5 ms·

One would assume that in a sufficiently competitive market (for examples, certainly in the UK, supermarkets), this then gets passed on in terms of price cuts.

phillipcarter 8y ago
> One would assume I severely doubt it's the case. Besides, businesses aren't typically interested in having a competitive market anyways. It's probably more profitable to not lower prices at all and lobby to make it harder for competitors to lower prices . . . or just conspire with major competitors to keep them higher. Both actions have a strong historical precedent in US markets, at least.
- ddxxdd 8y ago
  Businesses are generally more competitive than people realize. The average person believes that corporate profits are typically in the 36% range, which is 5X higher than what reality shows: http://www.aei.org/publication/the-public-thinks-the-average-company-makes-a-36-profit-margin-which-is-about-5x-too-high-part-ii/ http://www.aei.org/publication/the-public-thinks-the-average...
  - xyzzy123 8y ago
    Partly this is because profits are taxed, so it makes sense to shift profit into some other accounting bucket like capital expenditure / growth, offshore ip etc.
- mruts 8y ago
  There is a much much stronger historical precedent of businesses competing rather than colluding. Price fixing isn’t a Nash Equilibrium, and therefore, isn’t a stable state. The market will ruthlessly push prices on goods to their lowest profitable price by means of the marginal consumer. While price fixing obviously happens, it usually only happens in markets with a small number of producers. And even then, it will inevitably collapse. Look around, goods are very competitive nowadays. Computers are competitively priced, all goods on Amazon, nyc $1 pizza, food, gasoline, cars, clothes, etc. Very few businesses have the fat margins you claim are the norm. And the businesses that do are usually not producing goods, but renting services: telecoms, advertising, etc.
- bookofjoe 8y ago
  Concur. I've always been puzzled why self-checkout isn't, say 1% cheaper, considering how much labor costs in supermarkets and razor-thin profit margins.
  - wutbrodo 8y ago
    This seems clear to me: customers aren't remotely rational, and will generally complain about economically fair systems[1] that they feel are "taking away" things they're entitled to. I can't count how many times I heard people complain about baggage fees when they were introduced, and no one ever had a response to "I never fly with baggage, why should I subsidize your propensity to overpack?". Even people who knew way better and would default to an efficient market assumption in every other possible scenario would assume that it was a naked cash grab, the benefits of which accrued entirely to the airlines. The same is true of complaints about Spirit Airlines: how DARE they give me the voluntary option of a low-priced flight without a bunch of (useless, costly) amenities that I feel entitled to? I can go on and on: credit card fees at liquor stores, etc etc. [1] In particular, rewarding consumers who reduce costs by passing on the cost savings.
driverdan 8y ago
It gets passed on in the form of faster checkouts and shorter lines, resulting in less wasted time.
- owenmarshall 8y ago
  “Please place the item in the bag.” “Please remove the last scanned item from the bag and scan it before placing it in the bag.” “Please wait, help is on the way.”
  - dceddia 8y ago
    Every damn time. I really wonder whether that system actually helps prevent theft, or if it was originally put in place because stores suspected that theft would be a problem, and we're just stuck with it now. Plus, in the couple stores I frequent, there's always an employee standing at the ready to clear out the errors. Which, I imagine, would go a long way toward reducing theft on its own. Either way, they seem to be universally bad. I can only hope a store tries to buck the trend by turning off the weight check and finds that it causes no problems. Maybe if that happens, the other would follow suit.
    - SOLAR_FIELDS 8y ago
      I know over the years at least some of the systems have either gotten better or more lenient. With Walmart specifically I haven't gotten "Unexpected item in bagging area" in a couple of years at least. It's probably a combination of an improved system on Walmart's part and learning how to place items in the bagging area appropriately on my part. There's obviously a long way to go to make these kind of systems ideal (the UX of entering in produce items is probably the most common frustration for me nowadays) but the all-too-common refrain that I hear that these systems are basically unusable without some employee to constantly babysit them is false, at least at the stores I frequent that have them.
  - driverdan 8y ago
    When was the last time you used self checkout? I haven't seen this problem in years. Older systems had this problem but it has been fixed for a while.

