TL;DR version - Laundry Detergent is pretty fungible, everyone needs it, and its difficult to trace, unscrupulous retailers will buy stolen tide for cash.
This situation provides crooks with a couple of benefits, one they can separate the money trail for selling drugs, after all who thinks this looks like a drug buy:
Alice goes to grocery gets laundry detergent;
Bob sells stolen detergent to a grocery for cash.
No way to connect Bob and Alice until you add:
Alice goes to grocery gets laundry detergent;
Alice gives Detergent to Bob for drugs.
Bob sells stolen detergent to a grocery for cash.
Now you can connect them and see the drug deal. Hard to get a warrant to search Bob's car for laundry detergent.
I can't figure out why the unscrupulous retailer is buying Tide from anyone except P&G. Except that he knows Bob is up to something and willing to assist Bob.
Quote from the article:
"Despite its popularity, Tide is not a big moneymaker for stores. P&G’s proprietary surfactants and enzymes are relatively expensive to produce, notes Bill Schmitz, a Deutsche Bank analyst, so Tide’s wholesale cost is steep. Only so much of that can be passed on to customers. “It’s so tight,” says Schmitz of the profit margin. In general, a retailer clears just a few percentage points on a Tide purchase. A store that charges $19.99 for a 150-ounce bottle might claim $2 in profit. But if it buys stolen bottles for $5, that jumps to $15."
"A few percentage points"? $2 in profit/$18 in cost is over 10%. That's nothing like the ~1-2% grocery store profit margin which I think of when I hear "few."
Quoting one source: "Total pretax profit for the industry in 2009 was about $5.2 billion," and "Convenience stores’ gross revenue for 2009 was more than $505 billion." "While the average gross revenue per store for cigarettes was about $576,354, the gross profit on those sales was closer to $89,923. Cigarettes are the second highest-ranking profit producers for convenience stores, after nonalcoholic beverages, which provide each store with about 18 percent of its profits." "Motor fuel [...] provides a gross profit margin of only about 6.4 percent"
That puts detergent a bit under the 15% margin for cigarettes, but a lot higher than the margin for the store as a whole, and higher also than the margin on motor fuel.
This is covered in the article. If the retailer's supply was exhausted by theft, their tracking system fails to alert them to reorder in time. They're in a bind and can't get supplies in time, so they turn to the local suppliers that very likely are selling them back the stolen goods.
Alice doesn't care how much drugs she gets for that, because shop lifting is easier than prostitution and has lighter sentencing than robbing houses.
Bob sells his bottles for $5 each. That means the store can either sell at a big discount for friends, or can make more profit. The margins are not good on Tide.
>Alice doesn't care how much drugs she gets for that
I think your explanation is wrong.
Alice would certainly care how much she got for $Tide, else she wouldn't see it as ($).
Bob is the lowest common denomiator here in that Bob must know that he can get $xY for $Tide from the store... whereas he is going to give minimal value for $Tide to Alice.
This is not only how Bob $Profits, but also how Bob lays low from the Law.
>While the driver kept the car idling, a heavily tattooed, spiky-haired detective named Alexander Mallari jumped out holding a laundry bag filled with a few bottles of Tide and lots of bonus items—a dozen pairs of Philips earphones, a dozen or so bottles of Victoria’s Secret perfume. Mallari’s mission was simple: He’d enter the shop, disclose that the items were stolen, and try to unload them.
>Ten minutes later, Mallari emerged with an empty bag and a small wad of money in his pocket. He was offered just $30—a pittance by the standards of the Tide trade. “That’s a true crackhead price right there,” Thompson said.
This is the drug that brought us "smurfing" - addicts would earn drugs by taking very many blister packs of OTC medication and popping the pills out of the blister packs to be used in making drugs.
Bob fences stolen goods from drug addicts because the margins are so good - and the margins are good because drug addicts just want enough money to get more drugs.
Addicts may be the most rational economic actors of all: each $10 can be a really, really big deal to an addict, and he will find the most efficient way, within his limited capabilities, to get it, whether that is smurfing, farming WoW, stealing copper pipe, etc.
I like Dan's explanation too but perhaps more directly.
Lets say that Tide is $20/bottle so $100 is 5 bottles. She then exchanges that for 5 tide bottles worth of drugs.
The value of the drugs is, by definition, 5 tide bottles.
The article discussed the value of buying stolen tide at a discount against retail in order to get better margins on their sales. The article claimed that the margins were roughly 150% better ($5 vs $2) although that number may have been made up by the author.
Bob prices his drugs in units of Tide bottles, the Store buying stolen tide establishes the exchange rate for Tide to Dollars. There is a 'posted' exchange rate of dollars to tide bottles, although the argument talks about people stealing Tide. This becomes low cost because apparently the store staff is unwilling to call the police, and the police apparently have issues because the monetary numbers are low enough that the crime is a misdemeanor rather than a felony.
