Economics always includes psychology
Main Image Credit: SoccerBible
So, I was going to a write a whole thing about New Balance’s interesting approach to a limited edition release, but then someone complained about people (rightly) taking issue with the high prices in the market right now. Now, I need to preface this by saying that I do not expect all limited editions or rare boots to be available for lower prices. Some boots, like the Adidas Predator Mania do rightly demand some higher prices, but others absolutely do not need to be in that realm of money. This goes both for resellers and retailers.
A good place to start with be with Lotto’s re-release/remake of the original Zhero Gravity to celebrate its 15th anniversary. As someone who absolutely loves the originals, as well as the Due and Tre models, I was very happy when these released. Setting aside the baffling decision to only make two sizes, which neither were mine, the pricing on the boot is over the top. The boot retails for €350 in Mainland Europe, £300 in the UK and in both cases, they are 50 more than the adidas Messi Speedflow.1 El Retorno! Its pretty obvious which one people will prefer, though the Messi is not selling either, which once again is probably down to price. In the case of Zhero Gravity remake specifically, I think Lotto misread the market and the demand for their product. It does feel as if the boots would sell better if they were cheaper, which is the complaint I have heard the most.
It is the peak of arrogance in my opinion to expect to sell something for that price. Giving a pair of boots a nicer cardboard box does not make them worth that much more. Yes, remakes will fetch more, but just by being a remake or limited edition boot does not guarantee success. Puma did a 10th anniversary release for their V1.06 and they just sat there until they were marked down. This shows that the demand was there, but not at the price Puma was asking. These companies think that if they build up enough hype, anything will sell. The New Balance Takela V3+ First Edition actually makes for a good example. They are a limited-edition boot. They are only available for 48 hours. At the time of writing, they have sold decently. It is true that having extremely limited quantities helps but the fact that the boots retail for £225 in the UK and in the US they are $220, meaning that more people are likely to buy in.
Another recent example of raising prices is the recently released Nike Tiempo 9. In Japan, the price has jumped from 25000 yen to 29000 yen ($227 to $263 USD), which bearing in mind that Mizunos are cheaper here than Japan internationally, makes even less sense. In the UK the Legend has gone from £190 to now £200. In Europe, from €220 to €230. In the US, the price has not changed, admittedly. In Australia, it has gone from $270 to $300. Nike, like other brands, are trying to push the prices higher.
Speaking of higher prices, look at the transfer market. Loads of clubs are looking to sign players for free, even giant clubs like Barca or PSG. If these multi-billion-dollar clubs are trying to save money because they have been impacted by COVID, then it is understandable that we would want to do the same on an individual level. Many people have been severely impacted economically (as well in much worse ways) by COVID and yet people are saying that we should not complain about prices because of supposed “supply and demand” in the market. This is a convenient argument that the less scrupulous sellers trot out when people complain about prices.
First off, in terms of the big brands, Nike, adidas and Puma have suffered in sales because of the pandemic but are still giving their executives multi-million-dollar bonuses. If they really needed to save money, they could start by paying their executives less. These companies do not need to raise prices, they want to. When people defend the prices that these companies decide on, they are doing free PR and free marketing work for those companies. I am sure a wry smile creeps the face of an executive when they see someone defend them like this. Again, brands are not your friends. Saying do not complain is basically telling these people that we should just buy whatever crap they make, and we should be grateful that they deign to satisfy demand. Which – LOL.
As for the fact that limited-edition boots are still selling out, like the Predator Remakes, it is dishonest to suggest that they are selling out because they are being bought by the average joe. It is easy to disprove this when everybody has seen multiple resellers buy up a lot of stock to sell themselves later at higher prices. They are manipulating the market when they are doing this.
By controlling the stock, these less honest resellers can set the price they want for the boots. This was even clearer with the F50 remakes that retailed for 300 EUR but some resellers were wanting 550-600 EUR for them, and they could do this because they had more stock than others and could set the price while trying to take advantage of mental factors such as FOMO – the fear of missing out.
The “Prices are driven by demand argument” falls very short when you realise that some of these resellers are in chat groups with each other and set prices so prices so that they do not compete with each other. It is pretty obvious when you see several resellers having similar prices.
