A cooperative or "co-op" is most commonly defined as a voluntary association of members united in order to obtain economic and social benefits not available to the members separately. As Robert Grott states in "Why Coops Die: An Historical Analysis":
Co-ops are unique in that they have a dual mission -- part economic and part social. Economically, they provide a way for a community to capitalize its own business and to provide for needs that would otherwise go unmet. They can then return the economic benefits of that business back to the community. In other situations, they can protect people from abuses such as monopoly overcharges. Socially, co-ops actualize the ideal of human co-operation. They operate democratically, and they suggest a new type of relationship between businesses and consumers. They can provide people with a new measure of control over their lives, and they offer a context for community organizing.Often a benefit of a co-op involves collective buying power; such a cooperative can leverage its size (and therefore its purchase volume) to obtain lower per unit prices or rates. Members may be individuals (consumers), retailers, or any other association or enterprise. I'll write more about retail cooperatives in a future post.
There are many different types of consumer cooperatives, focusing on food, housing, health care, insurance, etc. A food cooperative is essentially a grocery store owned by its members. It is a real business and must compete and attract consumers to survive. It must price food items attractively with enough of a markup to pay for the overhead involved in a maintaining and running a physical store. Often paid members get special low rates compared with walk-in visitors, and occasionally members are required to perform all the human work of the co-op.
Continuing to use food co-ops as an example, we see many problems common to large associations, voluntary organizations and corporations: bad management, complex political structure, inability to compete, requirement for participation, the need for a physical location and elitist snobbery.
The solution to these problems is to make co-ops less like corporations, and more like small local grassroots meetups or buyers clubs. The advantages of these micro-co-ops ("Splits") are:
- Economic and Competition: since there is minimal overhead, there is either zero or minimal markup. A Split leader may take a small markup for his/her troubles as long as there is full transparency. Each Split is usually focused on a single item or small set of items. The leader chooses a source in part due to the per unit price being less than comparables at local stores or co-ops, etc.
- Political and Management: a far simpler political structure means far fewer problems. There is one leader who has ultimate responsibility. If the members of the Split are not happy with the leader, they may request a change of leadership or simply form a separate Split. Splitters vote through their participation.
- Variety and Choice: Leaders and splitters may choose from unlimited sources and suppliers. They may choose any level of quality, price, from local producers if they desire, organic, green, low packaging, etc. Or not... it is their choice. At a physical store, the choices are largely made for you.
- Distance and Transportation: Splits can be quickly formed from members of your local neighborhood. The only driving required is on the day of delivery of the items. Normally all splitters converge at the house of the leader in order to take their share. Transportation from supplier to consumer is reduced dramatically, with proportional reductions in vehicle emissions, refrigeration, etc.
- Spoilage and Waste: Shoppers often buy in bulk at co-ops and warehouse stores because of driving distance and the uncertainty that an item of interest will remain (or remain at a certain sale price). Local splitting allows participants to order only what they need immediately - and such Splits may be repeated often and regularly. Bulk goods must be stored or frozen, and often go bad or add to the clutter in a home.
- Social and Community: Each splitter may be a member of multiple splits with different splitters. The direct communication and cooperation with neighbors for mutual benefit leads to greater feelings of community and better community relations. Neighbors become so accustomed to working together that many other community projects (political, social, civic, infrastructure, etc.) suddenly begin to take shape. Community festivals and BBQ's are more frequent, and potholes are less frequent.
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