So in our scenario Alice is risking getting arrested for shoplifting by stealing Tide bottles, Bob is risking being arrested for drug dealing or trafficking in stolen goods, the store is risking sanctions for buying stolen goods.
The entire point of the article was that because there is so little risk, this process of stealing Tide to buy drugs flourishes as actors in the system arbitrage the risk for cash (or drugs).
No, Alice steals laundry detergent. The jugs are going for $5-$10 on the street, but $20 in the store. Nobody is buying the stuff from the store unless they're doing laundry.
I grew up in a suburb in Australia that bordered a bad area where crime and drug dealing were rife, and I went to school with a lot of people from that area.
The network seemed to always have one product or another that was used as an informal currency. For years it was the Energizer brand AA battery, then it became prepaid cell phone minutes after one provider allowed users to send credit to each other (this was shutdown).
At one period it was Gillette Mach 3 razors, but then stores started putting them behind the counter so it didn't last long. Cigarettes were always a quasi-currency, I remember the value going from 20c to 50c, and cigarettes being exchanged for everything (and some smaller stores selling or buying them individually).
After I left the school I heard that the market had reverted back to batteries (there was always a battery market, I don't think I ever purchased batteries from a store), after a very brief period where the most shoplifted items in the local supermarket were cuts of meat and meat trays[0].
What these items all have in common is that they can be shoplifted from large supermarkets easily, are portable, easy to store, have a long shelf life (well, not the meat) and are essential household purchases even in poor neighborhoods.
I find interesting that even if you aren't involved directly in the drug trading, you are taking part in the surrounding economy by purchasing or exchanging these goods. I never bought drugs but my friends and I were always buying and trading these goods. I assumed that they would always end up back with the drug dealers somehow, who would find a way to convert them back to cash.
Edit: an interesting related article from Forbes that came up in my Google search - "Why do people steal meat from grocery stores?", goes into the economics and details of shoplifting and is US-centric: http://www.forbes.com/sites/larissafaw/2012/12/24/why-do-peo...
The primary reason for using detergent as a currency, beyond the fact that the market for stolen Tide is so strong, is that shoplifting carries a far lower penalty than robbery or burglary -theft-.
If they were robbing the stores at knife point, or breaking and entering, the risk is significantly higher. This way they have a low risk, easy to turn over, virtually untraceable scheme, and that is obviously a very attractive thing.
A similar story:
I read years ago that there was a gang of people that would steal laptops at airports when businessmen were tired and unattentive.
The reason they gave was that it was easy to move them (this was 10 years ago so a Macbook Pro was about $5k) and if they got caught they could pretend they accidently picked it up instead of their own bag. If they got caught it was very unlikely to be prosecuted.
The robbers said that compared to robbing a convenience store etc it made as much cash but the risk was extremely low.
About five years ago I worked in an office that was above a physical therapy place. Sometimes patients would sneak upstairs and steal a laptop. We were able to recover one laptop: the guy who stole it sold it to a kid for $50 and when the kid came home, his Dad made him tell how he'd gotten it. The Dad found our number and said he'd give us back the laptop for the $50 his kid spent, which we were happy to do. Another time a laptop was stolen the thief wasn't smart enough to take the power cord.
I guess if you're desperate enough that you're willing to commit a crime for $50 then stealing a laptop is a better idea than robbing a convenience store but you still have to be pretty desperate.
A power supply is $70 retail from the OEM versus $500-1000 for the entire device. Unplugging and carrying a cable may have increased the risk of detection.
Passing morphine withdrawal is an interesting experience. I tried once, and it was by far the most physically intense pain I have ever experienced. Even with the most powerful sedative I could only cry in pain. If I was out of luck and on the streets I'd steal stuff to avoid it again. (Not that I would. Even entry-level coding is enough to avoid a junkie lifestyle. I did it just for the experience. Also, I gave up after a few hours.)
Knowing that the problem will be immediately resolved is well worth $50.
The cops were happy to come and take a report but they never seemed all that interested in solving the crime (doubtless its a very low priority). In the other stolen laptop case a wallet was also stolen and the thieves used a credit card at a gas station. We gave that information to the officer but we could never get them to return phone calls. If we had threatened the guy with arrest we probably wouldn't be able to actually back up that threat. Why risk the cost of a new laptop plus the loss in productivity of setting up a new laptop, worrying about what information was on the hard drive, etc?
It's sad to think that a person can get away with a property crime in a medium-sized city and the cops will be indifferent, but that's the way it is.
if i had been the kid that bought a laptop for 50 dollars, and should have known it was to good to be true. I dont think getting my 50 dollars back would have been part of the conversation my dad had with the company that the laptop belongs to.
Amazingly, I think this is actually almost feasible, at least with regard to the "fencing" of the stolen product. If you only attempted to swindle $50 out of someone with this, it would very likely have a very high success rate.
Unfortunately, the economics don't work out w/respect to the risks/overhead involved in the theft of said product.
