Recently I became aware of a company that claims to use business to help the impoverished by providing a market for their hand-made items. They are a big company with a nice website using home parties to sell jewelry and other accessories. It is all marketed very nicely, with a section on their artists, and their terminology makes you feel good just considering buying their products.
I always ask a company about their product price breakdown when they claim to be doing humanitarian business. Because there is not an agency that certifies handmade goods as Fair Trade, there is nothing to stop someone from opening a company that is just as exploitative as some of the major sweatshop producers and claiming to run a business concerned with justice and based on “fair trade principles.”
This company refused to give me a price breakdown. They won’t tell me how much an artist gets paid for their work and how much of their price is profit. The reason this matters to me is that they are building their business on the theme that buying from them helps women in poverty to rise above. If I pay $60 for a necklace, I want to know that a good chunk of that goes to pay the person who spent hours crafting it. All sales businesses worth their salt know their price breakdown, it is how they know they are making money. At the bare minimum there is a base item cost, shipping, overhead, profit, and commission for those who use a home party model.
In the case of the company above, their consultants receive 20%, their own profit margin is at least another 30% because their consultants can buy at half price. That leaves $30 of my $60 to cover overhead (which includes their offices, marketing, salaries for their employees, and all other business costs), shipping, and finally something for the artist. I think if they were as justice-minded as they claim they would be proud to tell me how low they keep their overhead and how much their artists make. Since they will not, I will give them a generous benefit of the doubt and assume that their artists receive 10%.
From that $6, the artist must pay for all of their materials, as well as provide themselves with enough to invest in the next item they will make, and pay themselves for the labor. All on half of what a consultant who attends a party for 2 hours receives for the work of their hands. I don’t have a problem with businesses making a profit. But if they are making a killing and the people whose art they are selling are still struggling, then I cannot in good conscience support them.
In an email exchange with their customer service people, the responses I received from my direct questions ranged from quotes from their website to “we are a business, not a charity,” “we share your passion for justice,” and “we just don’t track those numbers.”
The difficulty is that I am sure this company is staffed with good people. I am sure that they care about justice. My big problem is that without voluntary transparency, there is no one holding them accountable. In a publicly traded company, there would be published reports with profit and loss columns. In a non-profit company, they would have to provide the numbers. In private business there is no requirement for reporting to anyone.
So I am careful about buying the carefully laid out marketing setup.
I won’t be buying from the company I mentioned above. I will stick with others who are truly concerned with empowering the impoverished, particularly women.
Asking questions that lead to conscientious consumption, that is a refreshing way to buy.