On line markets where people sell peer to peer – think eBay sellers, or used cars on line – can trick our perception of the price of things. Here’s why:
This is the advertised price, not the price it sells for.
When we compare similar items on line, we are more likely to see the price of things that haven’t sold yet. The price people actually buy at, is often not advertised long enough for comparisons. This means the real value of something is often much less than we think. Especially when we are looking to sell something we own. We are weirdly programmed to think items we own are worth more than they are.
You might notice a car like yours is advertised for $20,000. There may even be multiple advertised at this price. Other sellers also see the most common price and follow the market. But we need to remember these are the cars which ‘haven’t sold’ – those that sold probably did so at $17,ooo and are no longer listed. It’s the overpriced stock that creates our price perception.
Why does this matter? Because it is counter intuitive, the opposite of what we’d expect. It’s the filter bubble in action. The more we see homogeneous products with price X on line, the more we should remember it’s the price people hope for.
You should totally read my book – The Great Fragmentation.
I’ve been a Vans off the wall fan since I did my first cross up on my BMX way back in 1982. My fav’s are the original checker board slip ons, as sported by main man from Ridgemont High – Spicoli.
Well today in a classic web enabled distraction I decided to see if I could make a custom pair over the web. I found that Vans do have a design your own shoe service – like most shoe brands these days. I was prepared to pay a premium – maybe double the usual price. For these wouldn’t be the Spicoli, they would be the Sammatron. I even decided to go fluoro to give it a bit of 80’s retro kick. Check ’em out below:
But when I got to the check out. I pumped in all of my information only to be told they don’t ship to Australia. It was curious, because their on line form let me add Australia as my country. I could also see that the shipping agent was UPS. I chatted with a staff member on line who also told me they couldn’t ship to Australia. Even after I offered to pay twice the price. Sad that one of my favourite brands is still in 1985 with more than their retro cool products.
Here’s what I don’t understand:
- The site doesn’t care what country the person is from.
- The staff shoe maker doesn’t care what country the custom shoe is sent to.
- The site has the e-commerce built in.
- The site accepts credit cards and other forms of payment.
- The shipping agent ships to Australia
- The customer (me) wants to give them money.
So why wouldn’t they sell me my custom shoes? A strange decision indeed. In the end I decided to buy some custom old school superstar Adidas shoes – who gladly ship to my fair country. The world doesn’t care what country a company is based in. If you don’t let them give you their money, there is always somewhere else to spend it.
At first we got confused about how to make money out of the internet. We thought we should be able to demand payment. Silly us, we forgot about the first lesson in economics – that pesky demand and supply. Supply doesn’t automatically equal demand – especially financial demand. On the internet things work in reverse. First value must be created, then it is extracted. It’s the opposite to the previous industrial world of buying and selling.
Now it’s proving, then earning.