Fencing is illegal. If you have my laptop, you have to give it back to me, or you are yourself a criminal.
If, on the other hand, the scenario was real, why would I reimburse your kid's foray into stolen goods? He got the $50 in the first place, he spend them on crime, he should "do the time".
Yeah but back then laptops would have been in the $1000-2000 range generally. Even without a PSU I would imagine you'd get at least $100-200 from a pawnbroker.
IMO if youre robbing or stealing then you're generally pretty desperate or have an addiction of some sort.
I saw one of these transactions go down a month or so ago in my town (a DC suburb). A somewhat ragged looking woman was lugging a large bottle of tide down the street. Another person waved at her and they approached each other in the middle of a crosswalk. They haggled for a brief moment, the Tide changed hands, and they went on their respective ways. My husband and I were totally confused as to what we'd just seen. Now we know!
I have been curious, since I moved to the LES in NYC a year and a half ago, why the Duane Reade near me had security dongles with metal cables attached to the handles of Tide and other premium detergent and on nothing else in the store. Now I know.
[edit] this comment's reference: http://news.ycombinator.com/item?id=5024191 suggests that my local Duane Reade may have simply fallen victim to paranoia induced by a viral and perhaps inaccurate news article. I'm inclined to investigate further.
[edit again] the end of the article mentions another Duane Reade in NYC that had someone steal a great deal of Tide detergent. I now wonder if there is, in fact, a black market for tide, or if this thief fell victim to viral misinformation, causing Duane Reade (equipped with the same misinformation) to also over-respond.
Reminds me of the time I was carded when I bought Baking Soda.
I see a lot of weird shit on the internet, I generally like my reality to be a bit more logical, but every once in a while something really does make me say WTF.
Yeah, how do you walk off with 20 bottles of detergent anyway, let alone 100? Ignoring the questionable issue of clerk attentiveness, how do you physically hold that many bottles at once? And what are these drugdealers doing, driving around with tractor trailer trucks to hold all their "money"?
1. Case the stores camera policy and times that loss management comes and leaves.
2. Watch for lazy employees.
3. Load up a shopping cart (20 bottles would fit, be pretty heavy.
4. Push cart out door.
I've seen some pretty brazen theft before. A gas station down the road from me lost a large display of cigarets when two people walked in picked it up and carried it off when the cashier was dealing with a flooding toilet (most likely caused by them before a short time before).
I could maybe see it with 20 with a cart, but 100 seems like quite a stretch.
Also if they are presumably loosing many thousands of dollars a week to the theft of something so bulky, how the hell haven't they figured out a way to prevent that sort of theft?
If it's happening, my money is on them being in on it somehow because it's really just ludicrous otherwise.
Many stores will not do anything to physically stop shoplifting; they may call the police but they won't stop you. (A Whole Foods employee was fired for attempting to stop a shoplifter, because employees are not allowed to touch customers.) So I imagine you'd just fill a cart with Tide and push it out.
After reading through this a second time, I'm convinced it's an elaborate press release. Way too much of the article is devoted to the benefits of Tide and why people are so brand loyal.
Also, many of the quotes and details given appear to be pretty tongue-in-cheek.
It seems that the writer at NYMag hit his word count by extending the background on the brand, since he had a ready source available with the marketing/PR department at Procter. I think this could have been more interesting if it went into the direction of exploring the economics at work.
Interesting read about the "Economic Theory of Bike Crime": "...Using this risk-return framework for crime, it begins to be clear why there is so much bike theft. For all practical purposes, stealing a bike is risk-free crime. It turns out there is a near zero chance you will be caught stealing a bike (see here) and if you are, the consequences are minimal. "
tl;dr: Thieves and crackheads are using Tide bottles as currency, because those are getting bought by some stores under their market value in order to turn a bigger profit.
I used to work in a supermarket in Australia, and we had a very similar problem. We'd lose $10,000 a month in Olay products, virtually all of which would end up at the local markets. It's not as uncommon as you might think
Honestly, I don't know. I think a lot of it has to do with the fragrance. Wearing clothing washed with a different detergent feels odd, at least to me. Also, one of the main odors that defines a "household scent" is the detergent used in that household. Maybe these factors help drive brand loyalty?
It's possible that this is a viral marketing campaign to get you to think exactly that. Other comments go into detail, but it seems impractical to do this on a large scale as mentioned in the article.
If you think a bit, you really can't come up with anything better. Gourmet coffee is a bad currency because it's very local and few people actually need it.
EDIT: And if it's already ground when you buy it, it's no good, by the way. ;)
Because Tide is universally popular in the US, amazingly so. You could go into a CVS or Walgreens in the US and 70%+ of the detergent on sale will be Tide branded.
Since people are always going to wash clothes, retailers can guarantee they'll shift, and it's virtually un-perishable - and because the margins on tide are rather low, shops will happily buy suspect goods: they're practically untraceable and will shift fast.
