For every product, there is a customer at a given price. 80GB iPod may retail at $333. Definitely, there will be customers living on cutting edge and are willing to pay that price. However, there will be many more potential buyers for the same iPod at say $250, and even more buyers at $200. Increase in sales volume can help bring down the price. Also, with consumer electronics product, price also decreases with time, at which point buyers who have waited to buy at lower prices will jump in. Currently, a large subset of consumers are willing to wait out for prices to fall over a period of time at which point it becomes affordable for them.
Instead of price being a function of time, price can still be shrinked by increasing volume. Increasing volume means aggregating more buyers to buy a particular product. Which better place to aggregate buyers than Amazon.com. Similar to 'Wish List', Amazon can introduce 'Wish Price' where users can specify their willingness to buy a particular product at a given price. 'Wish price' is the price users 'wish' the price was at which they are willing to buy the product.
Amazon can perfectly orchestrate such buyer aggregation (demand aggregation). It already has wish list of millions of Amazon users. All they have to do is add another 'Wish Price' dimension for items listed in customer's 'Wish List'. Once, Amazon is aware of this Wish Price, it can very well orchestrate the demand to subsidize the price. This way, Amazon would have shrunk the time by aggregating more demand, leading to lower prices.
1 comment:
That's a great idea. I hope someone from Amazon is reading this blog. :)
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