Transparency

At the Hongqiao Pearl Market in Beijing, vendors thrive on the fact that customers (mostly foreign tourists) by in large are clueless as to the value of the items for sale and how little vendors would actually sell them for.

"She's asking $30 for that Ermenegildo Zegna tie. Could I get it for $20? Or maybe even 10?"

"$80 for Adidas or Puma shoes is a bit steep. I could probably offer half that."

With a little bit of negotiating, though, you start to figure out the exact price at which the vendors won't sell. When I visited this market, I used this information to my advantage, spreading real prices to the members of my group and even other tourists whom I didn't know.

"Most people will give you shoes for $5 or $6."

"Thanks. Don't pay more than $1 for the ties."

Once the shopkeepers found out what we were doing, they were furious. Understandably, the more ignorant they can keep people, the higher their margins. They got angry and said they wouldn't play by our rules. But in the end, they had to cave. I'd just go into a shop and skip the entire bargaining process by saying "I'm here to buy 10 ties for $10 or I'll go somewhere else."

Though some customers are able to find the bare-bones price, I'm sure that these merchants often score big on tourists who don't know how to haggle (or even that all the name brands are fake, for that matter).

Most businesses don't have the luxury of feeding off of ignorance. With the internet, consumer reviews, and word of mouth, you can't expect to pull a fast one and get away with it.

1 comment:

Ken said...

Is it just me, or does healthcare seem very similar to the situation you're describing here?

It seems like retail costs go awry when suppliers (doctors) have far more price information than the consumer (patient). I don't know, but I wish some smart people would figure out a way to do what you did for the tourist and apply it to healthcare.