Online Holiday Shopping

Blessed be Black Friday, Cyber Monday, and now Green Monday. This article here talks about the phenomenon noticed a few years ago that the Monday after Thanksgiving saw a sharp rise in online sales, presumably because everyone that goes back to work on the Monday after Thanksgiving wishes to buy the items online that they couldn't procure during the Black Friday madness. Ebay is now predicting that another anomaly will occur the Monday of the second week of December as procrastinators for Christmas presents will realize that they need to order their items in time to be shipped and received before Dec 25th.

To retailers, this time of year is like the Super Bowl of shopping. Most of the proceeds made in a calendar year for many retailers will occur during the holidays. As a result, retailers are all pining to collect as much from as many customers as possible, so some strange and otherwise abnormal pricing schemes and strategies take place.

I propose that even though the Black Friday participants feel that they are getting phenomenal deals, that they all suffer from the winner's curse, and that part of the price paid by them for their goods is not easily accounted for like loss of sleep, waiting in large lines, or fighting that cranky fat lady for the last copy of Pirates of the Caribbean on sale for $5.99.


Dominic said...

Are you suggesting that retailers actually mark up their prices on Green Monday? It seems like that would be the smart thing to do as a seller, but I would like to be aware as a buyer so that I don't fall in their trap.

Dylan said...

It's a fairly new concept that I think retailers are now beginning to become more and more aware of.

The website I work for, DealTaker.com has noticed an increase of retailers actually trying to take advantage of this trend by lowering prices and giving some great deals.

Dr. Tufte said...

Logan - you are absolutely correct.

On the other hand, there are positive externalities too. At holiday shopping time 1) the stores have all the goods you want, 2) they have more goods that you don't know you want yet, 3) they have more people around to help you out, and 4) you can watch other people to see what is hot.

Personally, I like the last one. I actually enjoy shopping around the holidays - everyone has a goal in their shopping, and I think you can pick up a lot from watching them.

Matthew said...

My friends and I love Black Friday. To us, it is an experience and tradition to go shopping, even if what we want isn't on a great sale (but we always eventually find something good). The hustle and bustle actually gets us in the spirit. Each year that I go shopping on Black Friday, the more the stores seem to get faster and more prepared to take care of the many shoppers.

My problem with Black Friday though, is the rebates. Staples is pretty good about getting the money back, but other stores aren't as good. For example, I just got a letter back from Pep Boys, stating that my $5 and my $45 rebates were unacceptable because my products didn't "qualify" for a rebate. How would I have had the form to submit them? A phone number was provided, but I still haven't had anyone answer the phone . . . I wonder how much money they are making on these "rebates?"

William said...

Dr. Tufte,
I personally have mixed feelings concerning Black Friday. Yes I love the deals and I think as a consumer no matter what you buy you feel that you are getting a deal just because it is that day. My family and I this past Black Friday woke up at 4 am to hit the deals. But to say it was worth all the headache of losing sleep, finding a parking spot, and getting ran over by carts. I think not. I think that as mentioned by Travis that it is not always worth the deal because of the whole situation of shopping on the craziest shopping day over. I think you must be able to look at the benefit that you get from it and weigh it with the costs that are associated to it.

Grace said...

Extra Credit--Dr. Tufte

Dr. Tufte made a good point in his second comment that you have to evaluate whether the "good deal" is worth the price you pay (standing in lines, fighting the crowd) to get it. I try to look at it from that perspective rather than just counting the actual dollars that I spend or save in the process. Personally, I'd rather pay $5 extra dollars for shipping than fight the crowd at the store any time of the year! I did most of my shopping for Christmas online this year and plan to do so again.

Green Monday? I've never heard of it until reading this post, but it does make sense to me. As the economy slows and as consumers have more options for places to shop (online vs. brick & mortar), retailers will have to continue to offer these kinds of deals to maintain market share. Consumers do their research!

Dr. Tufte said...

Matthew: they make a lot of money off of "fake" rebates. Unfortunately for the firms like Pep Boys, they outsource the payment of those things, and the fulfillment firms get to keep a percentage of what is unclaimed. This sets up an incentive for the fulfillment company to make Pep Boys look bad. It's not the brightest management choice, but on the other hand, the profits from doing this are explicit while the costs are implicit, so it is easy to justify on the basis of accounting statements.