Monday, November 8, 2010

Strange Business

Below are a few observations about how businesses function here in Kathmandu. I leave on an eleven day trek through Annapurna tomorrow so this will likely by the last substantial post for the next two weeks. Annapurna is, by all accounts, stunningly beautiful so expect some pictures and a full write-up when I get back.

Bhat Bhateni

As those of you who know me are aware, I don't like shopping. I go out of my way to order things on the internet if it will save me a trip to a store. If I must go to the store (or god forbid, the mall), I will try to get through my shopping as quickly as possible. I just don't like shopping. Period.

I'm pretty sure I cannot enumerate all the reasons I feel this way. Part of it probably relates to the soul-killing aesthetics of many retail outlets. Another part is that uncertainty about whether I will find what I want, and the sinking feeling that I'll probably have to purchase some crappy substitute. That last feeling is particularly exacerbated when I go clothing shopping and *know* that wherever I go, they will not carry my size. Then, of course, there are the other consumers. Who are normally, no doubt, lovely people. But immerse them in an overabundance of things and they transform into a sad caricature of their usually pleasant selves. I could go on and on...the inane exchange of words with the person behind the checkout counter, the various useless products ("Why would you ever buy that," I think to myself, getting more and more pissy), etc. You get the idea. I don't like much about the American retail experience..

That said, Kathmandu has given me a newfound appreciation for the convenience of American retail. I realized this a few weeks ago, when I was in Bhat Bhateni, the largest department store in Kathmandu. Bhat Bhateni is very clearly modelled after American retail, or maybe the American retail of the past, since department stores are sort of dinosaurs today.

But, to the point: I was standing in Bhat Bhateni and I just felt overwhelmingly impressed. The food is refrigerated, or covered up, or wrapped. There are no clouds of flies to be seen anywhere or on anything in the store. Everything has a listed price, and it's actually fair. You don't have to haggle over every item you want to buy. No need to battle the shopkeepers who immediately name some ridiculously exaggerated price because you are a foreigner. When you go to the checkout counter, and present a 500 rupee note (about $6.50), they don't look at you blankly with that look that says, "Even though 500 rupees is only about 3 times the cost of an average purchase here, I don't have change for that." No. In Bhat Bhateni, they have change.

A butcher's storefront. The animal is usually decapitated and skinned on the sidewalk.
And all that is wonderful. It is convenient. It lowers one's blood pressure. Incidentally, virtually every store in the States does these things. I didn't appreciate that before, now I do. However, I will probably still get home and go to Best Buy or The Gap or whatever, and still hate shopp

This sign is just awesome...

The key thing to note there is "Thailand FDA Approved." I think that's a cool line for two reasons.

First, as far as I know there is no Nepali FDA. Indeed, there's not much of a functioning government here at all. So in the absence of various public services, people and businesses are essentially free riding on the public services of foreign governments as a substitute. Now, obviously, that doesn't work for everything. Kathmandu residents can't free ride on the work of the Indian Government's road repair work, because the roads being repaired are in India, not Nepal. On the other hand, where a government service is portable, as is the case with an FDA approval, this is sort of viable.

I say "sort of viable," though, because there are problems with this set up. After all, a FDA should do more than just approve things. Ideally, it also bans, restricts, and otherwise regulates. But that's not going to happen in this case. When a product get's approval from the Thailand FDA it might mention that fact as an advertising point. On the other hand, if the Thailand FDA rejects a product, that's not going to keep the product of the market here in Nepal. So what's going on here is that Nepal is free riding on the approval half of the Thailand FDA regulatory process.

Which leads to my second point: I find it interesting that the advertising for this energy drink mentions the Thailand FDA approval in the first place. I mean, no one is forcing them to provide that information, and as far as I can tell, their competitors don't offer similar endorsements in their advertising. Clickz is telling us they have Thailand FDA approval of their own volition. They are most likely doing so because they think it will help them sell more of their product.

What I think that points to, more than anything else, is the fact that many people are suspicious about the safety of energy drinks...

Street Vendors
Most weekdays, I walk back from OGN to Boudha by going through an area called Chabahil. This takes me along the primary road that runs out to Boudha from the Kathmandu Ring road and, at 5:30 or 6, the sidewalk along this road is packed with street vendors. These vendors mostly sell vegetables or cheap clothing, which they spread out on blankets over the sidewalk. This causes a lot of congestion on the sidewalk. As a result, I used to walk in the street on my way home, because it was so much faster.