Practically everyone does laundry, but not everyone drinks coffee. And those who do drink coffee will have differing tastes and far more varying brand loyalty than the detergent market.
Because it is ubiquitous, there is constant demand for it, a consistently high retail price, and there are plenty of retailers willing to fence it in large quantities.
Interestingly, it would also be rather easy to counterfeit, assuming the fragrance isn't impossible to nail down. Wonder how long before we see that start happening...
I used to work retail. Well, during Bush the 1st. Anyway there are multiple markets. Its not like on the internet where there's pretty much ebay and nothing else. Locality and physicality breeds multiple markets.
One is a kid can probably walk out of his parents basement with a bottle of tide and mom and dad probably won't notice quite as obviously as if the kid walked off with a $20 bill. So at least some Tide is from unemployed teens smoking up via mom's walmart bill. Obviously not terribly high volume, but...
Another is there is already a booming market in turning high value food stamp food into money for "whatever". Our food store was surrounded by bars where a cold steak presented at the bar resulted in maybe half price in cash being returned, more or less. Also you can buy a steak OTC, cooked even, from the bar, for cheaper than we sold them. Whatever drug market operating in steaks is parallel or in competition with the existing food stamp market in steaks. This also explains the anecdote WRT food stamp corruption the crooks are always buying stacks of steaks with food stamps... they're the universal currency, not doritos or rice bags or whatever. If you're trying to turn stamps into cash you buy steaks. (yes I'm old, and I'm well aware its a debit card like scheme now, but nothing really changes with the market)
I imagine it depends on definitions. I bought a dozen pairs of socks in November; does that count as 12 pieces of clothing or 24 pieces of clothing? Do the hiking boots I bought count as clothing? And if a new parent is buying baby clothes, who is the consumer -- the parent or the baby?
The latter point is probably not as important since we're talking about averages anyway.
I would imagine boots do not count since we're talking about detergent here, although some shoes can be thrown into the washing machine.
There are three comments about socks now :-) But to get to 68 you'd still have to buy 34 pairs of socks. Even if you exchange some of them for shirts, pants and underwear, you'd need a pretty big sock drawer if you keep adding and adding every year...
The latter point is probably not as important since we're talking about averages anyway.
Well, unless you say that the baby isn't a "consumer", in which case your average is the same total number of items of clothing divided by a smaller number of consumers.
I throw away socks as soon as they get holes in, which is pretty frequent (I don't make any effort to take care of them, they're just socks). To replace them I buy a set of 5 pairs maybe three or four times a year. It doesn't seem completely implausible.
If we are counting an 8 pack of socks as 16 items of clothing, for example, 68 seems a sensible number. Counted otherwise the number sounds dubiously high.
I have 3 kids (singleton+twins). If my kids are not counted as consumers, then I hit this number by mid-year point each year (and we do use donated clothing from friends). If you count my wife (we buy under the same cards), 130-ish would be about accurate aggregated.
Whether this story is fully accurate or somewhat sensationalized, it seems as if the market accepts it. I was in a Duane Reade (convenience store/pharmacy, think CVS or Walgreens) recently in the LES, NYC and I was trying to figure out why they had alarm tags on most of the bottles of Tide, but none of the other brands that had similar value and value density. This explains a lot.
The undercover cop selling the nail salon $1000-worth of stolen goods for $30, then busting them for a felony is a little harsh and dishonest. They relied on a trick, too (including expensive items, like quality headphones, with the Tide, ONLY to push the "retail cost" of the goods over the felony-minimum).
Reminds me of a story I can't seem to google where a D.C. council woman was killed and robbed for her credit cards, which were used to rent a tanker truck and to buy thousands of gallons of gasoline, which (the plan was) was to be sold for cash back to another gas station (at a discount) in order to buy drugs.
Things like toothbrushes are locked up because they are relatively expensive but so small that they are easy to steal. You can just slide one up your sleeve while pretending to examine another one and then putting it back. It's not worth trying to identify or detain shoplifters over toothbrushes, but the costs of theft add up. Same thing with razor blades.
Used to work at a market as a grunt and later in mgmt doing orders. No supermarket orders pallets of blades. Cost per sqft to warehouse a pallet for years as they slowly sell or are stolen is too high.
If you're using it as a proxy for cost per volume then lately prices have exploded such that blades win, but the winners used to be pharmaceuticals, batteries, film (ye olden days), and oddly enough spices. Spices were good enough for galleons in the middle ages, so I guess its no great surprise. The price of a cardboard box full of genuine vanilla flavoring or maple syrup is fairly shocking if never considered before.
If you demand pallet level ordering / money laundering it is surely laundry detergent. Nothing else comes close in cost at the required pallet level sales volume. Certainly not $1/gallon distilled water pallets or $5 bags of road salt.
I'm not sure if that's the point. What they're doing is lowering expressed risk.
