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

Re: Why Chinatown Produce Is Cheap (2016)

#41

Post by naravara » Tue, May 02, 2017, 6:19 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.

>I'm racking my brain trying to figure out what's stopping chains from replicating this.

Scale.

Anything living has a level of variability and likelihood of failure/damage/spoilage to it that gets harder and harder to manage as your scale gets bigger.

When you're a small shopkeeper who sells about 3 baskets of apples a day, it's both easier to sift through it and throw out the bad ones AND easier to find 3 basket's worth of apples that meet your quality expectations.

When you have to move 3 pallet-loads of apples, though, not only does QC become a more complicated endeavor, but you have to find 3 pallet-loads of apples to sell at a competitive price, so you may not have the luxury of being so choosy. When pallet-loads scale up to shipping-containers. . . you can see where I'm going with this.

And then there are logistics issues. If you're a large retailer you have to bring everything into centralized warehouses and then send them out. This means things need to travel longer distances and/or have longer shelf-lives. The upshot of that is they have a higher chance of either being past their prime by the time they get to you, or that had to get picked before they were properly ripened on the vine.

When you're smaller, have smaller scale suppliers, and less complicated distribution networks a lot of that extra burden falls away. Starbucks had this problem when they first started to get big too. A lot of people give them flack for over-roasting their beans and giving everything a charred/muddied flavor. When they were small they were able to be choosier about the beans. As they grew the scuttlebutt is that there just weren’t enough beans of that quality level on the market, so they had to lower the quality threshold and move to darker roasts. They still sell better beans, but only in select locations.

Re: Why Chinatown Produce Is Cheap (2016)

#42

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

penpapersw wrote: post #20

bcaulfield wrote: post #7

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

Could it be that they just don't have the cruft & boilerplate & inefficiencies that traditional retail has? Having been in several types of workforce, I've seen plenty of missed opportunities that continued indefinitely because of management incompetence, so I wouldn't doubt it if they're able to have high quality & cheap produce just by cutting out the middleman and by being competent.

Calling it management's incompetence is probably unfair, although certainly there is a lot of incompetence in the retail sector. I think it's more accurate to call it corporate inertia. It's easier to build such a network for a single stall on a busy street than it is for 500+ retail locations that all have to be exactly the same to keep the brand image.

Re: Why Chinatown Produce Is Cheap (2016)

#43

Post by bgun » Tue, May 02, 2017, 6:20 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…

As the article mentions (and in my experience having lived and cooked in Chinatown for years) this is fresh produce from small wholesalers, not near-expired undesirables.

I don't doubt, however, that mostly untracked/untaxed cash transactions (both store-customer and wholesaler-store) contribute to some of the price differential.

Re: Why Chinatown Produce Is Cheap (2016)

#44

Post by tmaly » Tue, May 02, 2017, 6:20 PM UTC

I have always liked to shop at some of these places.

I can find exotic stuff I need for a variety of Asian recipes that I cannot find elsewhere.

Re: Why Chinatown Produce Is Cheap (2016)

#45

Post by Nav_Panel » Tue, May 02, 2017, 6:20 PM UTC

panglott wrote: post #31

Nav_Panel wrote: post #14

Earlier quoted context omitted.

> 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.

Indeed. However, I'd argue it'd be nearly impossible to have stall-to-stall competition in your standard American city/suburb: people wouldn't be willing to drive to multiple locations, and even if all the vendors were centralized in a market (hmm, perhaps a "super-market" of sorts?), the sales aren't regular enough/in high enough volume to do away with refrigeration, which drives up start-up costs, leading to the classic natural monopoly where the "supermarket" itself is an entity selling the goods.

The Saturday morning farmer's market seems a reasonable approximation of these Chinatown markets at a sustainable scale for smaller/less dense regions. But really, population density is the magic sauce for demand in cases like this.

Re: Why Chinatown Produce Is Cheap (2016)

#46

Post by Chathamization » Tue, May 02, 2017, 6:21 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…

I've noticed that there's a pretty substantial network available to them (and not just food) on Weixin. It would be interesting to see a Western equivalent. From what I've seen, Weixin is a lot more useful a social network than something like Facebook (which seems to be more of a time waster).

Re: Why Chinatown Produce Is Cheap (2016)

#47

Post by Alex3917 » Tue, May 02, 2017, 6:22 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.

> I wonder whether this alternate network is as scrupulous about source tracking and food safety regulations.

If you think there are some regulations that Jetro or whoever is enforcing that these other wholesalers aren't then post that. Otherwise this just comes off as a subtly racist comment.

Re: Why Chinatown Produce Is Cheap (2016)

#48

Post by Nav_Panel » Tue, May 02, 2017, 6:25 PM UTC

Spooky23 wrote: post #27

Nav_Panel wrote: post #14

Earlier quoted context omitted.

> 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.

Not really. Drive up to Albany where there is zero foot traffic and the Asian markets are about the same price. They have coolers though.

I'm actually from Albany. There are 3 Asian markets there: "Asian Supermarket", Kim's Asian Market (never went in this one, but I think it's Korean rather than Chinese), and one more whose name I forget that's smaller but seems to have fresher produce. I never tried buying produce there (we'd mostly hoard Asian snacks) but I wouldn't be surprised if it was more expensive and less fresh than Chinatown simply as a result of the additional shipping/refrigeration required. Anecdotally, no family I knew would shop at those over the standard region supermarkets unless they needed some specific Asian ingredient, whereas in NYC many shop preferentially at the Chinatown markets.

Re: Why Chinatown Produce Is Cheap (2016)

#49

Post by throwaway2048 » Tue, May 02, 2017, 6:26 PM UTC

paulddraper wrote: post #12

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.

> Markets also cut costs by eschewing extra technology and certain aesthetic choices—the Journal points out that shelves “are typically made of plywood and lined with newsprint,” prices are scrawled on cardboard instead of printed on stickers, and credit cards are not always accepted. Some people don't want to buy food with cardboard signs and cash. Hell, I've heard California even has people who are fans of convenie…

Its a conditioning thing, if thats how you had always bought vegetables it wouldn't be odd to you at all.

Re: Why Chinatown Produce Is Cheap (2016)

#50

Post by mikeash » Tue, May 02, 2017, 6:27 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.

I don't think produce prices are all that competitive. For one thing, it's terribly difficult to comparison shop them. The prices change all the time and you pretty much have to visit the store in person to find out what they are on any given week, so it's either waste a lot of time shopping around, or go with what you find in the store you usually visit anyway.

The fact that the prices are usually round numbers (e.g. when I buy apples they're almost always $0.99, $1.49, or $1.99/pound) seems to support the idea that stores aren't trying hard to wring out every last bit of competitiveness from this stuff.