When we write about the ways
in which co-ops put people out of business, we are addressing issues of legitimacy as well as issues of ethics and
sustainability.
We Advocate Cloth Diapering
Cloth diapers in the past 20 years in North America and Europe come with an abundance of social context in the
making, selling, and support of the diapers. Small businesses make and sell the products; people get to know
one another by name (even at a distance, such as "Betsy from Bummis says"); online and in-person communities
provide support. Cloth diapers come with community.
Much like our sister movement doesn’t advocate baby carriers, they advocate babywearing, we don’t advocate
cloth diapers, we advocate cloth diapering.
The RDA members who are business owners sell and rent the tools parents need to participate in a meaningful
act: cloth diapering.
Co-ops Cost Quality
Without social context, cloth diapers would become an artifact in isolation---a commodity.
When cloth diapers become a commodity, it just isn't possible that the construction or the materials will be of
comparable quality to those made by ethical small businesses. Profit drives commodity capitalism. A small
business will choose higher quality when the choice involves pennies because quality is one of the selling points
for most small businesses (and because they want the best for their own children). For a commodity, those
pennies turn into dollars for distant owners, so the choice will always be for the lower quality. The goal is to give
the least possible quality for the greatest possible return. It’s simply business calculus. Lower quality
construction and lower quality materials will mean measurable drop in quality of function. It's all in the
numbers. The drop will be enough for profit but not enough that the bulk of the consumers stop buying.
Even if the quality of co-op imported cloth diapers is high enough now that the majority of parents are satisfied
with function, we can expect to see that quality and that satisfaction slide gradually in order to find that sweet
spot of good enough quality and good enough satisfaction to create highest possible profits. And, if quality
sinks, the durability of diapers sinks, which will also impact the availability of cloth diapers for multiple children
or even in the second-hand market. As we see the phenomenon of cloth diaper co-ops develop over time, we
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intend to revisit satisfaction with co-ops and co-op cloth diapers. We hope to document the trends in
satisfaction and quality over time.
Co-ops Create Unsustainable Expectations
Co-ops often operate illegally, creating expectations for consumers that legitimate business costs are optional.
When co-ops forego taxes, licenses, testing fees, and other expenses of legal business, consumers who buy
those black-market co-op diapers become resistant to paying full price for the product. Being in business also
means paying the employees whose expertise helps customers make good choices, paying rent on the space
where products are stored and displayed and classes are held, and paying to keep the lights and computers on.
All of these expenses create the shopping experience and the support system a parent needs to choose and use
cloth diapers successfully.
One way manufacturers have been able to squeeze more profit from a product is to make that product for lower
cost. Production for many products has moved to China, where materials, labor, and other costs have been low
for the past decade.
The lower expense, lower quality, and lower satisfaction to be expected with products sold through direct-
import co-ops is completely apart from the lower quality of life for those extracting and processing the materials
and those piecing the diapers without a living wage. Among the consequences of the great China export are
horrific air and water pollution, as well as other predictable consequences. If those social and environmental
costs can be externalized---and these are inevitable factors in the true cost of any product---that's excellent for
business driven by profit alone.
As mentioned earlier, rising regulations and costs in China is eroding the competitive advantage of
manufacturing. China followed Taiwan, which followed Japan. The cycle of low cost, high profits, then rising
costs will undoubtedly move elsewhere in time. Even if co-ops continue to import directly from China, they will
find costs rising as Chinese manufacturing stabilizes to address some of those previously externalized expenses.
The expectations set by the current wave of cloth diaper co-ops are unsustainable not only in comparison with
legitimate local businesses but for the future of co-ops themselves.
Co-ops Cost Businesses Time
Sales through co-ops result in less support as end-users learn to use cloth diapers, which can mean that these
buyers come to local businesses for support without buying products from those businesses. The time it takes to
support products is another of those hidden expenses that small businesses cover.
Lack of support is not an issue with co-ops alone. For several years, baby product retailers have reported that
consumers come to them for support using products bought in chain stores, big-box stores, or online stores.