In a standard drug+robbery cycle (I'm guessing here):
Alice robs a Walmart/7-11/etc with armed force or intent to use armed force.
Alice gains $500.
Alice goes to Bob and pays the $500 to him for drugs.
Not only is Alice in danger (she can be prosecuted for armed theft), but the cash can be traced back to Bob putting him in danger. This also links Alice to Bob's drug dealing activities which stacks additional charges on Alice.
In a Tide-enhanced drug+robbery cycle:
Alice goes to the Walmart/7-11/Etc and walks out with 10 tubs of detergent (coordinating shift changes to make her escape). If caught, she can only be prosecuted for shoplifting which is at best a mark on the record.
Alice sells the tubs of Tide to Bob and grabs her drugs.
If caught with the tubs of Tide, Bob can deny any connection. In addition, as Cynthia, Darcy, Elizabeth, ... all shoplift Tide from the same store, that store's inventory of Tide detergent will be depleted. As it takes time for P&G to ship the Tide out, the store will have to rely on local-area suppliers of Tide which in turn will have bought the Tide from Bob at a markup.
As long as Bob is not caught with the drugs on him, he'll not face any charges (for possessing marked cash for example) as a bottle of Tide is deniable. Similarly, Alice will only face charges for shoplifting which carries a far more lenient sentence compared with grand theft.
They're not necessarily buying drugs directly with Tide--some of them are selling the Tide to a fence, then buying the drugs with cash. Even if that's not what's happening, it's possible that walking around with a ton of Tide is less suspicious than walking around with a ton of cash (at least until the police figure out what's happening).
People are addicts. They don't have cash. They get cash by burgling houses; mugging people; shoplifting tide (and other products); or prostitution.
Getting cash by shoplifting has advantages over burglary, mugging, and prostitution.
People selling crack are criminals. They have some organisation and are usually involved in other crime. Once you have the network and are committing crime selling Tide is just more profit.
Indeed. I expected a revealing that Tide was used as an ingredient to make drugs, like how baking soda is used to make crack. I didn't expect "brand loyalty" to be the TLDR.
Yeah, this has all the signs of a viral marketing campaign to me.
But some folks with long-established accounts on here confirmed that they've seen evidence of the Tide underground economy in and around DC.
I think the world would be a more interesting place if it turned out that Procter and Gamble had subcontracted some PR firm who trolled the shopkeepers, police and crackheads alike.
I don't think anyone would sign off on a viral marketing campaign whose message was "buying our product might make it look like you're about to buy drugs".
How so? The drug dealers are converting Tide back to dollars, and a significant portion of their business is still done with paper currency.
The drug user is who acquires the Tide, and then barters it for drugs. As other have pointed out, shoplifting Tide carries less risk than burglary, armed robbery, prostitution, etc.
If anything I think this speaks to the resourcefulness of drug users, and/or, the effectiveness of black markets.
Tide as a poor man's bitcoin.
TL;DR version - Laundry Detergent is pretty fungible, everyone needs it, and its difficult to trace, unscrupulous retailers will buy stolen tide for cash.
This situation provides crooks with a couple of benefits, one they can separate the money trail for selling drugs, after all who thinks this looks like a drug buy:
No way to connect Bob and Alice until you add:
Now you can connect them and see the drug deal. Hard to get a warrant to search Bob's car for laundry detergent.
And if you get sent to prison you can always exchange Tide for canned mackerel: http://online.wsj.com/article/SB122290720439096481.html
It's not really like bitcoin. For one thing it does not broadcast to the whole world whenever it changes hands.
I can't figure out why the unscrupulous retailer is buying Tide from anyone except P&G. Except that he knows Bob is up to something and willing to assist Bob.
Quote from the article: "Despite its popularity, Tide is not a big moneymaker for stores. P&G’s proprietary surfactants and enzymes are relatively expensive to produce, notes Bill Schmitz, a Deutsche Bank analyst, so Tide’s wholesale cost is steep. Only so much of that can be passed on to customers. “It’s so tight,” says Schmitz of the profit margin. In general, a retailer clears just a few percentage points on a Tide purchase. A store that charges $19.99 for a 150-ounce bottle might claim $2 in profit. But if it buys stolen bottles for $5, that jumps to $15."
"A few percentage points"? $2 in profit/$18 in cost is over 10%. That's nothing like the ~1-2% grocery store profit margin which I think of when I hear "few."
Quoting one source: "Total pretax profit for the industry in 2009 was about $5.2 billion," and "Convenience stores’ gross revenue for 2009 was more than $505 billion." "While the average gross revenue per store for cigarettes was about $576,354, the gross profit on those sales was closer to $89,923. Cigarettes are the second highest-ranking profit producers for convenience stores, after nonalcoholic beverages, which provide each store with about 18 percent of its profits." "Motor fuel [...] provides a gross profit margin of only about 6.4 percent"
That puts detergent a bit under the 15% margin for cigarettes, but a lot higher than the margin for the store as a whole, and higher also than the margin on motor fuel.
