Thursday, July 12, 2012

Focus on the consumer, not the merchant

This week I stumbled across two mournful articles about trends that benefit the consumer. The first was about how is gearing up to offer faster deliveries for free, including same-day deliveries, and the second was on how the country is suffering from a "glut" of lobsters that is pinching lobstermens' bottom line

"Glut" being a negative way to describe an abundance.

The Amazon article reveals an interesting twist. Brick and mortar retailers have (falsely) claimed that Amazon's low prices come from online purchases being free of sales taxes, not the massive economies of scale. Now that multiple states have started forcing the company to collect that tax, Amazon isn't restricting its warehouses to tax haven states and will have less distance to cover when it ships from these new locations. The slight price increase for Amazon goods will be offset with faster deliveries.

In all fairness, the lobster story did manage to give a decent amount of focus on a customer who benefits from these lower prices.

While lobstermen wring their hands, consumers are making the most of the low prices. At a busy intersection in South Portland, Maine native Barbara McFarlane parks her car and heads for an early lunch at Docks Seafood restaurant and market.
 "We just love lobster. We're Mainers, and usually we can't afford it," she says. "It's grand to be able to afford it this year." 
I can sympathize with the reporter here. I've had to write multiple stories for different newspapers about how a warm winter didn't allow specific merchants to profit off of customers. I made sure to include some examples of those who benefited from the weather, such as a motorcycle shop and a public works department that saved a lot of taxpayer money in road salt.

Despite some good efforts from the reporters, the headlines their editors gave the pieces were unreasonably negative for two stories about consumer benefits. They were "Lobster Glut, Low Prices Leave Boats High And Dry" and "I Want It Today: How Amazon’s ambitious new push for same-day delivery will destroy local retail."
When people talk about a false sense of entitlement, the criticism is usually thrown at members of the public who expect free handouts from the government. In this case, we can clearly see a sense of entitlement concerning profits and commerce.

No one is entitled to an automatic profit, or for their business to survive changes in technology and the market.It's a mistake to judge economic activity by how it impacts the merchant. Instead, one should focus on consumers and see if the exchange is good for them.

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