Do customers want to haggle?

Do customers want to haggle?
Tags: Consumer Behavior, Customer Service, Department Stores, Merchandising, Multichannel Retailing, Online Retailing, Pharmacy/Drugstores, Psychology, Retail - Apparel, Retail - Automotive, Retail - Convenience Stores, Retail - Electronics, Retail - General, Retail - Home Center, Retail - Mall, Retail - Warehouse, Specialty Stores, Supermarkets & Grocery Stores
October 16, 2008

I have bought and sold a lot of stuff on Ebay. I bought a brand new MacBook on Ebay while standing in the Apple store waiting my turn for service. I bought a Bestey Johnson dress there, and I've sold lots of tickets to Giants baseball games there, too.

Ebay got its start as an auction site, and the idea of the garage sale has fueled the company's identity from the outset. No doubt, there are people who enjoy haggling over price. We have a friend — I'll call him Richard — who would negotiate with everyone on everything. He even once got a car dealer to throw the tie he was wearing into the deal. No joke. For him, it was sport, and he did it in a way that was natural ... for him.

But I don't enjoy haggling over the price of hand made items. I find it somewhat degrading, particularly for the seller.

And I don't like online auctions, either. They take too long to play out, and odds are that someone else will bid more at the last second, meaning I'll have to go find and buy the item somewhere else, anyway.

I prefer Ebay's fixed price feature for both sides of a sale. And apparently I'm not alone. Brad Stone reports in Sunday's NY Times, on the brewing e-commerce war between Ebay and Amazon. In the article, Ebay's leadership admits that its unwillingness to embrace the fixed-price side of e-commerce is strategic miss that has contributed the company's current difficulties.

Shangby.com is an interesting new site I discovered this summer. It attempts to appeal to both those who enjoy the haggling, and those who want to buy at a fixed price that has already been negotiated by a fellow shopper. CEO Steve Bell estimates that only about 10 percent of shoppers will bargain with a supplier, and Shangby provides tools that support the negotiation process including a live video conversation with the manufacturer or merchant that is facilitated by a Shangby concierge. For the 90 percent of shoppers who prefer not to haggle, the site makes the merchandise available to all comers at the negotiated price and highlights the savings that price represents.

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So, the merchandise on the site is all stuff that a shopper actually wanted to buy, not just stuff that a merchant thought s/he could sell. And all shoppers benefit from the haggling one shopper took the time to do.

When I met with Steve, I asked about scalability. Turns out Brad Stone asked him the same thing as he reported in the NY Times a year ago. The folks at Draper Richards and G-51 saw enough potential to get past that issue, and funded the business.

Shangby's value proposition seems to emphasize undercutting Wal-Mart on price and the site and format shortchanged the cultural experience that is possible here. In fact, I first told Steve Bell what I later told WorldOfGood.com — that there was a great opportunity to bring the romance of different cultures to life through the site and to feature evocatively and not commercially the stories behind the merchants and the merchandise.

That said, there is a kernel of an idea here that any e-commerce site, including Ebay, should appreciate.

Judy Hopelain is a consultant with Brand Amplitude and a blogger on the topic of retail experiences.