Why Chinatown Produce Is Cheap (2016) • Hacker News Board

Re: Why Chinatown Produce Is Cheap (2016)

#31

Post by panglott » Tue, May 02, 2017, 6:14 PM UTC

Nav_Panel wrote: post #14

bjt wrote: post #6

This feels like the proverbial dollar left on the street that economists say should not exist, so I'm racking my brain trying to figure out what's stopping chains from replicating this. I wonder whether this alternate network is as scrupulous about source tracking and food safety regulations. Those costs could be driving up prices on the traditional retail side.

> what's stopping chains from replicating this Probably volume. Chinatown is extremely dense and has such high foot traffic that it makes sense to operate without refrigeration, with goods stocked from neighborhood warehouses. Most parts of the country don't have anywhere near that level of density, so the economies of scale wont work out like they do in Chinatown.

Free market economics always works best in an actual marketplace, where vendors are competing stall-to-stall.

Most Americans buy groceries from a large corporate-owned store that they drive to and has everything, which compete with other large corporate-owned one-stop-shop that you have to drive to.

Re: Why Chinatown Produce Is Cheap (2016)

#32

Post by pm90 » Tue, May 02, 2017, 6:14 PM UTC

throw9966 wrote: post #13

technotony wrote: post #2

Fascinating. I'm wondering if there's an opportunity for a tech startup to replicate this network more generally. I could see the network connecting the sellers with the farmers directly, plus coordinating delivery of the veggies... it's an easier problem than ubereats delivery as you've got fewer nodes. Maybe you even skip the sellers entirely, which basically gets you to CSA boxes but those always felt expensive to…

In my opinion this model works & keeps prices low, there is nothing to disrupt here. Similar like the Indian Dabbawala network. The Dabbawala System: On-Time Delivery, Every Time http://www.hbs.edu/faculty/Pages/item.aspx?num=38410 https://en.wikipedia.org/wiki/Dabbawala

It works only as long as there are more Dabbawallas willing to do what they do. Once their kids (or grandkids) decide they can earn more/do other professions...who will deliver the lunch?

Re: Why Chinatown Produce Is Cheap (2016)

#33

Post by metaphorm » Tue, May 02, 2017, 6:14 PM UTC

this rarely gets mentioned in these articles but it's extremely important. The Chinese food culture is substantially different than the Western food culture, and I don't just mean the items on the menu.

Chinese don't eat raw foods at all, and especially not vegetables, which they correctly (by the standards of Chinatown produce) view as being unsanitary until thoroughly cooked.

They have created a market that is efficient by eschewing the standards of sanitation that Western produce markets use. That's not to say that this is bad. Their food culture is fully adapted to it and it doesn't produce epidemics of food-borne illness in their community because they handle and cook food appropriately. The same approach wouldn't work if it was mostly Westerners buying the food though. A taste for raw baby kale salad makes this entire approach to food marketing non-viable.

Re: Why Chinatown Produce Is Cheap (2016)

#34

Post by Spooky23 » Tue, May 02, 2017, 6:14 PM UTC

bcaulfield wrote: post #7

Cheaper and better? That defies efficient markets theory. I guess any sufficiently advanced social network is indistinguishable from magic.

Who says the market for groceries is efficient? It's consolidated and segmented, so less competitive action = lazy retailers and high prices.

Why do you think Amazon is sort of price competitive with delivery?

Re: Why Chinatown Produce Is Cheap (2016)

#35

Post by bcaulfield » Tue, May 02, 2017, 6:16 PM UTC

NwmG wrote: post #21

bjt wrote: post #6

This feels like the proverbial dollar left on the street that economists say should not exist, so I'm racking my brain trying to figure out what's stopping chains from replicating this. I wonder whether this alternate network is as scrupulous about source tracking and food safety regulations. Those costs could be driving up prices on the traditional retail side.

Likely has something to do with scale. In particular they are able to keep a low or nonexistent administrative overhead.

A real-world example of diseconomies of scale?

Re: Why Chinatown Produce Is Cheap (2016)

#36

Post by ricardobeat » Tue, May 02, 2017, 6:16 PM UTC

technotony wrote: post #2

Fascinating. I'm wondering if there's an opportunity for a tech startup to replicate this network more generally. I could see the network connecting the sellers with the farmers directly, plus coordinating delivery of the veggies... it's an easier problem than ubereats delivery as you've got fewer nodes. Maybe you even skip the sellers entirely, which basically gets you to CSA boxes but those always felt expensive to…

Picnic.nl is doing something like that, and they just closed the largest A round ever at $100m. Just-in-time delivery using fixed routes, small electric trucks and local produce. Can't wait for them to launch in Amsterdam.

Re: Why Chinatown Produce Is Cheap (2016)

#37

Post by landryraccoon » Tue, May 02, 2017, 6:16 PM UTC

bpodgursky wrote: post #22

bjt wrote: post #6

This feels like the proverbial dollar left on the street that economists say should not exist, so I'm racking my brain trying to figure out what's stopping chains from replicating this. I wonder whether this alternate network is as scrupulous about source tracking and food safety regulations. Those costs could be driving up prices on the traditional retail side.

My understanding was that a lot of the produce sold in Chinatown markets was near expiration dates and often had already been rotated off of the shelves of normal supermarkets, often for cosmetic reasons or as a way of segmenting the market. (basically, supermakets sell produce to Chinatown vendors for a lower price, who then move it to a segment of the market which is willing to buy non-aesthetic food which needs to…

Your point was addressed and refuted by the main article.

Re: Why Chinatown Produce Is Cheap (2016)

#38

Post by Chathamization » Tue, May 02, 2017, 6:17 PM UTC

sotojuan wrote: post #3

The amount of secret networks and deals Chinese/Chinese Americans pull off is astounding. I don't mean that in a negative way, I'm mostly impressed (I live near Brooklyn's Chinatown).

I don't think it's so much a "secret network" as it is a community network. A strong community network is absent for a lot of Americans, so it probably seems strange or secret when they come across one.

Re: Why Chinatown Produce Is Cheap (2016)

#39

Post by sushid » Tue, May 02, 2017, 6:17 PM UTC

bjt wrote: post #6

This feels like the proverbial dollar left on the street that economists say should not exist, so I'm racking my brain trying to figure out what's stopping chains from replicating this. I wonder whether this alternate network is as scrupulous about source tracking and food safety regulations. Those costs could be driving up prices on the traditional retail side.

Well on the retail side, we do have retailers like Aldi's. You bag your own grocery and they have no workers focused on presenting the store in an ideal way. It's an IKEA maze full of warehouse goods like Costco.

I feel like the reason Safeway can't replicate this is because they have regional distributors. Having each and every store work independently requires very shrewd buyers on the retailer side. Furthermore, there's the expectation of having certain items for sale, regardless of demand or price fluctuation. There's no expectation for the Chinatown retailers.

Re: Why Chinatown Produce Is Cheap (2016)

#40

Post by xapata » Tue, May 02, 2017, 6:19 PM UTC

elefanten wrote: post #5

Where does the food in these secret warehouse networks come from? Is it actually equivalent in quality and oversight to the "mainstream" farm networks?

That's racist! Just kidding. I have the same concerns. In some groceries you can observe less than perfect practices. However, a friend who worked at a Michelin star restaurant told me those luxury spots are no better. Sometimes it's the fanciest places that have the worst practices, because they feel obligated to wipe down all surfaces to shine them. That towel they use goes everywhere.