Podcast: Download (Duration: 52:57 — 60.9MB)
Kenric Hwang donates one product to a dog rescue for every product Max and Neo sells, which means his cost of goods is literally double everyone else’s. His margins hover around 10%, and he deliberately refuses to raise prices to cover the donation.
Kenric started in ecommerce in 2007 with a dropshipping store, built it into a profitable outdoor products company, and sold it in 2018 specifically so he could focus on Max and Neo. I have known him for years through Billy Murphy and Ecommerce Fuel.
Below is why he sold a more profitable business for a less profitable one, the real economics of one-for-one, and why donating physical products beats writing checks.
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Table of Contents
Key takeaways
- Cost of goods on every sale is double, plus roughly $10 per box to ship each donation.
- Margins run around 10%, which he describes as very low by ecommerce standards.
- He refuses to inflate prices to fund donations, because that shifts the cost onto the customer.
- Donating physical products leverages his importing ability, turning a $75 equivalent into 15 collars rather than 5.
- He sells some products at a loss when rescues need them, subsidized by profitable products.
- The donation operation is more work than the selling operation and required its own staff and a bigger warehouse.
- Abundance drives sharing where scarcity kills it, so he will never cap the rescue list.
- He pre-donated before having sales, funded by his other company.
How Kenric got into ecommerce and why dropshipping failed him
Kenric started in 2007 with a 100% dropshipping store, which worked well until a specific failure taught him he controlled nothing.
He had worked hard to rank in the top three on Google for his products. On December 5th he sent an order to his dropshipper and learned they were sold out for the rest of the Christmas season.
Because every dropshipper in the country used that same supplier, every competing store ran out on the same day. He had top rankings, a hot seller, and nothing to sell.
His fix the following year was buying the supplier’s entire remaining stock, 500 units, on Black Friday. Every other dropshipper went out of stock immediately and he sold all 500 through the holiday season.
What owning inventory did to his margins
The margin difference was substantial. A product with a $100 retail price cost him $79 dropshipped plus roughly $10 shipping.
Importing his own version of that product from China landed at $37.
Once he saw that, the logic extended everywhere. His store already had traffic and rankings, so he knew which products sold, and he moved those to his own imported versions.
The other dropshipping problem was price creep. That $79 product started at $69, went to $79, then $85, with nothing he could do except raise his own prices.
His view on dropshipping today is that it is much harder to rank a store without heavy ad spend, so using it to discover what sells no longer works the way it did in 2007.
Why he sold the profitable company
Kenric sold the outdoor products company in 2018 after roughly seven years of very good income, most of which he saved.
His reason was not financial. He had stopped being interested in the business, and it had become purely a moneymaker.
He describes the difference in motivation directly. He worked on the outdoor company because he needed the income to keep coming in and could not let it wither. He worked on Max and Neo because he wanted to donate as much as possible.
He ran both simultaneously for a year, splitting his time 50/50, before concluding that Max and Neo was not getting enough attention.
How the one for one model actually works
Max and Neo sells dog leashes, collars, harnesses, supplements, and blankets. Every product sold means an identical product donated to a dog rescue or shelter.
Kenric explains why rescues need this. A rescue takes dogs from county humane societies, which typically hold a stray for a week or 14 days before deciding what to do with it. Rescues house those dogs until they find permanent owners.
They are almost always nonprofits funded by donations and adoption fees, paying all expenses themselves. When you adopt, they hand you the collar on the dog plus a leash and some starter supplies, all of which they bought.
His goal was removing that expense so rescues could spend on other things.
The real economics
| Cost component | Max and Neo | Typical competitor |
|---|---|---|
| Cost of goods per sale | Two units | One unit |
| Donation shipping | ~$10 per box, roughly 300 boxes monthly | None |
| Dedicated donation staff | Yes | None |
| Approximate net margin | ~10% | Substantially higher |
Donation shipping alone runs roughly $3,000 a month.
Kenric is candid that without having sold the outdoor company, funding inventory would be a serious problem, since he has to stock months in advance at double the quantity of any comparable business.
Why he refuses to raise prices to fund donations
This is Kenric’s sharpest point, and it is aimed at a common practice.
Plenty of companies donate and inflate their prices substantially to do it. If a normal leash sells for $15 and you sell yours at $25 while donating one, your margin is identical to a company that donates nothing.
You have pushed the cost of the donation onto the customer.
His view is that the supporter is then the actual donor, and rescues have loyal supporters he does not want paying an extra $10. Customers should choose his product because it is genuinely good, with the donation as an added benefit rather than the reason for a higher price.
His other objection is to vague percentage claims. A company promising to donate 100% of profits can pay the founder a salary that reduces profit to zero. A promise of 10% of profits on a $15 leash might be a 50 cent donation, and a rescue needs 30 of those to buy one leash.
One-for-one is unambiguous and auditable.
Products he sells at a loss
Kenric works backwards from what rescues need rather than from margin.
His salmon oil example: rescues need it because it makes food more nutritious, and running the numbers showed he could not make money on it.
His reasoning for selling it anyway is leverage. Losing $1 per sale means losing $100 lets him donate 100 bottles, where buying retail with that same $100 would donate five.
Profitable leashes subsidize the loss-making products, netting roughly zero for him while rescues receive both.
Why donating products beats donating money
The core reason is leverage from his importing expertise.
The idea came from watching Facebook posts where rescues asked supporters for collars. Someone would go to a pet store and buy five collars for $75, and the rescue would thank them.