phillipcarter 8y ago

> One would assume I severely doubt it's the case. Besides, businesses aren't typically interested in having a competitive market anyways. It's probably more profitable to not lower prices at all and lobby to make it harder for competitors to lower prices . . . or just conspire with major competitors to keep them higher. Both actions have a strong historical precedent in US markets, at least.

ddxxdd 8y ago
Businesses are generally more competitive than people realize. The average person believes that corporate profits are typically in the 36% range, which is 5X higher than what reality shows: http://www.aei.org/publication/the-public-thinks-the-average-company-makes-a-36-profit-margin-which-is-about-5x-too-high-part-ii/ http://www.aei.org/publication/the-public-thinks-the-average...
- xyzzy123 8y ago
  Partly this is because profits are taxed, so it makes sense to shift profit into some other accounting bucket like capital expenditure / growth, offshore ip etc.
mruts 8y ago
There is a much much stronger historical precedent of businesses competing rather than colluding. Price fixing isn’t a Nash Equilibrium, and therefore, isn’t a stable state. The market will ruthlessly push prices on goods to their lowest profitable price by means of the marginal consumer. While price fixing obviously happens, it usually only happens in markets with a small number of producers. And even then, it will inevitably collapse. Look around, goods are very competitive nowadays. Computers are competitively priced, all goods on Amazon, nyc $1 pizza, food, gasoline, cars, clothes, etc. Very few businesses have the fat margins you claim are the norm. And the businesses that do are usually not producing goods, but renting services: telecoms, advertising, etc.
bookofjoe 8y ago
Concur. I've always been puzzled why self-checkout isn't, say 1% cheaper, considering how much labor costs in supermarkets and razor-thin profit margins.
- wutbrodo 8y ago
  This seems clear to me: customers aren't remotely rational, and will generally complain about economically fair systems[1] that they feel are "taking away" things they're entitled to. I can't count how many times I heard people complain about baggage fees when they were introduced, and no one ever had a response to "I never fly with baggage, why should I subsidize your propensity to overpack?". Even people who knew way better and would default to an efficient market assumption in every other possible scenario would assume that it was a naked cash grab, the benefits of which accrued entirely to the airlines. The same is true of complaints about Spirit Airlines: how DARE they give me the voluntary option of a low-priced flight without a bunch of (useless, costly) amenities that I feel entitled to? I can go on and on: credit card fees at liquor stores, etc etc. [1] In particular, rewarding consumers who reduce costs by passing on the cost savings.

driverdan 8y ago

It gets passed on in the form of faster checkouts and shorter lines, resulting in less wasted time.

owenmarshall 8y ago
“Please place the item in the bag.” “Please remove the last scanned item from the bag and scan it before placing it in the bag.” “Please wait, help is on the way.”
- dceddia 8y ago
  Every damn time. I really wonder whether that system actually helps prevent theft, or if it was originally put in place because stores suspected that theft would be a problem, and we're just stuck with it now. Plus, in the couple stores I frequent, there's always an employee standing at the ready to clear out the errors. Which, I imagine, would go a long way toward reducing theft on its own. Either way, they seem to be universally bad. I can only hope a store tries to buck the trend by turning off the weight check and finds that it causes no problems. Maybe if that happens, the other would follow suit.
  - SOLAR_FIELDS 8y ago
    I know over the years at least some of the systems have either gotten better or more lenient. With Walmart specifically I haven't gotten "Unexpected item in bagging area" in a couple of years at least. It's probably a combination of an improved system on Walmart's part and learning how to place items in the bagging area appropriately on my part. There's obviously a long way to go to make these kind of systems ideal (the UX of entering in produce items is probably the most common frustration for me nowadays) but the all-too-common refrain that I hear that these systems are basically unusable without some employee to constantly babysit them is false, at least at the stores I frequent that have them.
- driverdan 8y ago
  When was the last time you used self checkout? I haven't seen this problem in years. Older systems had this problem but it has been fixed for a while.