I was shopping on Canal Street in Chinatown with my 17-year-old cousin, and I watched her haggle with a storefront vendor over a pair of shoes. She managed to get the hawker down from $24 to $8! I was really impressed — and she was visiting from Indiana!
This made me think: Haggling is a fun way to shop. Can the process of haggling be reproduced as an automated e-commerce model on the web?
The chart is pretty self-explanatory (okay, maybe not), but the idea is simply that the computer store has an opening price and a (secret) final minimum price, just as a street vendor might have, and through a series of interactions that opening price is reduced to some uncertain level that is agreeable to both the buyer and the seller. The seller will open with a high price, and then interact with the user, playing a game of chicken with them, until the computer seller decides “this is my final offer”.
To raise the stakes a little, the engine would, like Amazon’s Gold Box feature, pull out of the sale completely if the buyer makes several bad faith (ridiculously low) bids in a row.
Note that this is not intended to appeal to really cost-conscious people looking for the very best possible price — street vendors don’t serve that audience, either. It’s supposed to be fun, a kind of game or even a kind of gambling.
Other potential additions to the algorithm would include some weighting by the level of interest in the product by other customers, the current customer’s history with the store, giving the buyer the ability to bail out partway through the negotiations, etc.
Any other ideas? Is anyone doing this already?
I think Priceline has been doing something like this. I’ve only used it a couple of times. The first time I remember being able to play the prices for a while until getting something that worked. Then the next time I used it there was a restriction on how many offers you could make.
Damn, you’re right. Priceline even has a little of that gambling feel, which is part of the “fun” of shopping with them.
Still, I’m imagining Haggle! for things a little more mundane, basically consumer products. Priceline’s approach is to try to get the best price for time-based flights and hotel rooms which would otherwise go unsold and whose revenue is lost forever. Haggle! is to simply move goods in a fun way.
Another site in this family is woot, where deeply-discounted items are only on sale for one day, encouraging impulse buys.
I’m sure there’s a critical flaw to this: Haggling as a marketing model was made obsolete a century ago when department stores introduced the concept of the “Price Tag”, saving consumers the hassle of price negotiation with unscrupulous vendors. What’s fun for some people is uncomfortable to others. Still, it may have its place.
I’ve read that amazon.com employs “dynamic pricing” for certain items in which the buying history of each user is weighed against what is known about that user’s income.
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