Then one day, I noticed something odd. I wasn't paying attention, didn't cross the street at my usual place, and ended up walking most of the way home on the other side of the street, and for some reason, there were no street vendors on that side of the street.

That realization made my walk home much more pleasant, but it also got me thinking: All these street vendors sell the same set of goods, so why do they all set up shop right next to each other on only one side of the street?

One side of the street is empty...
...but if you look across the street, the other side is packed with street vendors.

I have a few theories...
  • The sidewalk is wider on the street vendor side so that's where they all go. But it's not wider by that much...
  • Clustering together on one side of the street creates a convenience for their customers (who can visit more vendors in less walking distance) that translates into better sales, despite the increased competition with their neighbors. I'd find that more compelling as an explanation if it weren't a) laughably easy for a potential customer to walk across the street and b) if the vendors weren't literally selling the exact same goods as their neighbors.
  • It's government mandated that they use that side of the street. Given the general lack of functioning government, I"m not convinced this is it.
  • It's a first mover problem. Regardless of how the current equilibrium (all on one side of the street) came about, it is now what consumers know to expect. That means that if any one vendor were to move to the other side of the street, his business would suffer as customers are not habituated to going to that side of the street to make purchases. This seems plausible, but it doesn't account for how this situation came about in the first place.
So basically, I'm not really sure. Any thoughts?


  1. In regards to the energy drink sign I think that you are spot on. The same problem has been born here in the U.S. where the early niche of non-traditional caffeinated beverages was occupied solely by a rowdy teenage crowd looking for little more than a rush. The various colors of these early energy drinks seemed to exaggerate the artificial nature of the product because this is what the early consumer wanted. In turn, a public perception has risen surrounding these drinks which insists on their unregulated sketchiness, which has made brands like 5hour-Energy almost impossible to market to a broader consumer.

    This being said, I think that there is a whole other layer to this mess when you encounter beverages like this in the unregulated third world. In the U.S. today, these drinks are essentially harmless variations of caffeine mixed with daily vitamins, but early on many were mixed with borderline pharmaceutical agents like psuedoephedrine which in high dosages had effects similar to amphetamines. Having done some research, it seems that there are countless non-regulated brands which border on hallucinogenic that are still highly popular in non-regulated markets (many contain L-Tyrosine and 5-HTP early metabolic variations on dopamine and serotonin). The 420energy brand comes to mind as one of the most amusing. It boasts the fact that it contains cannabinoid agents similar to THC as the major selling point (Whoopy!).

    Long story short "FDA approved" is a code word for "This drink will only wake you up not put you on a psychedelic drug trip."

  2. With regard to your discussion of the street vendors, I believe that the explanation lies in a combination of your second and fourth theories.

    There have been many studies done over the years on various types of retail in the USA along the lines of "Why do fast food restaurants congregate together?"; "Why do so many clothing stores congregate in malls?"; "Why does a grocery store with a full aisle of birthday cards sell a multiple of cards (exceeding space differentials) vs. a store with a single rack of cards?"; etc. Generally, the conclusions of these studies revolve around much higher levels of consumer confidence that they will find something that they want to buy, so that the increased traffic more than offsets the cannibalization effects of proximity. This turns out to be true even when goods being offered for sale are essentially the same--think of a McDonalds, Burger King, and Wendys all next to each other. Not sure that fully explains the one-side-of-the-street phenomenon, unless vehicular traffic is also sufficiently heavy during prime shopping times to make crossing the street more of an inconvenience than it might appear to be, which would be why your 4th theory might be an important supplement.

  3. A lot to ponder on your trek. Have a great time! Be safe.

  4. David H. said,
    With regard to the debate about street vendors (which naturally extends to the question of why there is a "plant district" and a "lighting district" in New York), I will provide you with the answer as soon as you tell me, oh grasshopper, why mammalian life forms such as ourselves exhibit preprogrammed senescence, even though this presumably limits the replication of any individual within the species. Regarding consumerist disappointments in Nepal and the United States, well I can't imagine that anyone in Nepal has your size, but it must be some compensation to watch everyone in the store stop what they're in order to stare in awe at the 6'8" white gaijen in their midst.

  5. @David (sans Hariton) I think your explanation is pretty compelling as an answer, particularly since at peak shopping time (5pm when everyone is on the way home from work) traffic makes crossing Nepali streets something akin to a game of human Frogger...