Santa’s Greatest Gift: Online Price Wars
The free market is making available lower-cost Christmas gifts.
Here is an example: a video game that went from $50 to $15 in 7 days. A price war broke out. Amazon drove down the price. Walmart and Target followed suit.
It pays to shop online. It pays to wait to buy presents.
There is no place to hide any longer. The big stores are cutting prices online. This means that people who shop online have a huge advantage over those who shop in the stores. This rewards digitally savvy people.
The New York Times reports:
Retail price wars online have entered a new era of speed and precision, creating a confusing landscape for shoppers in which prices leap and plummet on short notice. In the old days, merchants sent employees into competitors’ stores to check on pricing, and days later “sale” signs reflected new markdowns. Now, sophisticated computer programs accomplish the same goal online within hours, and even minutes.
Price competition is the free market’s magnificent gift to customers. High prices based on customer ignorance is becoming a thing of the past.
This will squeeze profit margins. Hooray!
This will give customers more wealth after taxes. Hooray!
This will hurt retailers that cannot compete. Not my problem!
The free market is the customer’s friend. When it comes to making investors rich or customers rich, the free market does the latter first.
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Published on December 3, 2012. The original is here.
The essence of the free market is its support of the customer or consumer. The free market is relentless on behalf of the consumer. The consumer has what sellers want: money. Money is the most marketable commodity; therefore, the free market places consumers in control. It rewards producers only in so far as producers can satisfy the wants of consumers at prices that consumers are willing and able to pay.
In contrast to this is mercantilism. Mercantilism is a philosophy that defends producers at the expense of consumers. Adam Smith refuted it in 1776, but the mercantilists live on. They resent it when consumers get a good deal. They think the government should intervene in order to help inefficient producers. Producers love to hear this.
The process which was visible in 2012 has accelerated. Walk-in stores are going out of business. They will continue to go out of business.
Here are three articles on this that cover brick and mortar disasters in December 2019:
https://wolfstreet.com/2019/12/24/what-options-do-mall-landlords-have
Walk-in stores that are price competitive are doing well: dollar stores and Walmart. Especially Walmart.
Why Walmart? Four words: "Save Money. Live Better."