A second part of why the whole “supply and demand” argument is total bullsh—is because it disregards the role psychology plays when it comes to purchasing something. A good example of this comes from Fortnite. We have seen that kids have been bullied for having a default skin. Thus, they push their parents to pay for skins in-game so they don’t feel left out. They do not want to be excluded from the “in-group”. This plays on the human fear on missing out on something. This also points to pressure from the peer-group that an individual must buy into something, or they are not “one of us”.
“But that’s just video games”- I am sure you will find people who are Predator collectors who wish there were less remakes. Heck, even as someone who is known for grabbing Mizuno boots, I only buy if it is a new model, or it is something I am going to review. And even then I often sell after the review so that I can purchase other boots to review. There is definitely pressure there to grab a lot of stuff that releases, especially when you like a colourway. But I also do not suffer from FOMO in the same way that others do – which did take a lot of self-control to get over and it is not always possible. Not everyone can resist buying stuff – just look at what FIFA Ultimate Team has done to people.
Third, if the demand were so high because of limited supply, you would expect limited editions to be difficult to find. This is true for some of the rarer, more sought-after products. Although, it is worth pointing out that some of these are limited edition boots from half a decade or further back. But, some retailers and some resellers have been sitting on newer limited-edition products for months on end. The prices are not going down, so they’re not selling. That is the simplest part of all of this.
Advertising on the part of brands is also largely driven by psychological factors. This is why we are seeing a lot of re-releases. Playing on nostalgia is a big driver when it comes to sales.
When someone says that the market is just driven by “supply and demand” without taking into to account social-group pressure – be it online or IRL – FOMO, or just the psychological manipulation that is modern advertising, they are either being purposefully or literally stupid.
Now, I do agree that a few people might be buying product just to enhance their social media profile, but it is a mistake to generalize and suggest that a majority of people do this kind of buying purely for clout. It also does seem a little bit of projection on the part of someone who suggests this in generalized terms, as if they themselves are chasing clout by buying certain products.
For me personally, I still do this mostly for fun. Of course, I hope my blog will become more popular. And I have given into peer pressure myself – my Mercurial Vapor 13 review is proof of that – but I mostly do this because I enjoy it and I enjoy talking boots with and helping people. It isn’t cheap running a blog and I lose money on more than a few reviews. So, I am definitely in the corner of things being too expensive.
People will be sure to point out that Mizuno boots are really expensive overseas, and I agree, they could do with lowering the price. But with Mizuno’s Japan products, you know that they are handmade, and the quality is that much higher. This is something that of a lot of other brands can claim. Quality over hype, always.
Everyone is unique, so, arguments like “supply and demand” tend to erk me because it passes the blame for the issues caused by these multi-billion-dollar companies on to the consumers.
Thankfully, not everyone is so obtuse, and people are definitely getting better than they have ever been at smelling out BS. Do not buy into arguments like simple “supply and demand”. They are made as a distraction to cover up the real price-gouging, market manipulation and psychological influence that has been caused by the modern marketplace.
In short, lower your prices. It is not our fault they do not sell. Companies and a few resellers charge too much. There are good resellers out there who know better, and do not get many complaints about prices or b*tch about people pointing out their prices are too high. It is a pretty obvious connection.
But clearly this goes towards companies first and resellers second. High re-sell prices are a symptom, not a cause.
What do you think about the prices in the marketplace? Do you agree that companies are charging too much for what they have on offer? Please share this with your friends and make sure to follow me on Instagram and Facebook!
9 thoughts on “Boots are too expensive, actually”
As a boot nerd and someone who has a bachelors degree in economics, and not only took eco 101 as you pointed, I really disagree with a lot of what you say.
I think there are some aspects in your text where you consider thar economics should consider moral and ethics. I don`t think so. Economics should be treated as a scinces and that means morals cannot be part of its analyzes. You can implement economics to get to an ethic objective, but that is a different discussion.
In the end, and the long term, is true that demand drives prices. Being completley objective and cynical, companies do not have an obligations towards their clients. Business is about charging in a way tou get as much revenues as possible. If companies could charge as much as possible to each client, making “price discrimination” that would be efficient.