Kenric could import 15 collars for that same $75. Sending a rescue a check means volunteers pay full retail, where he can deliver two or three times the value.
He draws a line at things he cannot import. Veterinary bills need cash, so he wants rescues spending their money there.
The donation operation is harder than the sales operation
This surprised him. Ecommerce fulfillment is a solved problem: the order arrives in Shopify, flows to ShipStation, prints a label, and ships.
Donations require judgment. Which rescues have not received anything in three months, and do they handle large dogs or small ones, since sending large collars to a Chihuahua rescue is useless.
That required an entire division with its own employees and a bigger warehouse, generating no revenue and reducing profit. It is why more companies do not do one-for-one.
How social media drives the business
Kenric never planned a social strategy. Dog content performs well on Facebook regardless, and the mechanism that emerged is rescues talking about him.
Every Friday they post announcing which rescues are receiving donations that week, naming the specific rescue and the date.
That started as a response to feedback. Rescues told him other companies claiming to donate never actually sent anything, so the weekly post is proof, and it prevents anyone claiming he failed to deliver.
The result compounds. More sales means more donations, more rescues talking about him, more sales.
He still runs conventional ecommerce marketing, including substantial Amazon PPC, and notes he is neither the cheapest nor the most expensive option there.
Why abundance beats scarcity for sharing
Kenric’s observation about why his posts get shared is worth isolating.
A typical giveaway post offering $100 to one commenter never gets shared, because sharing lowers your own odds of winning.
His donations work in the opposite direction. Telling another rescue about him does not reduce your chance of receiving a donation, because he donates to everyone who applies.
Some rescues assumed it was a scam because applying and receiving free products seemed too easy.
People ask whether he will eventually cap the rescue list, and his answer is never. Making it scarce would stop the sharing, because scarcity and abundance motivate completely differently.
How he launched with no sales
Kenric pre-donated before having meaningful revenue, donating to rescues first and letting sales catch up, specifically so rescues and their supporters knew he existed.
He is explicit that he could only do this because his outdoor products company funded both the business and his living expenses, and he would not recommend it to someone on a limited budget. He describes treating it like a small VC-backed company.
On launching a commodity product like a dog collar on Amazon, his framing is that you no longer launch products, you build businesses. He put one leash on Amazon and did nothing else there, then built Instagram, Facebook, and the website, knowing what the company would look like in five years.
Bringing dogs to work
Every Max and Neo employee brings their dog, which was Kenric’s intention from his first company.
The origin is ten years in corporate work, thinking that having his dog there would remove the pressure to rush home. Knowing your dog has been alone all day makes you leave at the first opportunity.
He also fosters dogs, and bringing fosters to the office serves a purpose. Many rescue dogs have never been indoors and have no social skills, so meeting employees and delivery drivers helps socialize them and makes them more adoptable.
Why mission-driven businesses do not get abandoned
Kenric’s closing story explains why he considers this the right business for him.
Early on, a shipment of leashes started falling apart, generating bad Amazon reviews. It was a $10,000 to $20,000 order, and he had just started with little revenue.
The obvious response would have been concluding the business had failed and writing off the inventory.
What he thought instead was: if I close, what happens to the dogs?
His argument is that when your motivation is a living thing counting on you rather than profit, quitting stops being an available option. He switched manufacturers and continued.
His broader claim is that if you can get to a motivation one step removed from profit, you cannot really fail, because you will not stop.
The unexpected result is that the altruism drives the profitability. People are inherently good, want to do good things, and will support companies that do. He is clear this is hindsight rather than something he foresaw.
You can find Max and Neo at MaxandNeo.com, which has a suggest-a-rescue form for adding rescues to the donation list.
Frequently asked questions
What is the one for one business model?
Donating one product to a charitable recipient for every product sold. At Max and Neo it means a dog rescue receives an identical leash, collar, or harness for every one a customer buys.
What margins can you run with one for one donations?
Kenric Hwang’s margins hover around 10%, which is very low by ecommerce standards. His cost of goods is double on every sale, plus roughly $10 per donation box and dedicated staff to manage the donation operation.
Should you raise prices to fund charitable donations?
Kenric argues no, because inflating a $15 product to $25 to fund a donation leaves your margin identical to a company donating nothing and shifts the entire cost onto the customer. Customers should choose the product on merit, with the donation as an added benefit.
Is it better to donate products or money?
Products, where you can import them. Kenric can turn the equivalent of a $75 retail donation into 15 collars rather than 5, because he leverages his own sourcing rather than having volunteers pay full retail.
Why do few companies do true one for one?
Because the donation operation costs more than the selling operation. It requires deciding which recipients get what and when, dedicated employees, more warehouse space, and shipping costs, while generating no revenue.
Does scarcity or abundance drive more sharing?
Abundance, in Kenric’s experience. A giveaway where sharing lowers your odds of winning does not get shared, while telling another rescue about a donation program that accepts everyone costs the sharer nothing.
Why did dropshipping stop working?
Because you control neither inventory nor pricing. Kenric’s dropshipper sold out of his top product on December 5th, taking every competing store out of stock simultaneously, and raised his cost from $69 to $85 over three years with no recourse.
Can a mission-driven business be more resilient?
Kenric argues yes. When a defective shipment could have ended the business early on, the thought that stopped him quitting was what would happen to the dogs, since a motivation beyond profit removes quitting as an option.
