Hey guys, I’ve always had strong feelings against conspicuous consumption, so me and a friend decided to try to subvert this trend by collaborating with designers and making an exclusive online shop where you can buy expensive limited-edition items, but where most money goes to charity. Before launching the shop though, I figured I’d ask for some feedback from the EA community. Do you guys have any thoughts? I know it’s a long shot to expect this to take off, but it’s a very low-risk gamble with all the free tools available today, so I figured I’d give it a shot. I’ve provided more details about how the shop would market itself in the following sections.
About
In the developed world, people buy Gucci, Prada, and Supreme clothes for hundreds of dollars every day. The production cost of these products is low, but people are willing to pay extra for the brand and exclusivity. While we finance the luxurious life of fashion magnates, it is estimated that millions of children die from poverty-related conditions every year in the developing world. We don’t think that’s fair. That’s why we started Compassio.
If you have a median annual income in the U.S. ($56,516.00), you’re one of the 1.1% richest people in the world. If you donated a mere 1% of your annual income, that would be only $565. If you buy any of our limited-edition items, with prices ranging from $100 to $50,000, your money goes to:
U$ 339 (60%) - Effective charities
U$ 226 (40%) - Making altruism trendy
The price of each item would correspond to a reasonable annual donation amount for a person in a certain income bracket. The prices would range from $100.00 (many items available) to $50,000.00 (very few items available). The products would include t-shirts, hoodies, caps, mugs, posters, etc.
FAQ
What are these “effective charities” exactly?
Effective charities are basically non-profits that try to do as much good as possible with every dollar it manages to raise. While some charities focus on charismatic causes (e.g. Make-A-Wish Foundation), effective charities focus on efficiency, meaning most money goes to very underdeveloped countries where a few dollars can make a lot of difference. There are multiple charity evaluators who publish their own lists of charities. To simplify our lives, we give all our charity money to the Effective Altruism Funds, where a team of specialists evaluate charities and decide where to direct the money to maximize effectiveness. You can learn more about their methodology here.
Why not donate all the money to charity?
You can always do that, of course, but that is an isolated activity. By financing (and if you want, promoting) our shop, you’re contributing to creating a hype around altruistic giving, which may cause many others to buy our products as well, which means you’re potentially having a much greater positive impact in the lives of those in need.
Wouldn’t it be distasteful of me to show off how altruistic I am?
If you’re shy about giving, there’s no need to worry. Our designs are discreet and people will only know you were altruistic if you choose to tell them about how we work. Still, by purchasing our products instead of giving directly to charity, you help us invest in marketing and reach other people who are less shy and more open about their charity.
Isn’t it unethical to promote a culture of bragging about how altruistic you are?
Being enthusiastic is not the same as bragging. At Compassio we believe ethics is all about using the best information available to prevent avoidable suffering and promote well-being. Multiple studies have shown that being public about your altruism actually encourages others to also be altruistic, which helps us raise more funds to help those in need.
Isn’t it still better to share a fundraiser on social media for example, so that all money goes to charity?
Needless to say, we encourage any form of charity. However, promoting a fundraiser effectively involves work and skills that not everyone might have. When you buy our products, you let us take care of all that. Besides, by selling physical, wearable items, we believe we tap into some very core human instincts. Many of us feel the need to be expressive, to promote the causes that are important to us, or to approach altruism as a meaningful, quasi-spiritual activity. Many feel that these needs are not met by setting up automated donations and forgetting about them. Making rare but expensive purchases is a way to be mindful about altruism and what it represents to you.
Question
So, would you buy from such a store? Would you support it? Do you have objections? Any feedback is welcome.
It sounds like you’re saying that these companies are raking in cash without correspondingly high labor or capital expenditures, and I don’t think that’s true. While Gucci has a very healthy operating margin of around 30%, Prada and Supreme are around 10%, which is typical for large public companies. It’s true that the price of a luxury good is higher than the manufacturing cost, but there are a lot of other costs that go into running a retail company: R&D, marketing, office employee salaries, shipping, storage, dealing with returns and damages, and more. Plus, often in fashion something doesn’t catch on, and you need to eat a huge loss on it. If you save on rent by not having a brick and mortar business, you need to deal with very high e-commerce return rates.
As a small retail company, you don’t need to do all these things yourself; it’s common to use third-party providers like Shopify. But that costs money too.
It’s really hard to break even in retail, even selling luxury goods. If you’re donating a lot to charity with each sale, it’s way harder. I’d say that if you can do a test run of this shop without spending a ton of time on it and without huge capital outlays, that’s great. Like if you sell one-of-a-kind designs or if everything is made-to-order, that would be less risky. But I wouldn’t spend more money on acquiring inventory, storage space, paying designers, etc. than you’re prepared to lose.