This is covered in the article. If the retailer's supply was exhausted by theft, their tracking system fails to alert them to reorder in time. They're in a bind and can't get supplies in time, so they turn to the local suppliers that very likely are selling them back the stolen goods.
I have no idea how to reconcile this scenario.
Can you explain it in more detail?
If alice is buying $100 worth of Tide, how much $drugs does she get for her $Tide?
How much $cash does Bob get for his $Tide when he sells it back to the store?
How much $Profit does the store get from the $Tide bought from Bob?
Alice steals $100 worth of Tide.
Alice doesn't care how much drugs she gets for that, because shop lifting is easier than prostitution and has lighter sentencing than robbing houses.
Bob sells his bottles for $5 each. That means the store can either sell at a big discount for friends, or can make more profit. The margins are not good on Tide.
This is in the article on page 3.
>Alice doesn't care how much drugs she gets for that
I think your explanation is wrong.
Alice would certainly care how much she got for $Tide, else she wouldn't see it as ($).
Bob is the lowest common denomiator here in that Bob must know that he can get $xY for $Tide from the store... whereas he is going to give minimal value for $Tide to Alice.
This is not only how Bob $Profits, but also how Bob lays low from the Law.
You think a crack addict is a rational actor?
From the article:
>While the driver kept the car idling, a heavily tattooed, spiky-haired detective named Alexander Mallari jumped out holding a laundry bag filled with a few bottles of Tide and lots of bonus items—a dozen pairs of Philips earphones, a dozen or so bottles of Victoria’s Secret perfume. Mallari’s mission was simple: He’d enter the shop, disclose that the items were stolen, and try to unload them.
>Ten minutes later, Mallari emerged with an empty bag and a small wad of money in his pocket. He was offered just $30—a pittance by the standards of the Tide trade. “That’s a true crackhead price right there,” Thompson said.
This is the drug that brought us "smurfing" - addicts would earn drugs by taking very many blister packs of OTC medication and popping the pills out of the blister packs to be used in making drugs.
Bob fences stolen goods from drug addicts because the margins are so good - and the margins are good because drug addicts just want enough money to get more drugs.
Addicts may be the most rational economic actors of all: each $10 can be a really, really big deal to an addict, and he will find the most efficient way, within his limited capabilities, to get it, whether that is smurfing, farming WoW, stealing copper pipe, etc.
I like Dan's explanation too but perhaps more directly.
Lets say that Tide is $20/bottle so $100 is 5 bottles. She then exchanges that for 5 tide bottles worth of drugs.
The value of the drugs is, by definition, 5 tide bottles.
The article discussed the value of buying stolen tide at a discount against retail in order to get better margins on their sales. The article claimed that the margins were roughly 150% better ($5 vs $2) although that number may have been made up by the author.
Bob prices his drugs in units of Tide bottles, the Store buying stolen tide establishes the exchange rate for Tide to Dollars. There is a 'posted' exchange rate of dollars to tide bottles, although the argument talks about people stealing Tide. This becomes low cost because apparently the store staff is unwilling to call the police, and the police apparently have issues because the monetary numbers are low enough that the crime is a misdemeanor rather than a felony.
So in our scenario Alice is risking getting arrested for shoplifting by stealing Tide bottles, Bob is risking being arrested for drug dealing or trafficking in stolen goods, the store is risking sanctions for buying stolen goods.
The entire point of the article was that because there is so little risk, this process of stealing Tide to buy drugs flourishes as actors in the system arbitrage the risk for cash (or drugs).
I think 'barter' would be a better term to sub this up.
a) Why would anybody sell drugs? Answer: Money.
b) Why would anybody need money? Answer: To buy some thing useful called X. If X is something like detergent, sugar, wheat even more better.
a) and b) imply in many cases it makes more sense to trade drugs for X than directly with money.
Drug dealers aren't bartering for Tide to use themselves, they're selling the stolen bottles back to stores. So it's not that.
> Alice goes to grocery gets laundry detergent;
No, Alice steals laundry detergent. The jugs are going for $5-$10 on the street, but $20 in the store. Nobody is buying the stuff from the store unless they're doing laundry.
Thanks for the TL;DR version
Real TL;DR version: journalist got trolled.
Or publication got lazy and ran a lightly-edited PR release paid for by Proctor and Gamble.
I grew up in a suburb in Australia that bordered a bad area where crime and drug dealing were rife, and I went to school with a lot of people from that area.
The network seemed to always have one product or another that was used as an informal currency. For years it was the Energizer brand AA battery, then it became prepaid cell phone minutes after one provider allowed users to send credit to each other (this was shutdown).
At one period it was Gillette Mach 3 razors, but then stores started putting them behind the counter so it didn't last long. Cigarettes were always a quasi-currency, I remember the value going from 20c to 50c, and cigarettes being exchanged for everything (and some smaller stores selling or buying them individually).
