TCS Daily


Shopping as a Lifestyle

By Glenn Harlan Reynolds - December 14, 2005 12:00 AM

Okay, I've written about shopping here before -- in some ways, as recently as last week, and, if you compare this recent story with this column from 2003, maybe even presciently. I've also written about the way things like eBay are changing our country, and Christmas shopping, in all sorts of ways.

But I haven't thought things through in the way that Daniel Nissanoff has. Nissanoff's new book, FutureShop: How the New Auction Culture will Revolutionize the Way We Buy, Sell, and Get the Things We REALLY Want, looks at the long-term impact of easy purchase and resale of, well, pretty much everything. And it sounds as if it might be bigger than most anyone realizes.

Right now, eBay is a novelty, really, even if it's become a fairly important one. But Nissanoff points out that eBay (along with other auction sites in existence, or waiting to be invented) isn't just a place to buy and sell, but to buy and resell, so that consumers can recapture a lot of value from things that currently just sit in closets depreciating until people give up and throw them away. Having done a major round of closet-cleaning this summer, I can identify: We gave some things away to friends and family, but we threw away a lot of stuff that still had some value. I probably should have tried to unload at least some of it on eBay.

Nissanoff argues that with the advent of "dropshops" that sell things for you, and increasing familiarity with Internet auctions in general, more people will be doing just that -- reselling stuff via auction sites rather than just storing it until they toss it in a fit of pique. And he also argues that this will change the markets fundamentally. Instead of buying, say, a camera or a pair of skis with the expectation that the price we pay will come entirely out of our pocket, we'll buy things with the expectation that we can recapture a lot of their value later, by reselling them.

Right now only a few consumer products fall into this category; cars are probably the most obvious. Most people buy a car with the expectation of reselling it. They also pay attention to how well cars hold their value for resale, with brands that depreciate less (like Mercedes or Toyota) commanding a premium when new. And there are considerable resources available for those who want to know the going rate for used cars in various conditions.

Imagine if everything worked that way. You'd probably be more likely to buy a Burberry raincoat, or a new Nikon camera, if you knew that you could resell it in a year or two for 60% of its value, instead of clogging a closet until you eventually threw it away. Or you might choose to buy one a year old off eBay and save the 40% upfront.

Some people are already doing this, but if it gets easier, and more accepted, enough people will do so that it will change the market. Right now, notes Nissanoff, luxury brands like Chanel actually try to suppress sales of used products on eBay for fear that those cost them sales of new goods. But that strategy, probably beneficial in the short term, could be disastrous if people started buying Chanel with the expectation of reselling it. Imagine what would happen to Mercedes' new car sales if the company tried to crack down on the market in used Mercedes automobiles. Nothing good, I'm sure. That's why some companies are already taking control of the secondary market in their products (much as car dealers have done with "certified pre-owned" programs) by offering trade-in credits and selling used products themselves.

The kind of "auction culture" that Nissanoff foresees is likely to have interesting second-order effects, too. Some products with a steeply improving performance curve - like electronics - may not be built with the resale market in mind, but for others it may mean a move away from planned obsolescence. And to the extent that resale displaces the sale and purchase of new goods, it may offer an environmental bonus.

As with so many technologies (the theme is sounded at length in my forthcoming book) the end result may be a sort of "back to the future," where such 20th Century bugbears as short product cycles, planned obsolescence, low quality, and clogged landfills become far less prominent as people once again build things to last, because people aren't buying things to use and discard. Sounds good to me.

Glenn Reynolds is author of the forthcoming An Army of Davids.
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5 Comments

Perfect Timing
Just as I have increased my interest in ebay and other online shopping services, this article comes along to tell me I am probably moving in the right direction. Having just purchased a home, I find that I am already taking up lots of space with things I do not use and hardly look at anymore. So I am considering going the ebay route to start getting rid of some of it. Thank you Mr. Reynolds.

Renting vs. Buy
My eyes were just opened to this by a friend of mine who is building a large storage shed.

He needed a framing nailer, a roofing nailer, and a couple of other specialized tools. He's not on any kind of hard deadline and isn't sure when he'll need these tools.

Rather than worrying about renting them as needed at $40/day. He just went to ebay and bought them. When he's done with them, he'll auction them off. This is a really cost effective, flexible, and convenient way to do this.

Warning: If you do this, research *exactly* what you need before you buy. The transaction costs aren't trivial and buy-to-try probably will cost you some money.

There are surely many categories of goods that this would apply to. Tuxedos come to mind. What other rental situations are out there?

It's still got a way to go
The resale network idea won't ever really take off until the problem of ebay-type fraud is solved. It's one thing to buy a car where you can look at it, have a mechanic look it over, drive it, etc. before you buy it, but it's another thing to buy a car sight unseen from somebody you don't know. The same goes for most other high-value products. I know that I do ebay for lower value products, but I'd be leery of buying anything major through it.

the power of brands
There are some brands that became almost a myth. A capacious consideration on this aspect is given in "Enduring Passion" by Leslie Butterfield. It is telling the story of Mercedes Benz brand, a brand with a symbol more widely recorgnised than the Christian cross. Worth reading!

http://www.mercedes-benz.com/content/mbcom/international/international_website/de/com/international_home/home/passion/entertainment/Enduring_Passion.html

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