Treasury Bond Marketing and E-Retailing: Similarities and Pricing Lessons

In this paper, we first draw an analogy between the short- selling practice (i.e., strategies betting on price decrease over time) of bonds marketing and Internet retailers´ lower-price-but-Ionger-waiting practice. As a market convention, bond prices peak when the issuance is still in preparation, and drop when actually issued and when the liquidity quickly dries out. Such a convention was once exploited by some practitioners to squeeze others. Squeezing occurs when a trader intentionally builds up a large position in a sought- after bond to keep it from being available to the rest of the market, thereby controlling the availability of the bond and influencing its price to the trader´s advantage. Similarly, survey results suggested that, although timely delivery has been deemed a key indicator of perceived service quality, online customers have been underserved in that aspect. We model the underlying reason of significant late- delivery as e-tailers having been short-selling consumer electronics futures. We provided three examples to figure out the reason of delayed delivery from Internet retailers; and we generalize the three products in our examples to three classes of consumer electronics products for broader application. We believe that there are important preventive lessons to be learned from the bond squeeze to e-tailing delivery issues (actually the information asymmetry issue in disguise). Further research may provide useful insights for online consumers and their protection agencies; and for rental companies to better their pricing and sourcing strategies.