Consumers who come to local stores for support with products bought in co-ops are a recent addition. Real
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Diaper Association volunteers have also reported being asked more often to support the use of products that
are not supported by retailers or manufacturers.
Some store owners have responded with policies that limit consultations to customers. Before it became
apparent throughout the industry what was happening, this shift in buying patterns was reported as the reason
for some small, local businesses closing.
Most baby store owners have a sincere desire to support their customers in successful use of parenting
products. They are not volunteers, though. Their time costs them real money. Local businesses cannot be
expected to support products that are sold without the social context of support from a manufacturer or a
retailer.
Co-ops Cost Communities Stability
Co-ops remove the possibility of living local economies as consumers spend their money overseas rather than
locally. Even if the co-op were set up as an actual local co-operative with members who share the work and the
profits of the business, jointly buying products made far away with materials made far away sends the bulk of
the consumer’s money to build a different community.
Drain of local dollars is not an issue with co-ops alone, but co-ops have exacerbated the issue.
Sustainability isn’t just a matter of products that have lower environmental impact. It also helps to find products
with a lower social impact, products that don’t impoverish or cause harm to the health of the makers. The big
picture of sustainability requires that we look at the stability of communities and economies. Real sustainability
requires an awareness of rippling consequences.
As the environmental and social consequences of outsourcing become more obvious to consumers, a movement
builds to return social context to the artifact---to re-contextualize products by looking for businesses and
products that show a consciousness for a triple bottom line of people, planet, AND profit. Still profit; always
profit, since you can't do business without profit. We see push-back from those who still feel the pain of
departed industries. We see vocal movements to Buy Local in order to build sustainable local communities,
since, when you buy local, more of every one of your dollars stays within your community. Companies like
Patagonia make the case that businesses boost profits by making socially and environmentally sustainable
products. They have even down-sized because they prioritize sustainability over profit.
Businesses themselves are pushing back against the dominant narrative claiming that business must exploit.
Businesses are telling a new narrative of corporate responsibility. Stability of communities is becoming a
business issue.
www.realdiaperassociation.org
www.realdiaperevents.org
Co-ops Put People out of Business
When all of the consequences of co-ops feed together, it becomes far more difficult for legitimate, local
businesses that support cloth diaper communities to survive.
Of course small businesses in your community don’t like to see that there are co-ops for the products they sell,
but the reasons aren’t so simple as profit. The consequences of cloth diaper co-ops on small businesses that
make and sell cloth diapers are more complex than that.
Cloth Diapering Communities
Co-ops, no matter the quality, can commodify cloth diapers. They can remove the social context from a product
that has gained popularity precisely because of social context.
On the other hand, some co-ops are formed out of existing communities, and other co-ops become
communities unto themselves.
Nevertheless, all co-ops remove the maker from that social context, so the community becomes a social context
for an artifact separated from its maker. The replacement community is smaller than one that includes the
people who create the materials, piece the products, or ship the boxes.
Of course, we don't have to let that happen. We don’t have to let our communities shrink; we don’t have to
accept cloth diapers as a commodity. We know that we support, sell, and practice cloth diapering, the action
beyond the artifact. We know cloth diapers have meaning beyond the artifact, and we can rally the movement
to understand that.
We do not accept the inevitability of black market diaper co-ops. We reject the illegal, and we discourage the
unethical.
The Real Diaper Association mission and values have always included reference to face-to-face interactions
because we understand the importance of community in cloth diapering---that is cloth diaperING, the
meaningful action that comes with an abundance of social context in the making, selling, and support of the
diapers. It only makes sense that Real Diaper Association would continue to promote and support those actions
that build sustainable cloth diaper communities.
Buy According to Your Values
Cloth diapers CAN BE inherently environmentally sustainable, as reuse has lower earth impact, and cloth
diapering can be socially sustainable, as cloth diapers encourage community connections for support.
