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Toronto's Ethical Ocean e-commerce startup may just change what "shop till you drop" means

It's Tuesday evening, and seven entrepreneurs from across Canada gather around a wooden dining table in Little Italy -- laptops ready -- to discuss their newly launched business, Ethical Ocean.

While most of these twenty- and thirty-somethings have day jobs, they have devoted evenings and weekends to transforming the way people consume through their new Toronto-based shopping website. "Ethical consumption is already big in Europe," explains CEO Chad Hamre, who works as a climate change consultant by day. "In the UK, there were $56 billion in sales in 2008 (PDF). We want to open the market here and make it easier for North Americans to shop ethically."

Right now, the website has over 500 products on offer -- from organic baby garments to sweat- shop free handbags -- and shoppers can sort through the ethical wares by their personal values (eco-friendly, fairly-traded, organic, animal-friendly, people-friendly, or social change).

Here Chad, along with creative director Tony Hancock, and Davin Lengyel -- Ethical Ocean's CFO and a TV producer -- talk about the challenges that come with starting an online business, the difficulty with defining ethical products, and how they plan to change the way everybody shops.

Julia: All of you have day jobs in varied fields (except for Tony, your first full-time employee). So how did Ethical Ocean come about?

Davin: It started with a bunch of friends on a famous car ride, driving to Montréal to visit another friend. We started talking about what we can do to better the world but also become businessmen. We batted some things around, and started with a small idea: making shirts with African artwork on ethical fabric. That expanded to the idea of selling all kinds of ethical products. By the time we got to Montréal, we had the rough business outline. The site today is not far-off from the original plan

How do you vet the products you sell?

Chad: We look at the company first, and make sure they are legitimate. Once approved at a high level, they can list on the site. What makes us different from other organizations is that we don't claim to be ethical police. We try to create an environment and community that allows people to think about and discuss ethical claims. We set up broad categories -- eco-friendly, people-friendly, et cetera-- and let the community rank and comment on the products. It's an open-source model.

Has it been difficult to define ethical or green products?

Tony: Yes, we didn't anticipate how difficult it would be. There are hundreds different certifications, and there's no clarity about what's green and ethical. The breadth of knowledge out there on this type of consumption is staggering. This field is changing constantly. We try to dig as deep as we can, but then we put it to the community to learn with us and help us decide. It's not so black or white when you're talking about what's green!

What were some of the other challenges that came with starting the business?

Chad: I moved back to Toronto to be the first full-time employee. I had just finished my grad degree, didn't arrange any other employment, and landed here -- but it was too early. We didn't have our business model streamlined so we had jumped the gun. We're a year behind where I had hoped we would be because of all the small things that you need to get in place to establish a business: registering the business, getting internet domains, figuring out a name, branding and marketing, taxes, getting capital organized, understanding when to incorporate versus when to act as a partnership -- a million little challenges. When we wrote our business plan, we were thinking of a dream and an outcome.

Ethical Ocean has been focusing a lot of energy on social media interaction and building a community discussion space about ethics. How has this helped your business so far?

Davin: A lot of people have a business then try to attach a community to that business. But we engage with our community because that's one of the major goals of our business -- to have conversation with our buyers, to learn together with them about ethical consumption. For example, we do a series of videos that we put out through Facebook called 'Drop in the Ocean'. These videos put questions to our buyers about ethical shopping. We encourage visitors on the website to post video replies, which we learn from.

Are you making money yet?

Chad: The model has been very low-risk from the beginning. We have been cash-flow positive from day one, when we opened the website for traffic. We did that through sweat equity so we didn't pay ourselves for two years. Since February, we've had about 18,000 people visit the site. Our revenue expectations are to sell $800,000 worth of products to bring in a net-income for Ethical Ocean of $100,000.

You're all from different parts of the country-- Saskatoon, Calgary, Edmonton, Toronto, North Battleford. Why did you decide to start the business here?

Davin: For reasons of population density. There are a lot of people here, there are conferences to go to, there are people who are interested in ethical shopping, so it helped to be in Toronto.

Tell me about your goals. What can people expect to see in the coming months?

Chad: We want to be responsible for growing the ethical market. The big picture goal is we want to transform the market. Being active in the US is important so we'll be there very quickly. On the tactic side, we need to learn and understand search engine optimization. We now have one full-time employee, and if we can prove our revenue model in the next few quarters, we will hopefully jump from one to five, and from five to thirty. Also, if the next three to four quarters are successful, we'll look for an angel investor, venture capitalists, and take this thing big.

Davin: I've seen how big this [ethical products] business is in the UK, and it became that way because of a scare:  there's an argument that Mad Cow Disease spurred the growth of ethical consumption and the culture of asking questions about where products come from. We haven't had that shock moment here yet -- and I would rather we develop this market without having to go through that type of igniting event.

Julia Belluz is a Toronto-based freelance writer, editor, TV producer, and researcher.

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