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We see the kind of thing you're describing in a market like housing, but it only shows up there because of a strange combination of a) we live in a democracy an
by dnissley 2y ago
We see the kind of thing you're describing in a market like housing, but it only shows up there because of a strange combination of a) we live in a democracy and b) blocking new housing supply in desirable areas is hugely politically popular among multiple classes of people who vote. We don't see it in the grocery business, where even modest price increases like we've seen recently (that are mostly covering real costs) are hugely unpopular and drive people to the already numerous competitors very easily, and on top of that startup costs for grocery businesses aren't all that high so moats are very shallow for existing entrants.
- kelseyfrog 2y agoWe do see attempts at price discrimination in haggling and negotiations, but this is stereo-typically a human-human interaction rather than one mediated by predictive analytics. Theoretically there are margins to be gained by identifying customers, retrieving their personal financial information, predicting the price they would be "just" willing to buy for that's still above the equilibrium price of the good, and doing this at scale and automatically.
- dnissley 2y agoIf you want to get specific... let's take Kroger, one of the largest grocery chains in the US. Their typical net profit margin is in the 1-2% range. I'd wager that in 10 years (2034) we won't see that go up substantially -- that it will not regularly be reported to be greater than 2%. If Kroger is able to do what you're alleging is possible, what do you bet their profit margin will be at that time?
- kelseyfrog 2y agoI think a grocers could absolutely do the online ordering and pickup/delivery space where prices could be tailored to individual consumers and there was market dominance. Sorry, I don't have the data to give a figure. I'd have to build the model, and have a complete transaction record dataset.