Black Friday and Cyber Monday: Internet Sales Soar

Cyber Monday is widely regarded as the Super Bowl of online sales. This year's Cyber Monday did not disappoint, as it set record online retail sales and retained its status as the biggest online shopping day of the year. In fact, since the creation of "Cyber Monday" in 2005, each year has topped the year before in online sales, and there aren't signs of slowing the growth either. This year's Cyber Monday sales grew by 18% from last year. Those numbers could be higher, however, if companies were not dragging the sales out over the entire week. Over the last couple years we have seen a shift, as "Black Friday" has become "Black Weekend", and "Cyber Monday" is becoming "Cyber Week". Companies are beginning their sales earlier and keep them going longer. Because of this, we can no longer accurately analyze growth for Black Friday or Cyber Monday by looking at Friday's or Monday's sales figures independently.

In fact, according to an article by CNN Money, Black Friday sales fell 13.2% from last year. However, if you look at "Black Weekend", which spans Thanksgiving Day through Sunday, cumulative sales actually crept up 1% compared to last year. Stores like Toys 'R' Us, WalMart, Target, and Best Buy opened their doors on Thanksgiving Thursday, which significantly cut into the traditional Black Friday sales. But this only partly explains the odd distribution of sales over Black Weekend. The main culprit is online sales channels. Black Friday is no longer a one-day event, nor is it limited to brick and mortar establishments. In fact, we are beginning to see a shift as sales are going cyber. According to IBM's 2013 Black Friday Report, mobile traffic for Black Friday grew to nearly 40% of all online traffic, which is an increase of 34% from last year. Mobile sales reached 22% of total online sales, which is an increase of nearly 43% from last year. Retailers that catered to online customers found much success. Amazon and Ebay were extremely successful this year siphoning customers from brick and mortar stores. While brick and mortar black weekend sales rose just 1% from last year, sales on Amazon's and Ebay's marketplaces rose 30% on the weekend of deals from last year. The future of "Black Weekend" and "Cyber Week" is going cyber.

No Lemons in the Wine Industry

In Aplia, we recently learned about asymmetric information.  One of the examples of this was the Lemons Model.  This model suggests that in a situation in which the seller of a good knows more about the good than the buyer, the buyer will only be willing to buy at a lower price because of the uncertainty involved in the transaction.  A buyer does not want to spend $10,000 on a $7,000 vehicle so the buyer is only willing to pay $7,000.  Because of this, the seller is only willing to sell vehicles worth less than $7,000.  Ultimately, this situation results in an extreme shortage of high quality goods available for sale because no one will sell them at a loss.  This article from the Huffington Post has all the makings of a lemons situation, but none of the effects.

A high price bottle of wine is a considered a sign of wealth and class.  Because of this the best wine is sold at auction for thousands of dollars per bottle for those that consider themselves the ultimate connoisseurs or those who just want to impress.  Unfortunately, it has recently come to light that counterfeiting is a serious problem in this industry.  It has been particularly bad in Asia where many are not experts on wine, but have the money to buy the best.  Although the problem has only been publicized for a short time, those with more experience know it has been going on for quite a while.

Under these circumstances, one would expect the price of a bottle of wine to drop.  Buyers should behave more cautiously and sellers should respond by offering less high quality wine.  Interestingly, the opposite has occurred.  Wine sellers/producers have continued to sell as they always have and prices have continued to rise.  Why is this?  I see two possibilities.  The article mentions that those who discover they have been deceived into paying high sums for worthless fakes are ashamed to admit it.  If no one ever admits they have purchased a lemon, then it is as if it doesn't happen.  The other possibility is that demand for these wines is so high in proportion to supply, that it will take much more to drag prices down.  This is likely because older wines are often considered the best.  The idea of high demand and low supply also fits with common economic theory that large deficits will often result in black markets.  Counterfeiting is not exactly a black market, but it fills the same roll.