Tough competition
July 28, 2003 | Cooperatives
Well, I see the conversation over at Wealth Bondage didn't stop while I took the weekend off. Some very good discussion in the comments to this post. Mike Edwards has some especially good points. Great new weblog to track.
To capture my own thinking in one place, I'm going to post comment(s) to other blogs here. Possibly edited for context.
Credit Unions are co-ops. I'm meeting with the manager of the local CU next week to investigate building closer ties with our grocery co-op. Then a few board members will attend each other's board meetings. I'll report what I learn.
I can tell you that at the national level, the banking industry is constantly trying to shut down the credit unions. This takes the form of trying to limit their geographic reach, customer demographic or number of offices via legislation. The National Cooperative Business Association (www.ncba.coop) works really hard to publicize and lobby against all this hooha.
Re: competition: What's amazing to me is that co-ops thrive, if you can call it that, in the grocery business. This is a business with 25% gross margins, 1% (!!) net margins, and a business model highly sensitive to labor rates, perishables and continous margin maintenance. For contrast, Microsoft has something like 85% gross margins and on the order of 70% net (from distant memory; please correct if you know current numbers). Software CDs don't rot after four days (some might say that MSFT software rots on day one, but that's a different topic), the margins allow for lots of slop and experimentation, and although labor is expensive it's a relatively fixed cost.
What this says to me is that passion can compete in one of the toughest businesses round. Yes, Whole Foods and the like can put a co-op out of business pretty easily, but we're talking about pockets of resistance here, not taking over the world. Part of good market research (sorely lacking in most non-profit ventures) is analysis of demographics, consumption habits, geography, etc.
If an industry of ex-stoners can stay alive at 1% net margins, there is hope for alternative business structures, no matter what the big guys do.
Comments
"We're talking about pockets of resistance here, not taking over the world. Part of good market research (sorely lacking in most non-profit ventures) is analysis of demographics, consumption habits, geography, etc."
Michael, these are all valid points. However, as you will note if you compare the dates, this post of yours was taken, literally cut and pasted! from an earlier comment you left at Wealth Bondage. Now, my site clearly states that all words on my site are and will forever remain the sole property of Wealth Bondage.
Funny? Am I losing mind! I don't recall giving you express prior written permission to repurpose the Wealth Bondage comments for your site, under your presumed copyright.
See you in court. And have a nice day with your pathetic 1% margin and your granola eating friends. Sit in a circle and sing Goombaya for me.
Posted by: Candidia at July 30, 2003 12:05 AM
I'm not sure if I should apologize to placate you, or start hacking to steal your identity, Candidia. Imagine if all your Harvard MBA "wealth" disappeared overnight and you turned into a raving street person. You'd have a good rap though – perhaps you could fundraise your way into a decent home. Hey, 'cause of the new budget deficits we're having a bake sale for the air force down to the co-op; do you still have the recipe for pot brownies you made in college? You could get a buck a piece for them on tour.
Posted by: Michael J. at July 30, 2003 06:45 AM
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