Friday, March 12, 2010

We're S-H-O-P-P-I-N-G, we're shopping

Currently I am in the mode of acquiring more bottles for my liquor cabinet, so I have spent some time contemplating the process of doing so in the most efficient process. In this process if we do a little MBA style analysis I think we can make it a bit more efficient.

First we need to define a commodity. Wikipedia defines a commodity as “some good for which there is demand, but which is supplied without qualitative differentiation across a market.” So an individual scotch is not a commodity since each distillery has differentiation based on flavor and other characteristics. A bottle of 30 year Laphroig is very different from Johnny Walker Red and would be defined as substitutes. However, one bottle of 30 year Laphroig is a commodity since each bottle has no quantitative differentiation. This is quite important because it means that price is the critical factor in terms of asset acquisition.

Some people may find that a salesman at a liquor store has some knowledge which adds value, but from my experience I have never met a scotch salesman that has as much experience as can be found in Michael Jackson's Complete Guide to Single Malt Scotch. Rarely are samples given at a store, so that make no difference. For me scotch is not an impulse buy, it is well research ahead of time, so selection makes little difference either.

If you accept a bottle of scotch as a pure commodity the best place to get it by far is the internet since you can buy it from anyone and the cost savings from avoiding taxes more than make up for the price of shipping. Since this is a commodity using a product search web site to check as many sources as possible is incredibly useful.

There are a number of these sites like Shopzilla. Bing has an interesting shopping site that offers 5% cash back, but the selection is poor and the deals are not that great. To me the only place to go is It has great selection, the best prices, and it is quick to find what you need. For example within one minute I was able to find 9 bottles of Laphroig 30 year ranging in price between $450 and $840, a bottle that is very rare to find for a wonderful price.

Expect a new review of a scotch in a few weeks...

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