Dropshipping and Doing Good

Disclaimer: I have since stopped doing dropshipping. It ended taking up too much mental space and it was hard to keep profit margins consistent during the pandemic in 2020. It ended up being more of a fun side project.

I have never really ranked “doing good in the world” highly on my criteria of finding a job.

Quite practically, things like job security, income, control, and prestige have all decisively ranked higher on my list. Any altruistic benefits from my work so far have been mostly incidental.

Over the last few months, I’ve experimented with e-commerce dropshipping and have asked myself unexpected ethical questions about the nature of this work. As a result, I’ve wondered about the overall extent we should care about bettering the world through our work.

If you haven’t clicked on the predative YouTube ads from e-commerce salesmen peddling their courses, the dropshipping business model is typically to: re-sell merchandise from Chinese marketplace Alibaba (or equivalent) on a re-branded website designed on Shopify (or equivalent).

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The dropshipping business engine almost entirely relies on marketing and advertising. You typically don’t do any of the product design, manufacturing, warehousing, or fulfillment. You could also choose to outsource all the website design and customer service if you wanted to be as hands-off as possible.

E-commerce has long been something of a jewel to me because it’s often touted as a business that you can scale to eventually operate with extremely low upkeep. I have long wondered if e-commerce was a key part of me working a financially comfortable 25 hours a week.

But I quickly learned it can be a bit uncomfortable operating a dropshipping business. Common reviews of dropshipping websites reveal the stories of angry customers who had extremely long wait times or who didn’t expect their product to come from China. Described cynically, a dropshipping company is just a glorified reseller that preys on the impulse purchases of relatively rich North Americans.

These aren’t reviews of my store, but I’ve run into similarly spirited customers

In the back of my mind, I’ve wondered: am I just selling well-marketed garbage to people?

The second, potentially more troubling abstraction… does it matter if I am?

The Clever Mind Will Justify Itself

Broadly speaking, in finance, most people’s jobs are either to:

  1. Help advise / execute transactions (the sell-side)
  2. Invest money to buy things (the buy-side).

The sell-side justify their moral existence by saying they connect buyers and sellers or help efficiently price things. Those on the buy-side say they help improve the liquidity of markets, help companies run more profitably, or help their noble investors make money.

Morality is rarely a central focus of these companies, but even an inexperienced financier can make the case that they’re making the world a better place.

When you dropship in e-commerce, I suppose you’re still selling a product. It’s not like it’s blatant fraud or anything. You’re still planning on giving customers the product you’re advertising on your website.

Sure, you’re marking up your product’s price, but all retailers do that! It’s the business model!

Sure, they could buy the same product for a much cheaper price directly from Alibaba, but trust, delivery and presentation are all important factors to a consumer. It’s precisely why you might buy Moroccan argan oil in a shop, but might hesitate to inspect the wares of the guy waiting in the bushes outside your riad.

The issue is that – if we try to be – we’re all clever enough to convince ourselves that our jobs somehow add value to the world. Moral relativism is particularly blurry (and easy) when it pertains to one’s livelihood.

I often reflect on the following quote from 20th century writer Upton Sinclair:

It is difficult to get a man to understand something, when his salary depends on his not understanding it.

Upton Sinclair, prolific American author… and socialist

Archaic pronoun usage aside, I think this quote captures the fear I have about being ignorant to the ethical impact of my work.

If I become financially reliant on something that is ethically questionable, it won’t ever be in my personal interest to explore those ethics.

In the wake of the rampant fraud we’ve seen the past few years – Theranos, 1MDB, the Fyre festival – I’ve become nervous about the uneasy relationship that sometimes weds ambition and morality.

We are easily blinded by the attractiveness and potentially, the simplicity of our goals.

I’d bet that the moral issues of corporate villains like Elizabeth Holmes and Jho Low all started with smaller omissions. We are easily tempted to move moral goalposts when they’re only lightly planted to begin with.

The Concept of “Adding Value”

One of my personal issues with e-commerce is that it typically involves selling products I don’t really believe in at prices that I would find it difficult to justify for myself. Selling something you don’t believe in feels awful.

Is that perhaps just a consequence of learning how the sausage is made? Is it wrong to charge exorbitant prices for popcorn, jewelry, or… anything in the wedding industry… or is that just a fair part of how those businesses operate?

In finance, the concept of value is sometimes construed as what something is economically worth to you.

The value of an asset could be defined as what someone is willing to pay you less the cost of that thing to you. So, one way to create value is to increase that asset’s price to the customer.

It’s not economically rational to settle for anything except the maximum price. You certainly wouldn’t think it unethical to negotiate the highest price possible if you were selling your home.

So how could it be unethical to charge the maximum price possible for a product?

Coming to Terms With Moral Apathy

The depressing (and hilarious) result of my poetic waxing is that… I still don’t care enough about these issues to shut my e-commerce business down. Although hamstrung by the Coronavirus, the potential time-earnings trade-off is still too advantageous and I don’t feel like any harm that it is causing is particularly tangible.

Don’t get mad at me, I’m just doing a crappy job at operating a business!

Frankly, there are already too many other criteria to consider when looking for a good job that I can’t really get any pickier. I value my personal freedom more than I value operating a morally righteous business, which isn’t that stunning a realization to me.

BCG, globally recognized as a top… 8 management consulting firm, surveyed over 200,000 people around the world to determine the work preferences of professionals. The survey results revealed that people are increasingly starting to care about intrinsic rewards instead of purely compensation (which I completely support).

But in examining the list of factors, you see things like work-life balance, being friends with your colleagues, and… your boss giving you a hug and telling you they’re proud of you. The issue of a company’s ethics, perhaps most aptly captured as Company Values, ranks as the 10th most important factor in determining an employee’s level of job happiness.

I would go as far to say that it isn’t rational to care about your company’s ethical mission. You rely on a job for way too much to stubbornly pick your career based on some notion of what is good.

So if you feel guilty because you work at a cannabis, alcohol, or adult entertainment company, just tell your mom that it’s actually OK because your boss appreciates you.

There are still a few hard moral lines I’ve decided I won’t cross – I refuse to sell counterfeit LEGO (because they are sacred) and I won’t touch serious healthcare products (because it’s impossible for me to validate the honesty of the suppliers).

I do think there would be a big difference if I felt like I was actively doing bad in the world (like sneaking into impoverished villages and poisoning their water supply or selling Mega Bloks), but I think I can live with being one of many retailers who charge high prices and have mediocre customer service.

Like the traditionally wealthy, I’ll just plan on being a philanthropic nice guy later in life when I no longer have to worry about my finances.

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