# Banana Arbitrage

Photo: jetheriot

Bananas are a popular topic on this blog. In February, a reader wrote in with this odd banana stand pricing phenomenon. And in 2008, Dubner explored the potentially tenuous economics of the far-flung fruit.

I’ve recently run across something similar to the banana stand case: the Starbucks closest to my apartment now sells bananas at the counter for \$1 each, while right outside the door, a fruit stand sells them for 25 cents each, or 5 for \$1. And the fruit stand bananas are always better looking than the ones at the Starbucks register.

Now, I can’t say I’ve ever seen anyone buy one of the Starbucks bananas. I certainly try to watch when I’m in there, but for a store as carefully orchestrated as Starbucks, I can’t imagine that they would waste counter space on a product that doesn’t sell. Though maybe with the huge margin they presumably get on each banana, they have to sell just one or two to justify it.

So, ideas for banana arbitrage, anyone? Also, what other examples can you think of where huge price discrepancies for the same product exist in such close proximity?

1. Troy says:

When I was a kid, my dad was in the wholesale grocery business. He got a good deal on some off-brand canned tuna and figured he could unload it cheap and still make a killing. So he marks the tuna at 25 cents a can. The stuff sits…and it sits…and it sits. So he “marks it down” to 3 cans for a dollar…and can’t keep the stuff on the shelf. People respond to the PERCEPTION of a deal in really odd ways!

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2. Chrisfs says:

While it is amusing and a bit frustrating to see that, it’s not arbitrage until you can buy the bananas from the stand for 5 for a \$1 and sell them to Starbucks for \$0.50 each. That would be awesome.

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3. artemis says:

within any store there is usually a vending machine selling soda at a different price very close by.

Eggs are more expensive in bulk everywhere I have ever shopped. The price per egg is more for 1.5 dozen than for 1 dozen, and god forbid you go in a “warehouse” store, where the price for six dozen is usually twice the price per egg for a dozen.

Regarding all the “well they have them for smoothies anyways”, you will often see this banana affect at other types of convenience stops as well, not just starbucks.

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• Rajat says:

I’ve had the opposite issue with eggs at a grocery store near my last apartment. Due to difference in pricing on store brand eggs vs. brand name eggs, it was cheaper for me to buy a dozen eggs than half a dozen. Not cheaper by unit, but cheaper total; I could buy a dozen, throw out 6 eggs, and still have a better deal. They eventually repriced them to make sense.

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4. Richard Gay says:

In this case, it’s not about the price. Starbucks doesn’t care if that banana ever sell. In fact, it might be plastic. It’s all about projecting a healthy food image that helps the customer think he’s eating healthy while downing those 500 calories of sugar.

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5. Lassie says:

I see now a basket of bananas, apples, and pears, 89 cents each, at the checkout counter at the gas station, and little packets of nuts and trail mix. Otherwise, the store is full of soda, beer, chips, and junk food. I think there are some people who WANT a healthy choice, (or maybe the fruits and nuts are just put there for impulse buying) because this is a fairly recent development. Buy a bag of chips for \$3 or a banana for 89 cents –

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6. Owinok says:

To my mind, the main reason that Starbucks stocks bananas is because they are an ingredient for smoothies. So the opportunity costs for a banana in the store is close to the dollar because that is probably its value in a smoothie. the store is making a decision between turning the banana into a smoothie or sell it away.

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