3 ms·

So don't offer discounts and avoid the swarm? I won't lie, a huge portion of my grocery spending is under coupon books and the like, or in the long term pattern

by zanny 13y ago

So don't offer discounts and avoid the swarm? I won't lie, a huge portion of my grocery spending is under coupon books and the like, or in the long term pattern matching when stuff is cheapest, but this is another case of, as an individual, I can exploit mechanisms in the system to be better off. And hell yes I will take advantage of any economic mechanism I can to save money. You have to, or else you are less prosperous than your peers that don't. It is charity to spend more than you have to on something, and the end of the day bottom line of your business interactions isn't your personal concern. It might be a long term societal concern of unsustainability low prices strangling businesses but they can't increase them in the short term or their competitors, who are also suffocating, get all the customers. So you can't blame people for swarming. It is a natural economic process, and I don't think it is as do or die as the grasshopper metaphor. Even my rich relatives will jump at discounts just to feel like they are "winning" or "saving".

anigbrowl 13y ago
Well, there's two other things to consider: the opportunity cost of the time you spend couponing (vs taking your business to somewhere that offers everyday low prices and no coupons, like Trader Joes instead of Safeway in the supermarket sector), and the tragedy of the commons that results from unsustainably low prices. That's not just a long-term societal concern (ie not an individual's one), but a quite present one, because once margins fall too low for a small merchant to profit they'll rationally just exit the market. This leaves you as a consumer with less choice and competition than you had before, in addition to the increasingly bimodal income distribution that plays out over the longer timescale.
YokoZar 13y ago
It's entirely plausible they still profit from your couponed purchases, just not as much as if you had paid full price. Price discrimination is generally the motive behind issuing coupons (which still have marginal profits), as a "loss leader" strategy can be more effectively done through means other than coupons Which, incidentally, is one reason why you shouldn't be offering things at a loss on groupon.
- VLM 13y ago
  "It's entirely plausible they still profit from your couponed purchases" A lot of this depends on the social conditioning that "coupons are a below market price". This is, of course, not universally true. Last time I checked groupon the local market was dominated by ridiculously overpriced services marked down "on sale" to almost reasonable prices, although still too high. There is a major regional clothing retailer where I live where about 1/4 of the store is "on sale" at any given time, up to 50% off, in a random rotation. The other 3/4 of the store is marked up well over 100% over "reasonable market prices". This is how to make money in a locust economy, market yourself as a locust feeding frenzy location, and financially manage yourself to handle a larger inventory and smaller cashflow than a "normal" store. So one week per month, sell socks at a normal market price, yet advertised as a "half off sale" at $10. The other three weeks per month mark them up to about twice market price $20 and eat the zero sales volume. The zero volume is OK; you probably needed the break to reorder and ship and restock anyway. Its sustainable and it works.
ronaldx 13y ago
It's a pretty obvious business strategy to offer low prices with the goal of putting competitors out of business, in order to monopolise and ultimately drive up prices. (as long you have the deepest pockets) As such, I try to patronise businesses which I think provide value to the local community: businesses that I personally like and want to stick around. Even if their prices are slightly higher, I find that paying the cost of sustainability benefits me greatly more than saving a few pence. (I do feel grateful to have sufficient economic power to exercise this choice)

by zanny 13y ago

anigbrowl 13y ago

Well, there's two other things to consider: the opportunity cost of the time you spend couponing (vs taking your business to somewhere that offers everyday low prices and no coupons, like Trader Joes instead of Safeway in the supermarket sector), and the tragedy of the commons that results from unsustainably low prices. That's not just a long-term societal concern (ie not an individual's one), but a quite present one, because once margins fall too low for a small merchant to profit they'll rationally just exit the market. This leaves you as a consumer with less choice and competition than you had before, in addition to the increasingly bimodal income distribution that plays out over the longer timescale.

YokoZar 13y ago

It's entirely plausible they still profit from your couponed purchases, just not as much as if you had paid full price. Price discrimination is generally the motive behind issuing coupons (which still have marginal profits), as a "loss leader" strategy can be more effectively done through means other than coupons Which, incidentally, is one reason why you shouldn't be offering things at a loss on groupon.

VLM 13y ago
"It's entirely plausible they still profit from your couponed purchases" A lot of this depends on the social conditioning that "coupons are a below market price". This is, of course, not universally true. Last time I checked groupon the local market was dominated by ridiculously overpriced services marked down "on sale" to almost reasonable prices, although still too high. There is a major regional clothing retailer where I live where about 1/4 of the store is "on sale" at any given time, up to 50% off, in a random rotation. The other 3/4 of the store is marked up well over 100% over "reasonable market prices". This is how to make money in a locust economy, market yourself as a locust feeding frenzy location, and financially manage yourself to handle a larger inventory and smaller cashflow than a "normal" store. So one week per month, sell socks at a normal market price, yet advertised as a "half off sale" at $10. The other three weeks per month mark them up to about twice market price $20 and eat the zero sales volume. The zero volume is OK; you probably needed the break to reorder and ship and restock anyway. Its sustainable and it works.

ronaldx 13y ago

It's a pretty obvious business strategy to offer low prices with the goal of putting competitors out of business, in order to monopolise and ultimately drive up prices. (as long you have the deepest pockets) As such, I try to patronise businesses which I think provide value to the local community: businesses that I personally like and want to stick around. Even if their prices are slightly higher, I find that paying the cost of sustainability benefits me greatly more than saving a few pence. (I do feel grateful to have sufficient economic power to exercise this choice)