After I left the school I heard that the market had reverted back to batteries (there was always a battery market, I don't think I ever purchased batteries from a store), after a very brief period where the most shoplifted items in the local supermarket were cuts of meat and meat trays[0].
What these items all have in common is that they can be shoplifted from large supermarkets easily, are portable, easy to store, have a long shelf life (well, not the meat) and are essential household purchases even in poor neighborhoods.
I find interesting that even if you aren't involved directly in the drug trading, you are taking part in the surrounding economy by purchasing or exchanging these goods. I never bought drugs but my friends and I were always buying and trading these goods. I assumed that they would always end up back with the drug dealers somehow, who would find a way to convert them back to cash.
[0] Apparently this is an issue again in Australia - "GROCERY prices are rising because organised crime gangs are stealing hundreds of millions of dollars worth of meat" - http://www.news.com.au/national/organised-gangs-targets-meat...
Edit: an interesting related article from Forbes that came up in my Google search - "Why do people steal meat from grocery stores?", goes into the economics and details of shoplifting and is US-centric: http://www.forbes.com/sites/larissafaw/2012/12/24/why-do-peo...
The primary reason for using detergent as a currency, beyond the fact that the market for stolen Tide is so strong, is that shoplifting carries a far lower penalty than robbery or burglary -theft-.
If they were robbing the stores at knife point, or breaking and entering, the risk is significantly higher. This way they have a low risk, easy to turn over, virtually untraceable scheme, and that is obviously a very attractive thing.
Shoplifting is theft. I think you meant "robbery".
You are of course correct, I should have picked that up thanks!
A similar story: I read years ago that there was a gang of people that would steal laptops at airports when businessmen were tired and unattentive. The reason they gave was that it was easy to move them (this was 10 years ago so a Macbook Pro was about $5k) and if they got caught they could pretend they accidently picked it up instead of their own bag. If they got caught it was very unlikely to be prosecuted.
The robbers said that compared to robbing a convenience store etc it made as much cash but the risk was extremely low.
About five years ago I worked in an office that was above a physical therapy place. Sometimes patients would sneak upstairs and steal a laptop. We were able to recover one laptop: the guy who stole it sold it to a kid for $50 and when the kid came home, his Dad made him tell how he'd gotten it. The Dad found our number and said he'd give us back the laptop for the $50 his kid spent, which we were happy to do. Another time a laptop was stolen the thief wasn't smart enough to take the power cord.
I guess if you're desperate enough that you're willing to commit a crime for $50 then stealing a laptop is a better idea than robbing a convenience store but you still have to be pretty desperate.
A power supply is $70 retail from the OEM versus $500-1000 for the entire device. Unplugging and carrying a cable may have increased the risk of detection.
Passing morphine withdrawal is an interesting experience. I tried once, and it was by far the most physically intense pain I have ever experienced. Even with the most powerful sedative I could only cry in pain. If I was out of luck and on the streets I'd steal stuff to avoid it again. (Not that I would. Even entry-level coding is enough to avoid a junkie lifestyle. I did it just for the experience. Also, I gave up after a few hours.)
or return it and we wont press charges of possession of stolen property.
Knowing that the problem will be immediately resolved is well worth $50.
The cops were happy to come and take a report but they never seemed all that interested in solving the crime (doubtless its a very low priority). In the other stolen laptop case a wallet was also stolen and the thieves used a credit card at a gas station. We gave that information to the officer but we could never get them to return phone calls. If we had threatened the guy with arrest we probably wouldn't be able to actually back up that threat. Why risk the cost of a new laptop plus the loss in productivity of setting up a new laptop, worrying about what information was on the hard drive, etc?
It's sad to think that a person can get away with a property crime in a medium-sized city and the cops will be indifferent, but that's the way it is.
if i had been the kid that bought a laptop for 50 dollars, and should have known it was to good to be true. I dont think getting my 50 dollars back would have been part of the conversation my dad had with the company that the laptop belongs to.
1. Steal laptop.
2. Call victim and claim your kid bought stolen laptop for $50 and 'fessed up.
3. Claim you'd give it back for said $50
4. Profit $50.
4a. Appear innocent.
Amazingly, I think this is actually almost feasible, at least with regard to the "fencing" of the stolen product. If you only attempted to swindle $50 out of someone with this, it would very likely have a very high success rate.
Unfortunately, the economics don't work out w/respect to the risks/overhead involved in the theft of said product.
Unfortunately?
"Claim you'd give it back for said $50"
So now the father is in it too ?
Plot Twist: there never was any "kid"
Fencing is illegal. If you have my laptop, you have to give it back to me, or you are yourself a criminal.
If, on the other hand, the scenario was real, why would I reimburse your kid's foray into stolen goods? He got the $50 in the first place, he spend them on crime, he should "do the time".
Why would he do it if he can just ebay/cgl it for $200?
