thaison

Also someone more responsible than me. I feel like I'm too carefree.

Everyone I contacted via Zalo called me Mr. Son. And I never bothered to correct them. Some people called me Mr. Son for years. I want the respect I don't get in real life. Because normally I only attract high schoolers. But I prefer someone older than me.

I'm going to sleep now. I need to go back to my usual timetable. See you later M.

People were already dull 20 years ago. That’s why I had to entertain myself constantly out of boredom.

Adults are so dull. The elderly are even duller.

Hihi. How are you today? I'm so bored here. I want to go back already.

Fortress of the enemies.

Just saw rock sugar in the kitchen. Which, reminds me, when I was 4 and my sister was 7, I saw her stole some rock sugar from our aunt’s house. Few days later I threatened to expose her corruption because we had a disagreement on distribution.

Goodnight. See you soon.

Globalization and centralized digital marketplaces in the early 2010s created a loophole. Where one can sell Chinese goods to Western customers with huge margins because most normies never knew global market existed and just assumed what they saw online came from their own countries. Where is the loophole you ask?

Here is the normal distribution line: Manufacturer→ Retail → Customer

Here is the loophole: Manufacturer→ Retail → You → Customer

Why? Because retail is now online. You can act like a retail from behind the screen, but you don't need to own inventory.

You are now a dropshipper before anyone had a name for it.

1. Hospitality

Actually, I'm not talking about retail today. I want to talk about hospitality. So now, why did I bring up dropshipping then?

Imagine, if globalization didn't give you the advantage of margin. Because you can only sell beverages on site. But you still want to be the dropshipper of the hospitality, what would the model look like?

Manufacturer→ Venue → You → Customer

Basically, you will find a way to gather customers to the venues, maybe through group dating, or meetup,... and get the cut from the venues from customers you bring in. Not from collecting fees directly from the dating service or meetup. Because let's face it to make an event worth paying is extremely hard and you get like 2 customers at best.

Now, if the dropshipper gets extremely lazy. What would he do? He will hire someone else to do marketing, running ads, right? The new model is: Manufacturer→ Retail → You → Outsourced marketer→ Customer

But what the equivalence of the lazy dropshipper in hospitality would do if his margin is not enough to cover the expend of an assistant?

Surprisingly, there is a totally doable solution for this. Here is the model: Manufacturer→ Venue → You → Unpaid labor → Customer

And now we have a name for him too, “community dropshipper”.

2. Cost of Business

No one wants to calculate startup cost. It always ends up higher than original calculation. I, myself, have to think about all the picture of my boyfriend in romantic, airy looking style under diffused light that I will shoot to justify the 120cm octagon softbox that takes up half of my room.

But what if we make fixed cost down to zero?

For the retail dropshipper, he doesn't have inventory or have to pay for employee since he has none. Problem solved! For the community dropshipper, he doesn't run the venue.

So why wouldn't we do this? Is this because being a middleman is bad and shameful and unethical because you don't do things with your own hands ? And you supposed to have a mean of production and do something with it?

No. Because it's a VERY BAD MODEL!

The retail dropshipper can't do quality control because he never touches the products himself. When customers want to return products, he can't send them back to the retail or manufacturer and get back his money. He lost total money for that sale and now sit on his own dead inventory. He also can't provide adequate customer service because he doesn't own production or operations. Which make him more vulnerable to bad reviews and lost future sales. All that is counted as variable cost.

What are variable cost fort he community dropshipper? He can’t do quality control because he doesn’t own the venues. When a customer refused to comeback, there is very little he can offer, that raises customer acquisition cost (let’s assume time is money here, however cheap it could be!).

Now did I say about to be a lazy dropshipper of the hospitality, one would need unpaid labor? Yes, he would need to convince someone else to do the customer acquisition for him, but not have to pay them. Rememer, he wants to keep zero fixed cost!

What he needs to do is to make a so called “non-profit” organization to empower local community. And someone else would do the gathering for him. How does he do that? Well turns out easier than you think. Just give people fancy titles of community builder, changing the world, spread kindness while give them enough autonomy to make them feel like they are their own boss. After we gather enough of these people, let’s call them “proxy operators”. Proxy operators will take their money from venues instead, and send back percentage of their unstable salary to the head quarter (community dropshipper) to keep the empowerment mission for the humanity in good shape. That way fixed cost of community dropshipper is still zero!

Now that he offload the customer acquisition to someone else, would he reduce variable cost? Actually no. He is further himself from the operation. Which make him less in control of it. Now who would want to do the thankless unstable income freelancer work? Probably not someone responsible enough or high skill enough to have a normal job. And probably someone narcissistic enough to need community validation. That will cause internal dramas across proxy operators. All of the backstabbing would cause more work to resolve. Those are still variable costs.

3. Scaling

Since the retail dropshipper doesn’t own production or operation. He can only scale by keep posting more SKUs.

The community dropshipper scales by collaborating with more venues. Since customers per location for 1 social activity is mostly capped. You need to expand by geography. So global cities are his SKUs.

Someone would think: “He has 0 fixed cost. Multiple by number of cities would be a total rainbow!”. But you already read my previous section, so you know where this is heading to. Yes, he instead multiply variable costs.

So someone say, “At least he is never at risk of being in debt to pay for fixed salary of his employee”. Yes. But he can’t take too much % from proxy operator out of fear they would realize this is a bad deal for them and leave. And he still have to manage all the proxies. That would make him having salary of a low skill worker acting as a boss.

4. Solutions

  • If he want to take more profit from the customers the organization bring in, he will need to hire professional organizers and pay normal rate. But that would be the fixed cost he avoid. And he will have to do customer acquisition himself. He will not be able to acquire enough customers from all locations all by himself.
  • He can license the brand and charge a fee proxy operators to run their own events as separate operation. This only works if the offer is good enough. But proxy operator is also a middleman for the venues so their margin is too thin to justify their investment. With current model, proxy operator also has zero fixed cost. The only party has fixed cost here is venue.
  • He owns or rents a venue to increase margin. Cap per 1 social activity problem can be solved by scaling vertically (host 7 different activities per week with different types of customer, 1 day you go for a date, the next you go for a boardgame) instead of horizontally (by geography). He would probably need to work normal job for a long while to raise the capital. But that would contradict the lazy personality.
  • Centralized marketing to acquire customers directly. That way he owns the customers list instead of proxies, therefore less internal drama for variable cost. But customer lifetime value (LTV) for this activity is too low. For as cheap as 3$ cost per acquisition for paid ads, this is already more than profit for the entire organization. This cost can only be justified when you own the venue therefore have better margin and control the operation to optimize for less variable cost and increade LTV.

5. Conclusion

Why does it seem like there is no way out of this mess?

Because there is none.

For acquisition cost has always been more than profit from the start. He just didn’t count his time as a cost of business. Therefore, for him to have profit, he always has to exploit someone else.