Tag: Shoppers

Enough Is Never Enough

 

Amazon.com, the internet’s everything store, recently announced it will be opening two secondary headquarters, one in the New York City borough of Queens, and the other in the Arlington, Virginia, area near Washington, D.C.. City and state officials in both locations offered Amazon enormous benefits at taxpayers’ expense, though the exact amounts are unknown because officials claim they have a competitive advantage by keeping their bids secret.

 

Nonsense. It’s the taxpayers’ money and they have every right to know how officials spend it. The whole nationwide competition for Amazon’s secondary headquarters was a yearlong sham and circus, the kind of municipal debasement and looting that has become far too common as states and cities are pitted against each other for the dubious prize bestowed on them by corporate behemoths relocating or opening new places of business.

Caricature of "Organized Big Business Interests"
Caricature of “Organized Big Business Interests” illustrated by John Miller Baer (1886-1970) for part of the November 17, 1919 cover of The Nonpartisan Leader. Nearly one hundred years later, a caricature of a big business interest is more likely to appear trim and fit, wearing jeans and a turtleneck or other informal clothing.

Amazon is to labor practices and corporate citizenship as an internet business as Walmart is to labor practices and corporate citizenship among brick and mortar stores, which is to say they are leaders in their respective fields in abusing their lowest tier workers and siphoning funds away from local communities. Both Jeff Bezos, head of Amazon, and the Walton family at the head of Walmart are obscenely rich. They got that way because of their cleverness at exploiting the properties mentioned above, not because of their own virtuousness and hard work as they would have everyone believe. There are millions upon millions of people who are every bit as virtuous and hard working as Mr. Bezos and the Walton family, probably more so, and they are not obscenely rich, or even well off.

 

La2-buynothing
Buy Nothing Day demonstration in San Francisco, California, in November 2000. Photo by Lars Aronsson.

Mr. Bezos and others like him are obscenely rich because they are, among their other qualities in starting and running a business, both good and bad, obscenely greedy. Shoppers visiting the Amazon website cannot be blamed for taking advantage of the low prices and good service. That would be a kind of “blaming the victim”. Besides, it is all too easy for shoppers to forget about or remain ignorant of Amazon’s bad labor practices and exploitative corporate citizenship since it does those things mostly out of sight and therefore out of mind, a benefit it has as an internet company that Walmart does not have as a brick and mortar outfit.

Shoppers might fairly ask themselves, however, that even if they are not entirely complicit in sustaining Mr. Bezos’s greed, perhaps their own much smaller proportion of greed is something worth examining. It is a form of greed that drives most purchases from Amazon. Amazon sells some necessities such as groceries, but then so do stores at neighborhood shopping centers throughout the country. Most of what Amazon sells are not necessities. They are convenient luxuries, great or small, delivered to the shopper’s door. With the enormous emphasis on shopping around Thanksgiving all but swallowing up the holiday and its meaning, people might want to step back from the shopping cart, both real and virtual, and reflect on how their own petty greed feeds the monstrous greed of Jeff Bezos and his fellow billionaires and millionaires, while around the world millions upon millions of decent people go hungry.
— Techly

 

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Name Your Price

 

Now that Christmas is past, shoppers will be out looking for bargains as retailers slash prices in an attempt to clear inventory off their books before the end of the year. That brings up the subject of pricing, which beyond the obvious need to cover costs and generate profits, leaves some leeway in the ongoing, never ending psychological games between sellers and buyers.

 

Why $9.99 instead of $10.00? What about the typesetting of that $9.99? Is $9.99 better? How about 9.99, dropping entirely the suggestion that the seller is asking for real money from the buyer? Gas stations price fuel at even finer increments, using tenths of a cent, such as $2.299/10 per gallon. These pricing systems seem like they have been around forever, and it’s surprising to learn they are no older than 150 years, and in the case of gasoline pricing no older than the 1920s or 1930s.

1894 - Koch & Shankweiler Newspaper Ad2 Allentown PA
An 1894 newspaper advertisement for Koch & Shankweiler clothiers in Allentown, Pennsylvania. The fractional pricing is almost all in quarter dollar increments.

