January 24, 2009

You don't want a small business exemption pt. 2

I posted this comment at Fashion-Incubator's blog entry, "Don't throw yourself under the CPSIA bus." This article discusses in great detail the many problems with a small business exemption, which I fully agree with.

Thanks for writing this Kathleen, you saved me from writing another snarky blog post on the topic myself! There is another looming problem with the small business exemption. At some point in the future I expect to see “Certified lead free” or “CPSIA compliant” or some other such label. All those indie designers and crafters clamoring for an exemption will not have the competitive advantage without a label too. Parents will notice the labels on the products in the big box stores and will expect it from Etsians too. The small business exemption will be nullified because these micro-cottage businesses will have to jump into the game and play like the big guys. How is a crafter going to explain that it is ok to expose their child to potentially harmful substances because they have fewer than 5 employees? It just doesn’t make sense.
Another myth that is floating around Etsy and elsewhere is that Wal-Mart and Target are already doing testing. That is not exactly true. Wal-Mart and big box stores are putting the full brunt of testing costs on their vendors. The big box retailers accept the liability of selling your product in their stores, this means they will expect you to sell them a legal product. In other words it is the small businesses that sell to the big guys that are paying the testing costs. Vendors that do not supply GCC's (and sometime its the lab test results) will have to pay to have their product returned to them in the form of chargebacks. They will lose the sales they made plus be essentially "fined" by the Big Box retailers for the shipping costs and incidentals. Let me say it again, Walmart is not paying any testing costs period.

Walmart doesn't get off that easy though. They will have fewer products in their stores, it will cost more, and their revenue stream for that product category will be reduced. The CPSIA will negatively affect Walmart and its customers. A small business exemption won't make any difference, you'll still have to play by the rules.

3 comments:

  1. Walmart et. al. also won't be impacted as swiftly, because they started asking for testing before the law was even passed, based on where they thought the law might go. So their suppliers at least got a heads-up. But they will be impacted.

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  2. You're right on Esther. It's scary to think that people are lobbying for all these exemptions that really will make no difference in the long run.

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