Tuesday, May 19, 2020

Angel Soft exec explains why toilet paper supply couldn’t keep up with demand when COVID-19 hit — Michael Grothaus

In case you were wondering.
Toilet paper is a business where we run all of our assets 24/7…, so it wasn’t like there was an opportunity to just say, ‘Oh, just run more hours.’ All the hours were already accounted for.
Shows that retail is based on administrative pricing rather than market pricing. Under market pricing with quantity limited, the price would have risen to ration available supply based on price. Would that have prevented hoarding? Would this have been a better solution? An alternative would have been to ration the quantity of product per customer, which some firms eventually did.

Michael Grothaus


Peter Pan said...

Price gouging is illegal in certain jurisdictions.
And in the long run, it's bad for business.
Customers won't forget who tried to charge them extra for toilet paper.

Joe said...

Also, the supply chain for commercial TP is completely separate from the residential TP supply chain. About 40% of the market is commercial. Since the residential chain couldn't just expand to take up the slack from the collapse in demand on the commercial side, there might have been shortages even without any sort of hoarding at all.