Retailers started pricing items at fractions of a dollar rather than rounding the price to the nearest dollar in the late nineteenth century partly in response to inflation which raised their costs past one dollar for many things, and partly to convey to shoppers that they were getting a bargain. When inflation raised the cost of most items in a department store past a dollar, some retailers responded by rounding up the price to the consumer to the next dollar, while others retained fractions in their pricing. Eventually the retailers who retained fractions found they sold more than the retailers who rounded up, and the same principle applied to items within their own stores where they tried the different tactics. For reasons that psychologists and sellers dispute to this day, buyers like fractions of a dollar in pricing, and they respond by purchasing those items over the ones that are priced at rounded dollars, even though those prices may be only one cent higher.

Vintage Radio Advertising - Crosley Radio, "Crosely Again Lowers Prices", "Big Reduction in Famous Trirdyn and Other Radios", From the Literary Digest, January 17, 1925 (9700961943)
A Crosley Radio advertisement in a 1925 edition of The Literary Digest. Prices were at whole dollars or at half dollar fractions, underscoring how even in the early twentieth century fractional pricing was uncommon. Photo from Flickr user Joe Haupt.

At first retailers thought fractional pricing attracted bargain shoppers, and therefore they used the tactic principally for sale items. By the 1920s, however, fractional pricing became commonplace throughout retail marketing, regardless of whether items were on sale or not. The one area where sellers rarely use fractional pricing is for high profile, luxury items, presumably because those shoppers look down on bargain hunting, and because at a certain high dollar amount adding a fraction to the end of the price becomes ludicrous. The only aspect that needed fine tuning was the exact fraction that worked best as a compromise for sellers and buyers. It appears that fractions in the ninetieth percentile have worked best, which is why prices at half dollar fractions, which were once popular, are rarer now than they once were.

As for gas stations’ pricing fuel down to tenths of a cent, that practice dates to the 1920s and 1930s when government entities first started taxing gasoline to raise money for road building and maintenance. The government taxed the fuel sellers, and the sellers passed the cost on to consumers. When gasoline cost ten or fifteen cents per gallon as it did in those times, it made sense to fine tune fractional pricing down to tenths of a cent. The business of selling gasoline retail has always run on slim margins, which is why those businesses have always diversified, first by offering automobile mechanical services, and now more commonly by selling convenience items at a high markup. Gasoline retailers have learned that consumers will drive a mile down the road to save a penny a gallon on fuel, and since the gasoline on offer is essentially a loss leader for the higher priced items the retailer sells, it makes sense even in these times of fuel prices in the range of dollars for retailers to retain the tenth of a cent fractional pricing that could make the difference in their profitability from month to month.

The 1980 comedy Used Cars, directed by Robert Zemeckis, included this television advertisement for one way of dealing with high prices. Note that the Mercedes luxury car price is rounded to $24,000. Warning: foul language.

The latest development in the continuing tug of war between sellers and buyers that deserves mention is the one in which grocers have challenged the math skills of shoppers beyond simply rounding fractions off to the nearest dollar by posing more complicated division skills, such as 4/10.00, 5/12.50, or 10/16.90. These are not terribly difficult math problems, and many people would not need a calculator to figure them out. This pricing ploy is instead an attempt by the retailer to get the consumer to buy more of the item not only by suggesting it is a great value, but also by confusion over what the price is per unit.

Particularly when the consumer has to compare one item priced in such a manner to a similar item priced in the same way, the laziness and confusion of the shopper works to the advantage of the retailer. In that case, even buyers who do not have a calculator with them should take comfort in understanding that by law in most places they do not have to pick up the suggested amount in order to take advantage of the advertised price. A “Buy one, bet one free” promotion, for example, does not necessarily require the shopper to pick up two items in order to receive the benefit of buying only one item at half price. As always, however, caveat emptor – buyer beware – and check with the store manager to be sure of the applicable policy.
― Vita

 

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