Fair enough, I admit I didn’t do any deep research on luxury brands. My assumption that they make a lot of profit is based on the fact that many successful brands that also spend money on “R&D, marketing, office employee salaries, shipping, storage, dealing with returns and damages, and more” nevertheless manage to sell their products for very decent prices. So I really do not see what could justify another brand with presumably similar production costs selling almost identical products for 5 times the price. Based on the little I understand about human psychology and economics, it’s about the exclusivity, the luxury, the idea of having something “limited edition”. People think it’s worth a lot because other people think it’s worth a lot. But maybe I’m wrong and Louis Vuitton doesn’t make a lot more profits than, say, Zara. I’m checking now and the net worth of Bernard Arnault (the CEO of Louis Vuitton and richest person in Europe) is more than twice that of Amancio Ortega (chairman of Zara), but I’m not sure this is the metric I should be looking at. In any case my main point is that the fact that we spend so much money as a society on something so “useless” is a moral scandal.
And as far as risk is concerned, I will use Printful and Etsy for the MVP, and they only charge fees when products are purchased, so the financial risk is literally zero. The only thing I may lose is time.
The production costs are not similar and the products are not identical. Compare a Louis Vuitton bag to a cheap knockoff up close, and you’ll see that the authentic bag has a much nicer-feeling fabric, clean and consistent stitching stitching, metal rather than plastic fasteners, more aesthetic placement of the “LV” logo, a lack of “slouch”, an overall nice shape, and sturdy, symmetrical handles. You may not care about these features, and I don’t, but luxury consumers do. The authentic bag will typically last longer, and to achieve this level of quality, it needs to be made in a many-step process in the US, France, or Spain, where labor costs are high. If you’re not sinking that kind of money into craftsmanship, you’re competing with Walmart’s LV lookalikes, not LV itself.
This sounds like a good low-risk idea to me. My main reservation would be that e-commerce return rates are high—supposedly around 30% overall, but probably much higher for apparel (since you can get the wrong size). This is a special difficulty for made-to-order and/or low-volume businesses that can’t easily resell returned items.
I have worked in e-commerce pricing BTW; happy to answer any questions about the industry.
As the lead moderator of the Forum, I read a lot of comments. And I want to call out that this, and your prior comment in the thread, made me very happy.
It’s cool and unexpected to see someone show up on a thread like this who has your level of experience in a very relevant field from well outside of EA. I don’t have anything else to add here—just dropping in to say thanks.
I don’t have strong feelings about the shop, but I don’t think EAs are going to be your target audience. Most EAs aren’t buying luxury brands like Gucci. So we’re probably not very good people to ask.
Yeah, I’ve thought about that as well. I guess it’s not exactly EAs that I expect to be the main audience, but “conscious consumers” who are not necessarily super educated in ethics and EA, but who like to buy “eco” stuff, or who would be happy to buy a product if the profits are going to a any cause, like feminism or BLM, regardless of whether it’s effective. I just prefer to say it goes to EA to simplify my life, and because I think EAs knows best how to use this money in the most ethical way possible. The way I see it, EA is about two things: (1) we should donate (2) effectively. I don’t intend necessarily to focus on effectiveness so much. I want to focus more on the moral imperative to donate something.
One reason I’d have difficulty donating through this channel is that I’m not sure I’d be able to get tax credits. If we get something in return, it might not count as a charitable contribution any more.
I wonder if you’d be able to just, only sell your stuff (at reasonable prices) to people who can show you a big donation receipt in their name, that would behave similarly, and they’d still be able to claim the tax credits.
The $100 an item market sounds like fair trade. So you might compete with fair trade and try to explain why your approach is better.
The $50,000 an item market sounds harder but more interesting. I’m not sure I would ever buy a $50,000 hoodie or mug, no matter how much money I had or how nice the designs on them were. But I could see myself (if I was rolling in money and cared about my personal appearance) buying a tailored suit for $50,000, and explaining that it only cost $200 to make (or whatever it really does) and the rest went to charity. You might have to establish your brand in a conventional way (tailored suits, fancy dresses, runway shows, etc.) and be compelling artistically, as well as have the ethical angle. You would probably need both to compete at that level, is my guess.
Honestly at this point the $50,000 item is more like a joke, something to make a point. I’d have a listing there to raise awareness of the fact that people really are spending that kind of money on stupid stuff all the time, which I think is a moral scandal. But of course, I’d be happy if somebody actually bought it! But in any case, although people usually don’t buy t-shirts or hoodies for $50,000, they buy them for a few hundred dollars all the time. This shop idea is largely inspired by this Patriot Act episode:
Are you familiar with DFTBA.com? Or Hank Green?
https://store.dftba.com/