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?

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  1. Shiprek says:

    Cigarettes!

    The Margin is not as excessive as the fruit stand/starbucks, but the mark up of cigarettes out of the machine in a bar is comparable. There could be a gas station/convenient store right next door, but 9 times out of 10 the patron will purchase them right there.

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  2. John B. says:

    Pretty much anything sold at Balducci’s and at the Safeway down the street.

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  3. adora says:

    I frequently see people buying bananas at Starbucks. They usually look wealthy and can’t be bother to waste time making seperate purchases for coffee and fruits.
    Like a few weeks ago, I saw a middle-aged couple with a young child. Mom wears expensive Stella McCartney yoga outfit from head to toe. The toddler was dressed in Burberry. The father bought coffees, juice and pastry with 2 of those $1 bananas. His bill was closed to $40! I guess it’s the convenience.
    It was very strange because after the wealth family, there was another lady buying one shot of esspresso telling the barista to put it in a venti cup so she can top it off with a litre of milk for $2.

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  4. adora says:

    The groceries stores I frequent, have vending machines in the front next to coin star machines. A bottle of soda in the vending machine cost $1.75. A case of 6 cost $2.50-3.00 inside the supermarket.

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  5. Sam says:

    One price discrpency, while not as great as your example of the bananas, but maybe more surprising–when I was first traveling to colombia, there two different exchange rates..the international one and the local one. And the difference was considerable, 7% or so. It was actually possible for someone to send you $100 from western union, the person there asks you if you want pesos or dollars..you ask for pesos(getting the international rate) then turn around and say, I changed my mind, actually I think I would like dollars(getting a slightly lower than local rate because its western union) and walk out of the branch with $105. I’m pretty sure it happened because of the massive outflow of drugs..and the inflow of dollars and that exchange rate was basically caused by money laundering at a massive level..I mean wheree else can you make 7% changing money at the retail level? Its interesting to note now that the FARC has been largely beaten and there is alot of tourism…we’re back to losing money exchanging dollars in colombia.

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