But, we also imagine that cloth diapers can be barely reusable, far worse for the environment, and utterly
unsustainable. If we subtract the social sustainability, the family and community building that has surrounded
the revival, cloth diapers will lose the appeal that attracted a lot of parents.
www.realdiaperassociation.org
www.realdiaperevents.org
“I want to teach my children sustainability. And to me sustainability is not just buying and using items good for the earth. It’s
knowing how to be a part of a community and economy that will thrive.” - Christy B, Northwest Florida Real Diaper Circle
The explosion of cloth diaper business since the advent of the graphic internet in the early 1990s is part of the
leading edge of socially and environmentally conscious micro business. Mega businesses have followed with
corporate social responsibility, but it was the owners of very small businesses who were the first to seek
sustainability. Some of the long-term businesses in the cloth diaper industry were among those who consciously
chose to make and sell the products they did, cloth diapers, precisely because they were socially and
environmentally responsible products. Those businesses grew from the responsible choices of their founders
rather than marketing being plastered onto a random choice of industry.
Not every manufacturer or every retailer needs to build their business on the same values. Diversity in core
values of businesses gives end users a range of values to choose from. But, if businesses all sink to the lowest
common denominator of seeking nothing more than profit from cloth diaper buyers, the cloth diaper industry as
we know it will melt away.
Change is inevitable, but the direction of that change is still within our hands.
If each of us who is a business owner doesn’t build our businesses based on our cores values, and if each of us
who is a parent doesn’t buy our diapers based on our sincerely held values, we will lose the broad variety
currently found in the industry.
If you care about the social or environmental sustainability of cloth diapering, if you care about the survival of
the cloth diaper industry, you need to buy and use diapers by your values.
Otherwise, your choices are going to go away.
RDA Policy on Cloth Diaper Co-ops
In developing this report, we’ve spoken with dozens of people in the cloth diapering world. It’s relatively easy to
find common ground against black market (illegal or illegitimate) cloth diapers, which can endanger co-op
participants, babies, and the local cloth diaper industry.
As consumers, we all consider the ethical issues related to fair labor and environmental concerns in all our
purchasing decisions, not just when participating in a cloth diaper co-op. Some would say these considerations
go beyond the scope of our organization, and that may be the case. We do want to support all families who
choose to use cloth diapers, so we try to keep our messaging narrowly focused. That said, one of the main
benefits that we promote of cloth diapering is its lessened impact on the environment. So, our audience should
be aware that their buying choices play a role in their diapers’ environmental impact.
www.realdiaperassociation.org
www.realdiaperevents.org
Sustaining the practice of cloth diapering is, however, clearly central to our mission. Because the relationship
between cloth diaper co-ops and long-term cloth diapering is less clear, it’s difficult for us to develop a strong
policy statement that would condemn cloth diaper co-ops across the board.
Some members of the Real Diaper Association Board of Directors own businesses in the cloth diaper industry.
Our aim is not to narrow consumer choices in cloth diapering (which would, in fact, violate anti-trust laws).
On the other hand, that appears to be exactly the danger of cloth diaper co-ops. If they continue to undercut
the quality and pricing for cloth diapers, local industry - - both manufacturers that focus here in the US or
Canada AND the retailers who sell and support those brands - - will shut down. This in itself would severely limit
consumer choices, and it’s not apparent that all cloth diaper co-op participants are aware of this. If YOU are
concerned about the long-term health of the cloth diaper industry in the US and Canada and its contributions
to local jobs and communities, or if you are concerned about the long-term availability of quality cloth
diapers, we recommend that you don’t participate in cloth diaper co-ops.
That’s a strong statement. The companion statement is this: we will continue to support all cloth diapering
families with choosing and using reusable cloth diapers in whichever situation they choose, whether or not
they share our values, and regardless of the origin of their diapers.
To further spell out our position on cloth diaper co-ops, we have developed several supplements to this report.
