The Psychology Of A Dutch Auction - A Few Observations

It was an economics professor or perhaps an associate professor (am I supposed to use capitals for professor) at my university (does that need a capital U?) that once told me that a Dutch auction was the most efficient way for markets to correctly price products. In my first year I was sent to the Sydney Fish Markets to watch the daily catches come in and watch the the bidding system. I have forgotten exactly how it was done now, I think they used a clock, but it was a very interesting experience none the less.

The Dutch Auction that just concluded on our website was, in the end, no less riveting. Men who like bow ties are often very intelligent people, especially those of the tie-your-own variety. They are usually fastidious in their dress, thoughtful, well read, they pay attention to the minutae and they're often thrifty. So when you have characters like this, from all over the world, shopping your website as you eat into your margin more and more day by day, you are bound to observe some interesting behaviour. Let me expand upon this.

You Don't Know Who Else Is Out There

This is one of the most sublime advantages that we have over the customers. I can see who is logging on through the website, but our customers do not see who else is their competitor for the same prized bow. There is a limited supply of each bow tie. Some models, for whatever reason, have more workmanship, better silk qualities, a better handle, colour, or are just plain 'on trend'. So these are usually the first to go which causes the first stir as to when you might engage the website. One of the tell tale signs is the SOLD which pops up once we've run out and you can bet your bottom dollar that after observing this a few times some of the bigger cats take their first bite. But it won't end there.

Patience Is A Virtue But Not Always

Being patient as the 5% increments kick in is always an added advantage but as the increments start to add up, so too are the number of people willing to purchase the products. As you progress you run the risk of watching your prized bow run away to some other country. This is where the seasoned customers of Le Noeud Papillon show their true colours. They have worked out a way to monitor our stock levels and as the days wear in they start to play with the probabilities in their heads. There are 4 bow ties left in this model.... In two days they sold two, how long must I wait before I take a shot at this one and at what discount will I take it? How much do I want this bow tie versus the other one which has more stock in and less have sold... If I wait for that one, perhaps I can get it at a much better discount..... And so on thinks the shopper. But it always makes me smile when they wait too long and then lose out. You might ask why I might take pleasure in that? It's simple, I know whoever bought it at RRP still got a discount when compared to the quality of my competitors products. So when I see someone being extra greedy only to miss out - well I feel no pity for him.

I Don't Have The Money For One Of Your Bow Ties, But I'll Buy Six If You Are On Sale

It always amuses me how many potential customers write to us to say that they love our products but can't afford our prices. I often direct these customers to our mailing list so that they can join in on our SALES when they occur. What amuses me is that although they were unwilling to buy one bow tie at RRP - they will buy six at 50% off with no problem finding the money. Again, I attribute this to the hunter like nature of the internet male shopper, who, mixed with the intelligence of a bow tie wearer, makes for a very worthy adversary. I wouldn't mind recruiting such folk to do my own internet shopping.

The Tuna Bait Ball

Another one of the advantages that we have over our dear customers is that we know what you are like once you smell blood. I can recall the first time I watched David Attenborough on 'The Blue Planet' as he spelt out the movements of a bait ball of sardines as it was savaged by a school of tuna which rose from the deep. The ball was first attacked by smaller fish but as the frenzy in the water started to cause more and more commotion, tuna rose from the deep, shooting up like silver bullets from the ocean floor until all that was left was sardine scales drifting to the bottom of the sea bed. A Dutch Auction often shows the same phenomenon. As more and more irregular customers start to take bites at the stock, our larger, more regular customers who sit in the shadows prepare their own attack. As the Dutch Auction SALE wears on, they feel, almost impulsively, that they must enter into the foray. Their own entrance only serves to swell up the commotion and suddenly the smaller fish trying to chomp as much as they can. Having been a spear fisherman all through my twenties and early thirties, I can only say that seeing a bait ball is one of the most fascinating things you can witness but a Dutch Auction is almost as interesting.

NB: One of the more delightful things I witnessed was that one of my customers who comes from a small town must have felt guilty somewhat about purchasing so much stock at a discount that he asked a friend in the same town to purchase bows for him. Small things. But it did amuse me.

The Shadow People Come Into The Light

This is my final observation. There are so many voyeurs of the internet. People who like what you do, like to watch what you do, but don't necessarily want to participate. The wonderful thing about our Dutch Auction is that many of them become revealed during a Dutch Auction because as the price lowers they feel more and more inclined to join in on the fun.

I hope you enjoyed my observations of Dutch Auction Sale. I am physically exhausted and am now on vacation to spend time with my young one. I look forward to revealing some wonderful people I have met on the internet over the coming days. We have a tailor in Naples, a shoe maker in London and a shoe maker in Kiev. I do apologise for losing two interview over the past couple of weeks. We had made contact with Domenico Vacca in New York but the interview seems to have gone dead. Domenico is one of the most exciting designers I saw in New York last Christmas and he dresses all sorts of Hollywood celebrities. Unfortunately, with designers like Domenico Vacca, they are always on the run and if you lose the moment it seems to be gone forever. Hopefully he will come good some time after the holidays.