Yesterday was eventful: we acquired two chairs that can be pushed together into a sort of bench, and we got rid of a table that didn’t quite fit. If you’ve ever read Bruce Sterling’s Shaping Things, or if you’ve considered the entire lifecycle of the products you purchase, then like me, you may have grown to dislike disposing of things - because it’s a bit of a chore. I asked myself: what is the easiest way to get rid of this table? The obvious answer - throwing it away - is full of problems, not the least of which is that there is a city schedule for throwing away big items. Then the answer struck me: the Reverse Auction.
The concept was this: I’d disassemble the table, move it to the side of a major Toronto street, and angle the table towards oncoming traffic. The price would start at $40, and every 5 minutes, I would lower the price by $5. Now, this type of auction works best with a captive audience, and ideally the person who wins the action will think like this: I must buy the item at this price, because if I wait too long and the price is lowered, then my competitor might be willing to purchase it at the lower price. In the end, a reverse auction has the same consequence as a forward auction: you find the single individual who is willing to pay the most.
I wanted to use a reverse auction because I assumed it would guarantee that we would eventually find a price point that someone would buy at, and I could establish a schedule that would rapidly get us to the right price. In other words, it was a time issue; I felt it wasn’t worth my time to ask top dollar for the table, so I’d make price vary by time and accept the tradeoff.
I think a fair price for the table was around $30, so I started it at $40. I printed some price tags on letter-sized paper, using a 400pt font size to make the numbers legible from the street. Armed only with these price sheets and some tape, we set a timer and waited for someone to snap.
My wife was quite the salesperson, and effectively maintained a constant stream of sales points about the table. First, 5 minutes passed and the lowered price still didn’t make anyone budge. Another 5 minutes, and we lowered it to $30. I caved to pressure and waited 10 minutes before lowering the price to $25, and another 5 minutes later we moved it to $20. This started to get a reaction from people; bikers were commenting, people walking on the sidewalk discussing quietly among themselves…
And finally, someone bought it, in large part due to my wife’s sales pitch. I think they saw that we were lowering the price pretty rapidly, and realized that eventually it would be so cheap that someone else was definitely going to buy it. Here’s the insight, then: the reverse auction worked even without the captive audience, but the price-lowering mechanism is most effective if someone actually witnesses the changing price. They need to see the price drop in order to consider that someone else might compete with them at the lowered price point.
Instead of leaving the table for garbage collectors, earning $0 in the process and adhering to an arbitrary schedule, we sold a $30 table for $20, and we did it in less than half an hour. It was a lot of fun, and it was even educational. I think we ended up executing something related to the Reverse Auction, but which was different enough that it behaved unexpectedly. Nevertheless, it worked, and we bought delicious curry and pad thai with our spoils.