Wednesday, February 6, 2008

Business strategies

A question for all my economist/marketing/business experts amongst my friends (of whom I may actually have none):
Differential pricing is a long established practice in the business world: paperbacks versus hardbacks, first/business class versus cattle club, overnight shipping versus slow boat to China. And in the book market, it is reasonably clear that publishers release the hardback at a higher price, early, to milk as much out of those willing to pay more, and making cheapskates like me wait another few months to buy a copy. The hardback costs more to print, so it is more expensive.
In the airline industry, the seats are bigger, drinks are free, and it is "exclusive" so you don't have to mingle with the cheap-seaters. There is a perceived value for the seats. And it is justified, since the seats are bigger, so they take up more room, so it is appropriate to pay more, right?
In the shipping business, the value to the customer is clear. If you pay a bit more, you get your stuff shipped to you much more quickly.

What is less clear is where the extra cost to the supplier comes in. Is it really that much more expensive to ship things two-day rather than five-day?

And so to my question: I've travelled less in the past few years than before, but every time I travel, it seems like the conditions have got worse than the previous trip. Have the airlines actually been deliberately trying to make condtions worse in the cheap seats? Or is it just a result of malign neglect?
And UPS seems to be great at overnight shipping, but their standard shipping seems to be deteriorating rapidly: a few months ago I tracked a package only to discover it was sitting in a warehouse a few hundred miles from here for four days. I can't conceive the benefit to UPS to store that package longer than a few hours --- other than deliberately sabotaging one service to tempt people to use a more expensive alternative. Again, is this a deliberate policy? Am I imagining it?

This came to the front of my attention today, when I found out some stuff I ordered on Sunday on Amazon is due for delivery on Tuesday: nine days later! I am looking forward to tracking it to find out where it stays for four days this time!

Yours, cheapskating on thin ice,
N.

2 comments:

Joke said...

If it's any consolation, air travel in all classes is deteriorating wildly. I think teh reasoning is to make it so undesirable that not even Islamofascists would be willing to endure it.

-J.

Unknown said...

I don't know... I haven't had issues with the post office lately. In fact, I shipped a package to California (regular first class mail) and it got there in 2 days!!! I included the 4-digit zip code extension, so that may have helped.

I have also ordered things from vistaprint.com with the slowest shipping option (they say 21 days) and they got to me a week later.

Just my 2 cents on the shipping thing. :)