Why there’s no money in cloth nappies

I’ve pondered long and hard on whether to post on this subject. As a nappy retailer, it seems churlish to complain about work at home mums (WAHMs) who start internet shops selling cloth nappies in competition with us.

Seriously, I am pleased that the internet makes it possible to bring a specialist niche product like this to the mainstream. However, by the same token, it also prevents the market from growing properly, so that nappies stay a niche product until such time as they are taken up by the big retailers (who will then put us all out of business!).

The typical WAHM is a mum who used cloth nappies for her own child and believes in them as a Cause. She wants to bring them to the public at the best price possible, and is not motivated primarily by profit. Sometimes, I think such WAHMs believe us larger retailers to be sitting on our yachts in the Bahamas from our nappy profits (oh, I wish!). Anyway, such a mum transforms herself into a WAHM by setting up a website for a few pounds. It doesn’t matter to her whether she sells 10 nappies a week or 100, and whether she makes £10 profit or £100 profit. She’s doing it for the benefit of others, not for the money.

But in doing so, she undercuts all the larger nappy retailers, who – unlike her – have fixed costs like rent, staff salaries, commission to agents etc to pay. Yes, we get a larger margin on our goods than she does, because our volume is much higher. But the difference is not as much as you might imagine. A friend of mine with a background in retail on the high street is shocked by how small our typical margins are.

Our typical shopper is financially promiscuous by nature, because that is what the internet comparison sites have taught her. She will decide what she wants to buy. She will then load her basket at a number of different online retailers, to compare the different offers available, and will then proceed to order from the one which comes out the cheapest.

If this business were all about widgets, I’d have no problem with that. After all, the greatest efficiencies are rewarded, leading to business growth. 

But this is not about widgets. It is about a specialist market which relies heavily on giving good advice. That’s what www.thenappylady.co.uk does best, after all. I can’t tell you how heartbreaking it is for our advisors to put so much effort into giving advice, only for their advisee to save about £5 on a £250 purchase by going elsewhere. Her advisor receives no money if the advisee does not buy from us, because she earns her income based on commission.

So, our prices are constantly undercut, people buy elsewhere, and eventually we will be unable to provide the free advice service – we can only do that if we sell a certain volume of products. And this does not affect just The Nappy Lady, but every other cloth nappy seller in the market. 

Eventually, this forces the market back into tiny WAHM niches once more, as we all decide that in fact it is not possible to carry on making no money at all. At this moment in time, The Nappy Lady basically exists for philanthropic reasons, and every friend who is not a cloth nappy user is bemused as to why I still do it.

Well, of course, that’s because I too believe in it as a Cause, just like the WAHMs in competition with us. But at some point – and this may come sooner rather than later, given the current economic climate – I will have to say “enough.”

And the trouble is, the small WAHMs price so aggressively that they bring down the market price and so are unable to grow their micro business into a larger business like TNL, to take our place. So if we larger players go out of the market, that leaves a gap. And all those WAHMs who make lovely, individual nappies will also find they lose their market, as it is the mid range retailers that promote them. Back to a limited range of niche products.

At the other end of the scale, we have the players like Amazon putting pressure on as well, now that they are beginning to stock cloth nappies (yes, you’re just about to go and see what bargains you can pick up, now you know that, aren’t you?!). 

That’s all well and good, bringing cloth to the mainstream. Excellent. But we have been here before, with prefolds dominating the market – because it is all down to how good your marketing to the Big Boys is.

The net result is that only one or two brands make it into the mainstream, and one thing neither Amazon nor Mothercare are interested in is advice. They will happily beat the pants off us on price and on turnaround, but they won’t bother with the service we offer. When I first got into washable nappies, prefolds and Kushies dominated the market, and the waste of money for people who bought them and then had a horrendous time  with them, so reverting to disposables, was huge.

That’s not a situation I want to see happen again.

But it will, as fickle consumers will continue to use us (and other nappy retailers) for their advice, and then buy elsewhere to save a few pounds.

Eventually, the availability of unbiased and knowledgeable advice will simply dry up, as mothers move on from nappies and back into the world of paid work. Who can blame them, if they constantly do the work but don’t get paid for it? (Some mums seem to believe we are some sort of Nappy Offtel and even tell us proudly how they have saved a couple of quid by buying elsewhere – well thanks for that, ladies!).

I’m sorry if this all sounds like one big whinge. My point is that – as all of the midsize and larger retailers know – this is a very fragile market that could easily collapse under the pressure from both small and large sellers. Ultimately, the people who will suffer will be the parents who want the advice. All to save a few pounds.

And people like Money Saving Expert don’t help, trying to encourage people to write in for a sample of paper liners. Whilst I like a bargain as much as the next person, this kind of freebie-loading is having a terribly detrimental effect on our behaviour as consumers. I mean, seriously, what is the point in contacting us just so you can get 10 free individual liners? The point of the sample is to help you choose between different  liners, not simply to get you something for nothing.

Anyway, that’s why there will never be any money in cloth nappies, and I’m sorry to give such a gloomy prognostication. If you are thinking of buying cloth nappies, can I urge you to buy from the business which gave you advice, even if it costs a fiver or so more? It is only fair to the agent who is helping you, and in the context of a purchase of £250, it really isn’t much. If you honestly don’t think her advice is worth a fiver, well that’s your choice. But in our experience, our advisees rate their advisor’s help very highly indeed and would be horrified to realise she is not being paid if they don’t buy from us.

Now, I’ve got to dash – I have a meeting on my yacht in a few hours.

www.thenappylady.co.uk

Tags: advice, customer service, The Nappy Lady, thenappylady, WAHM