Product Differentiation? Not in SE Asia

One of the most popular tourist activities in Asia is shopping. Goods are very inexpensive, and the prospect of a $10 silk scarf, or a $2 pair of shoes, is simply too good to pass up for many. As I wrote a few weeks ago, there are some great bargains to be found here. But while you will find lots of inexpensive goods of relatively poor quality everywhere, what you will not find is a wide variety.

I have been walking around a lot in flip flops since arriving in Asia over two months ago. The heat and humidity here combine to make a less than hospitable environment for my feet, so flip-flops are a welcome break from the cramped environment my running shoes offer. All the walking and pack-carrying on hard ground have worn my flip-flops down so much that I can feel stones coming right through them, hurting my precious feet. Fed up, I decided to spend the afternoon searching for new ones in Vientiane.

And what better place to look than the mall, right? So we headed over to Tad Seo Shopping Mall, just down the street from the impressive presidential palace. The mall was large, with three floors packed to the brim (I do have to hand it to them, they know how to use every inch of available space) with vendors selling everything from silk scarves to Ray-Ban knock-offs and, yes, shoes. The vendors were divided into informal and very general sections — shoes, clothing, woven goods, cosmetics. But like everywhere else in Asia that we have seen so far (night and day markets included), each vendor sold virtually exactly the same products that the vendor next door did. No product or company differentiation.

I cannot quite figure out how all of these vendors stay in business with competition surrounding them. How do they stick out in a crowd? In this mall alone, there must have been 10 or 15 places to buy the exact same pair of shoes.

It’s a business puzzle to me. Do they compete only on price, assuming customers are going from vendor to vendor looking for the best bargain for everything? The prices seem about the same on the surface, but naturally, everything here is open to negotiation. Do they think I will assume these are the only choices available in the area and just give up and buy something? Am I missing some subtle difference in quality? (If you have answers, leave them below.)

So now, I am a little more thankful for the role marketing plays in helping consumers. Even though lots of the differentiation at home could be just advertising and not reality, at least I feel like I can make a more informed choice based on what product specifications I am going for. Plastic or leather flip-flops, for instance, or type of strap. If each shop specialized in a certain type of merchandise here, I would be able to shop more quickly and be more satisfied with the experience, like I am at home. If I want to buy cheap clothes, I know to go to Old Navy. If I want running shoes, I go to Road Runners. If I want a watch, I go to Fossil — or Swatch or others, but at least they have different things so I can browse and pick what I want.

I’ll head back to the US to get a quality pair of flip-flops to replace the ones I have worn out. In the meantime, I’m headed to Thailand, over 600 miles away, to see if the offerings are a little more varied in the land of beach vacations. I’m sure I’ll find something to get me through the trip, though I’d absolutely kill for a pair of Rainbows right about now.

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