Musings

rudy rouhana webtagz@yahoo.com
Sat, 13 Oct 2001 22:44:42 -0700 (PDT)


Adam L. Beberg Wrote:
> The next evolution of this will
> be when all prices simply must be listed as Price = ( cost + sales tax + 2
> day shipping ), end of story. The only trick I see left is the $5 + $17 S/H

"Imagine" when we'll buy everything online...That's SO 1999 ;)  Seriously, I
don't think it will come to that across the board.  Granted, I just bought a
gigabyte of ram for $99 + Fed-X + sales tax.  However, time and time again,
it's been proven that people use the Internet to browse and compare, but they
go to the store to buy.

> A+B - How the heck did we keep up the economy this long? Other then by
> restricting information and convincing people to overpay for everything? The
> Japanesse were doing this before their ongoing 10 year depression weren't
> they?

I think you're discounting the Fed-X part of the pricing equation that you use
to come to this conclusion.  People are still people, and not optimized
machines that make the best quantifiable decision.  The qualitative "buy here,
buy now" that physical proximity creates is very powerful.  Fry's Electronics
is a perfect example of this.  No online presence whatsoever.  However, I used
to look forward to going to California just to spend time at Fry's!  I'm lame,
but also a member of the silent majority of gadget geeks that get off on that
store.

Actually, aside from having a place to return the product, stores do offer
something tangible, and that is convenience.  That is real value that people
will pay for.  Do I really want to wait 2 days for Fed-X to deliver something? 
Maybe I miss the package arriving and have to drive to Fed-X to pick it up? 
Hell, maybe the cost with shipping is more than I can get at the store because
they can ship mass quantities of items cheaper.

That is the store value to the customer.  For the producer, the stores
presumably understand the local customer better.  In doing so, they should be
better equipped to market and sell the items and can adjust to consumer pricing
trends more quickly. [eg. Sony doesn't make speakers.  However, Best Buy can
package a KLH speaker set with Sony receivers.  They can create a package such
as this on the spot]

Moving up the value chain, distributors are advantageous to producers of
products because they create an inventory buffer for all those industries that
just in time production is not possible.

Anyway, long story short because it's late, there are lots of valid reasons why
our economy is the way it is.  My explanation is incomplete, and full of holes,
but I was just trying to illustrate a point, not create a convincing, airtight
argument.

-Rudy

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