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The Highly Profitable Economics of Cheap Flip-Flops

How much do those ubiquitous foam and plastic flip-flops actually cost to make?

There’s one thing that you can find literally everywhere on spaceship Earth, and it’s not McDonald’s. It’s not Irish pubs. It’s not even the Nike swoosh. It’s cheap foam and plastic flip-flops! They’re manufactured all over the world, sold at all price points and offered everywhere, from dollar stores to grocery stores to online stores to high-end department stores. Name an apparel company or a footwear company, and there’s a great chance they offer flip-flops in their lineup. 

We literally cannot escape them — for roughly half the world (well, 3 billion of us) it’s the only footwear they own. They’re taking a hell of a toll on our oceans, too: Millions of pounds of them aren’t only in the sea, but wash up on beaches constantly. They’re also one of the prominent ingredients in those large garbage patches in our oceans. It’s an entirely avoidable consequence of people losing them when the tide comes in, or wearing them into the ocean only to have them wash away.

But how is this most egalitarian of footwear made? What’s the profit margin on the name-brand flip-flops? Are they all basically the same? Do they all come out of one massive factory in China? How much do flip-flops cost to make? 

Alongside John Heron, marketplace strategic advisor at Footwear Distributors and Retailers of America, and Michael Leva, co-founder and former chief creative officer of footwear company Sea Star Beachwear, we’re stubbing our toes on some answers.

So are all these lookalike foam and plastic flip-flops made in one massive flip-flop factory, or what?

Not at all! They may generally resemble each other — a single piece of foam with a plastic thong strap — but they’re made all over the world, according to both Heron and Leva. Lots are made in Mexico and South America, and of course China, as well as places like India, Vietnam and Indonesia. Some are made in the U.S., too. They are, shall we say, not that complicated to make. 

How are they made?

They’re stamped out. Imagine a giant, foot-shaped cookie cutter, then imagine pressing it down onto large sheets of EVA foam (the same stuff that’s in most sneakers’ midsole). Maybe add some graphics, then poke three holes in it and insert the plastic thong strap. You’re pretty much done!

“If you were to put the complexity of footwear production on a scale, a tall leather boot is the most complex,” Heron says. “You have to make sure the vamp is right, and how that fits your ankle and calf. You have to make sure the leather or material is shaped correctly.” This means a lower markup.

Then, he says, you go down through shoes, sneakers and onto sandals. Something like gladiator sandals, with five or six straps, can get a little complex. But at the very end of the spectrum lies flip-flops — and they can have a very high markup. 

How much are we talking about? And how much do flip-flops cost to make, really?

Numbers are hard to come by, but some sleuth in Singapore gathered a bit of data, crunched some numbers and estimated that Havaianas (manufactured in Brazil) are marked up as much as 700 percent! Havaianas appear to go for roughly $1.64 per 1,000 pairs. Gisele Bundchen’s diversified fortune owes a lot to her own line of sandals, which sell 250 million pairs annually. Flip-flops are known for having among the highest markups in footwear.

And that’s why every brand makes them, presumably?

Correct. They’re easy to make and the profit margins are enormous! Heron says slides are also very profitable, but there’s so much more material on them that they’ll never quite match the simple, minimal flip-flop. 

In the fashion world, fragrances have a legendarily high markup, which is a big reason why every fashion label offers them. But apparently even they can’t touch flip-flops. “I’ve heard people joking at shoe conferences and meetings that [the markup on flip-flops] is higher than perfume,” Leva says. “I’ve heard that bantered around a bunch of times.”

You probably can’t make as many dollars on a pair of flip-flops as you can on an expensive bottle of cologne, but the margins are impossible to pass up — from a revenue standpoint, if not an ecological one.

Is there any difference, then, between foam flip-flops at a supermarket and surf-brand flip-flops?

There are different grades of EVA foam, and lots of brands like to layer colorful stripes into the foam. But, Leva says, the cost difference between grades of EVA isn’t that significant. “All flip-flops are basically the same thing, whether they cost 80 cents or $80,” he says.

Exactly how much am I getting ripped off by the name brand flip-flops?

That’s harder to say. A pair of $28 Havaianas may broadly resemble the cheapest pair of flip-flops you can find at the dollar store, but anecdotally speaking, almost anyone will tell you that Havaianas are objectively far more comfortable and longer lasting than most cheapo sandals. Heron says Havaianas spends a lot of money on R and D, including figuring out how the thong part won’t break so easily out of the footbed, like most flip-flops inevitably do. Is that superior quality and durability (and all that expensive, sexy marketing they do) worth paying more for? That’s up to the customer.

Heron argues that there’s a decent chance a name-brand flip-flop will be better for the simple reason that, these days, the last thing a brand wants to do is put its name on a product that will disappoint customers. “If you’re a good brand and you’re putting your name on something, generally speaking, you aren’t going to put it on something you don’t trust,” he says. “In today’s world, brand trust is so hard and so expensive to acquire that very few companies are going to stamp their name on something that they’re not involved in the process of.” 

The difference, he says, is that some random sandal brand at the dollar store or supermarket doesn’t mean anything to anybody, so no one really cares about the quality of it because there’s no equity in that brand. That goes for the consumer, too, who likely views flip-flops this low-priced as, basically, disposable footwear, which is why the damn strap always eventually breaks off on these cheapo sandals. 

What about fancier flip-flops? Ones that are leather, or have that cushy footbed, or a more durable outsole?

All that extra stuff on premium sandals does add to the cost. And because people are mad for sandals, many people are eager to pay a lot of money for premium features. It’s an expanding sub-category of its own — especially during COVID, when people don’t need to put on fancy footwear for parties or work. And, just like the foam-and-plastic flip-flops, a rather profitable one.

By total numbers, flip-flops are literally humankind’s most popular footwear. For better or for worse, it’s in a company’s financial interest to offer them, at all sorts of price points. But while you can pay as much as you’d like for them, please stop losing them in the damn ocean!