First, we’re giving specific guidance to our Circle Leaders to fill that gap. We’re prohibiting them from running or
promoting illegal or illegitimate co-ops and are recommending that all messaging about co-ops (if they choose to
allow co-op talk in their Circles at all), includes reference to RDA’s material on the subject. Second, we’re
offering guidance to cloth diaper retailers about how to minimize the impact of cloth diaper co-ops on their
businesses. Third, for cloth diaper users who choose to participate in cloth diaper co-ops anyway, we offer
recommendations to protect themselves, their babies, and the larger community. Lastly, we offer additional
guidance to families looking for inexpensive, quality cloth diapers.
Supporting Low-Income Families with Cloth Diapering
Given our research into the many concerns with cloth diapering co-ops, we’ve recommitted to our efforts to
support families in finding and using sustainable diapering choices that fit their budget. We believe that saving
money can be one of the biggest benefits of reusable cloth diapers, and saving money is a possibility even
without purchasing cloth diapers in co-ops. So, for those users choosing not to purchase cloth diapers through
co-ops:
http://realdiaperevents.org/archives/using-cloth-diapers-on-a-budget-%E2%80%93-how-to-build-that-
stash – Starting with items around the house or even a single prefold, you can save money each week to
build your cloth diaper stash over time.
www.realdiaperassociation.org
www.realdiaperevents.org
http://realdiaperevents.org/archives/cloth-diaper-for-under-5-using-items-in-your-home - Do you want
to get started using cloth diapers but can’t dig up the funds to buy them? No worries! Use what you
already have! Up-cycling items you own into cloth diapers is THE most economical way to diaper a child.
http://realdiaperevents.org/archives/how-to-buy-used-cloth-diapers - Buying cloth diapers in the
secondary market has many advantages. Not only can you save quite a bit of money but you are also
helping the environment by recycling. Includes tips on what to watch out for and how to prepare your
diapers before using them.
http://realdiaperevents.org/archives/cloth-diaper-banks-helping-families-in-need-get-started - While
families stand to save money using cloth diapers, the initial investment can be an obstacle. Diaper banks
provide cloth diapers to families in need.
http://realdiaperevents.org/archives/the-simplicity-of-hand-washing-cloth-diapers - Hand washing cloth
diapers is easy especially when using simple diapers like flats and prefolds. It takes about 5 minutes to
wash just a few diapers at a time.
Acknowledgement
Our sincere thanks go to all who contributed information, ideas, and feedback throughout the process of
creating this report.
Heather McNamara, Executive Director
Lori Taylor, Chair of the Board, President of the Corporation
Angela Torres, Vice Chair of the Board
Angela Imes, Treasurer
Elizabeth Pilgrim, Secretary
Heather Bradley, Director
Monique Bragg, Director
Marie DiCocco, Director
Rachel Dove, Director
Sara Moore, Director
www.realdiaperassociation.org
www.realdiaperevents.org
Further Reading
We are not the only members of the cloth diapering movement who have considered the impact of cloth diaper
co-ops. You can read more perspectives on the topic at the links below.
http://www.ecobabysteps.com/2013/05/04/cheapie-leakies/
http://www.ecobabysteps.com/2012/10/06/cheap-products-at-what-cost/
http://blog.bummis.com/2013/08/a-values-driven-business-part-1-looking.html
Manufacturers for a Local Economy: http://loveclothdiapers.blogspot.com/2012/09/manufacturers-for-healthy-
economy_15.html
http://www.clothdiapergeek.com/2012/09/co-ops-good-bad-and-ugly-truth.html
Consumer point of view: http://www.theclothdiaperwhisperer.com/2013/07/cloth-diaper-co-ops-one-
moms.html?m=1
More about cloth diaper imports, including co-ops:
http://dirtydiaperlaundry.com/cloth-diapers-made-in-china-what-every-consumer-needs-to-know/
http://allaboutclothdiapers.com/are-cloth-diapers-from-china-bad/
Sources
Thanks to EcoBabySteps.com for guidance in the ethics section of this report.
