Amazon (AMZN) is now taking bids. Venders who sell on Amazon can enable a “make an offer” feature that allows customers to offer a lower than list price. The seller can accept, reject, or counter the offer. If one makes a counteroffer, buyer and seller can haggle over e-mail and—if they reach an agreement—pay Amazon its commission. So far, the option is available only for 150,000 goods on the website, mostly art and collectables.
Amazon may extended the option to hundreds of thousands of items for sale within the next year. Amazon calls the offer process a “game-changer.”
While that’s probably an exaggeration, bargaining does have the potential to change American retail, quite possibly for the better.
In plenty of countries, people negotiate for nearly everything. Not so in the U.S., where bargaining on price tends to be limited to cars, real estate, and cable service. Research suggests that Americans are uncomfortable with the little haggling they do. In a LinkedIn (LNKD)survey of 2000 professionals in 2012, Americans (especially women) reported being more anxious than any other nationality when it comes to negotiating. (Indians feel most confident, followed by Germans.)
Whether setting a salary or buying a shirt, Americans should get over themselves: Bargaining can result in better outcomes for everyone. If the seller and buyer are equally skilled negotiators—granted, that’s a big if—they can arrive at a price that satisfies both. Without room to bargain, sellers inevitably set a price that’s too high for some and too low for others. Bargaining gives merchants a chance to sell more stuff. It also gives shoppers a chance to buy more, or pay less, than they otherwise might have done.
Bargaining works well only when both sides are comfortable with negotiation. That’s rarely the case in the U.S. Women are less likely than men to negotiate for higher salaries—one reason they are often paid less and an important part of the persistent gap in gender pay. When buying a car, dealers often quote women and minorities a higher price (PDF) than they offer white men. And while cable service and credit-card interest rates are both negotiable, not everyone knows that, or knows how to take advantage.
By picking up where EBay (EBAY) leaves off, Amazon may be able to level this playing field. Merchants selling through Amazon have a larger customer base than they would if they were limited to a storefront. That means they’ll get more and different bids, which means they’ll also get a better sense of what people will pay. For buyers, bidding over the Web can reduce discrimination; haggling over e-mail may be less intimidating than it is in person. In the end, merchants may sell more stuff, and buyers will get better deals. That’s a pretty good offer.