I don´t think price should consider the fact that people get bullied or feel the need to buy them. I think we shouldn´t feel this need to buy. I have felt it, the pressure. And is awful. But is a problem I need to solve with myself and try to have a healthier mind. That is an opinion, morals and not science. You can think otherwise, and that is totally fine. But I consider calling other “stupid” for thinking otherwise is a mistake. You migth call them “inmorals” but is a difference in opinion not objective knowledge. From an objective point of view, there only good price strategy is the one that maximizes profits. In that sense, “caring about your clients’ mental health” is only a good strategy if it will give you more profits.
Also, scalpers are not bad. Again, from a strictly economical point of view scalpers are not a problem. I wanted to make an study trying to figth resale in the sneaker market and two different PhDs told me that made no sense. There are even scientific paper published by serious researchers explaining why scalping migth actually be good (I can think of “3 hurreis for scalpers” from the top of my mind).
Collusion is actually a problem. Mainly because of the anti monopoly laws. According to Bertrand’s theorem, you only need two agents that compete in price so that the observed price is the marginal cost, so you would need to explain market power. It would be complex to explain and proof before the according authorities, like the european antitrust authorities, that they should do something. But you are rigth in this point.
I understand what you are trying to say and you have every rigth to say you would like the boots to be cheaper, but I there is not a price boots SHOULD have.
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Apologies for the awful english.
Big fan of the blog, btw.
Amen. Very nicely put
Hey! Thanks for your support as always and thanks for reading. Appreciate your comment. I am having that different discussion you speak of. Yes, I know economics is a science but I feel that not including ethics when it comes to analysis like this doesn’t show whole the whole picture. It is also letting companies off the hook for their actions.
In the current economic system, you’re right – companies don’t have any obligations other than to maximise profit. But the system sucks and shrugging your shoulders a pretty much saying “That’s just how it is” isn’t a good enough analysis for me. We have regulations in place that just barely hold companies accountable for their actions and they still get away with far too much.
If demand drove prices than surely boots like the Allures would be far cheaper since there isn’t as much demand. This also would mean that Nike, adidas and Puma would have the highest prices while Mizuno and other brands would be far cheaper because of demand. The argument for demand and price correlating falls apart here. In reality demand is often driven by hype/exposure/marketing. Prices are are also decided based on cost as well. I am surprised you excluded this point.
You keep mentioning an objective point of view. Which is something I heard often in several economics classes. This is the biggest issue I have with economics, being objective, “all things being neutral” – that’s not how the world works. Things fall apart when you apply it to the real world. There are some people who need professional help to stop themselves from buying stuff. This is why there are hotlines to help gamblers. Not everyone can overcome temptations like that. Worst still, is that the current global economic system pushes for constant increases in profit and damn the effects it causes. I feel you are being far too dismissive of the moral implications of such a system and the harm it causes. Economies do not exist in a vacuum and to try and be “objective” dismisses the real world implications.
Scalper is a negative word and I struggle to see how they benefit anybody. Resellers can absolutely benefit the system. But scalpers are people who try and suck as much money as they can from people. I really don’t think they provide any good in any way since in the end all they are doing is increasing the price for the buyer. Also, in many countries, scalping is “objectively” illegal.
Collusion is a problem and it sucks that we have the bigger resellers doing this.
We need to make sure that we watch out for each other and hold these massive companies and the bigger resellers accounts to task.
Overall I get what you are trying to say, but I am not sure you are fully engaging with the article on its terms.
No worries, your English is fantastic!
There will always be a difference in opinions between ‘re-sellers’ and ‘collectors/buyers’ as one party is profiting from the others passion.
The comment from Ale A. Best resonates a lot more with me and I agree with their points.
Great content again mate and it sure is getting some attention
In general terms I have no problems with resellers – there are a lot of good ones out there and its great having people scour in places and find stuff that most people can’t find on their on. Its a good source of boots and prices mostly err on a good and competitive side. Also, I can tell that a lot of resellers are passionate about what they do and don’t purely see it as a way to make money. That said, this doesn’t hold true for some of the very biggest resellers, which is a shame.
Ale put forward a good argument but it doesn’t feel like he is engaging with the article itself but rather making non sequitur points.
Thank you for reading. It’s nice to have so much attention but definitely lots more to still learna dn do!