Thanks to respondents of the Real Diaper Association Cloth Diaper Co-op Survey, September, 2013.
www.realdiaperassociation.org
www.realdiaperevents.org
Real Diaper Circle Cloth Diaper Co-op Guidelines
The following guidelines have been developed for and with our active Circle Leaders:
RDA Circle Leaders may not run black-market (illegal and/or illegitimate) cloth diaper co-ops.
RDA Circle Leaders are prohibited from promoting black-market cloth diaper co-ops in their community.
Co-op classes within the Circle (taught by anyone in the Circle, including, but not limited to, accredited
Leaders) may not be promoted unless they include RDA’s user guidance on participating in legal, ethical,
and sustainable co-ops.
We recommend that Circle Leaders respond to member mentions about cloth diaper co-ops with links
to RDA user guidance on participating in legal, ethical, and sustainable co-ops.
www.realdiaperassociation.org
www.realdiaperevents.org
“If I see a product in a coop, I drop the line. If I see it in a
bargain site more than once, I drop the line. Can't afford to
have it take space and sit on the shelf. “ – Sara Moore, 9/13
Recommendations to Retailers on Cloth Diaper Co-ops
Retailers tell us they are affected by cloth diaper co-ops in several ways:
Their customers develop unrealistic pricing expectations for quality reusable cloth diapers, either
because
- the specific diapers they retail are sold in co-ops below MSRP, or
- competing co-op brands externalize costs to achieve a low price point.
They spend a lot of time supporting people with poor quality cloth diapers that they bought in co-ops.
Here are some recommendations for protecting your business:
Report illegal co-ops to the appropriate government agency or customs.
Report unsanctioned co-ops to the manufacturer.
If you’re unhappy that your vendors are allowing legal co-ops for their products, talk to them about it.
Be firm about supporting only the diapers you sell.
Educate your customers about the impacts of their buying decisions.
www.realdiaperassociation.org
www.realdiaperevents.org
“Co ops have really helped me in
learning to cloth diaper. I am so
grateful for the two I have joined, the
community is wonderful.” – RDA Cloth
Diaper Co-op Survey respondent, 9/13
Are the diapers being sold through the co-op without manufacturer approval?
>>Report the co-op to the manufacturer.<<
Are the diapers not CPSIA compliant? Have the materials used not been tested for flammability? Report them to the Consumer Product Safety Commission (CPSC) at saferproducts.gov
Do the diapers not include care labeling? Report them to the Federal Trade Commission
Recommendations to Cloth Diaper Co-op Participants
The three major areas of concern related to a cloth diaper co-op are:
Is it legitimate? Is it legal?
Is it ethical, using fair labor and protecting the environment?
Is it sustainable, maintaining cloth diapers as a quality option into the future?
To understand the ethics and sustainability of co-ops, please read the complete Real Diaper Association
Report on Cloth Diaper Co-ops (http://realdiaperassociation.org/diaperco-ops).
To ensure that you’re participating in a LEGITIMATE cloth diaper co-op buy:
Check the manufacturer’s page to ensure they sell to co-ops
Check that manufacturer warranties are still valid if you buy through the co-op
The pricing and buy should not be secret (which usually indicates it’s an illegal or unethical buy)
To ensure that you’re participating in a LEGAL cloth diaper co-op buy:
If the co-op host is not collecting and remitting sales tax on the buy, you’re responsible for remitting your
own use tax.
Confirm that the cloth diapers are compliant per CPSC and FTC requirements and have the appropriate
labeling and certifications.
Other things to watch out for:
Watch out for under-estimated customs fees, which could result in a
second collection before getting your diapers.
Do you trust the host to complete the transaction that you’ve paid for?
Do you know how to get support from the co-op or manufacturer with
the items you’re purchasing if you have difficulty using them?
Look for local support in cloth diapering from other parents who can fill in the gap for missing care labeling
and give advice on their experience with new, experimental fabrics and diapers.
Looking for inexpensive, reusable cloth diapers?
http://realdiaperassociation.org/budgetdiapering