Yeah but back then laptops would have been in the $1000-2000 range generally. Even without a PSU I would imagine you'd get at least $100-200 from a pawnbroker.
IMO if youre robbing or stealing then you're generally pretty desperate or have an addiction of some sort.
I saw one of these transactions go down a month or so ago in my town (a DC suburb). A somewhat ragged looking woman was lugging a large bottle of tide down the street. Another person waved at her and they approached each other in the middle of a crosswalk. They haggled for a brief moment, the Tide changed hands, and they went on their respective ways. My husband and I were totally confused as to what we'd just seen. Now we know!
I have been curious, since I moved to the LES in NYC a year and a half ago, why the Duane Reade near me had security dongles with metal cables attached to the handles of Tide and other premium detergent and on nothing else in the store. Now I know.
[edit] this comment's reference: http://news.ycombinator.com/item?id=5024191 suggests that my local Duane Reade may have simply fallen victim to paranoia induced by a viral and perhaps inaccurate news article. I'm inclined to investigate further.
[edit again] the end of the article mentions another Duane Reade in NYC that had someone steal a great deal of Tide detergent. I now wonder if there is, in fact, a black market for tide, or if this thief fell victim to viral misinformation, causing Duane Reade (equipped with the same misinformation) to also over-respond.
At my local CVS in DC they moved the Tide to behind the counter.
Reminds me of the time I was carded when I bought Baking Soda.
I see a lot of weird shit on the internet, I generally like my reality to be a bit more logical, but every once in a while something really does make me say WTF.
This is listed as 'undetermined' on Snopes, for what it's worth. http://www.snopes.com/media/notnews/tide.asp
I don't quite buy it.
Yeah, how do you walk off with 20 bottles of detergent anyway, let alone 100? Ignoring the questionable issue of clerk attentiveness, how do you physically hold that many bottles at once? And what are these drugdealers doing, driving around with tractor trailer trucks to hold all their "money"?
This article doesn't pass the sniff test for me.
1. Case the stores camera policy and times that loss management comes and leaves. 2. Watch for lazy employees. 3. Load up a shopping cart (20 bottles would fit, be pretty heavy. 4. Push cart out door.
I've seen some pretty brazen theft before. A gas station down the road from me lost a large display of cigarets when two people walked in picked it up and carried it off when the cashier was dealing with a flooding toilet (most likely caused by them before a short time before).
I could maybe see it with 20 with a cart, but 100 seems like quite a stretch.
Also if they are presumably loosing many thousands of dollars a week to the theft of something so bulky, how the hell haven't they figured out a way to prevent that sort of theft?
If it's happening, my money is on them being in on it somehow because it's really just ludicrous otherwise.
Many stores will not do anything to physically stop shoplifting; they may call the police but they won't stop you. (A Whole Foods employee was fired for attempting to stop a shoplifter, because employees are not allowed to touch customers.) So I imagine you'd just fill a cart with Tide and push it out.
I recall the Daily article mentioned making the rounds last spring.
It jumped out at me because I had previously noticed conspicuous anti-theft tags on jugs of Tide in a downtown CVS, for what that's worth.
But are the tags because of actual theft, or because someone read the article and ordered tags be fitted?
Washing detergent is pretty expensive in the UK, and I can understand how people might start stealing the ultra-concentrates to pay for drugs.
Finish dishwasher tabs. £10 for a 39 box in the Co-op. Thats where the real money is if you ask me :-)
After reading through this a second time, I'm convinced it's an elaborate press release. Way too much of the article is devoted to the benefits of Tide and why people are so brand loyal.
Also, many of the quotes and details given appear to be pretty tongue-in-cheek.
I have to admit that before I caught myself, I was thinking "that's pretty impressive, maybe I'll buy Tide next time."
This story is 9 months old, it was first on local news (with the same source from the same police department):
http://baltimore.cbslocal.com/2012/03/14/tide-detergent-beco...
and again:
http://baltimore.cbslocal.com/2012/03/23/prince-georges-coun...
Then extended as a feature in The Daily later that month:
http://www.thedaily.com/page/2012/03/12/031212-news-tide-the...
Which lead it to becoming a subject on Snopes:
http://www.snopes.com/media/notnews/tide.asp
It seems that the writer at NYMag hit his word count by extending the background on the brand, since he had a ready source available with the marketing/PR department at Procter. I think this could have been more interesting if it went into the direction of exploring the economics at work.
Stolen bicycles are another example of a drug currency: http://blog.priceonomics.com/post/30393216796/what-happens-t...
Interesting read about the "Economic Theory of Bike Crime": "...Using this risk-return framework for crime, it begins to be clear why there is so much bike theft. For all practical purposes, stealing a bike is risk-free crime. It turns out there is a near zero chance you will be caught stealing a bike (see here) and if you are, the consequences are minimal. "
I'm surprised no one has made a money laundering joke yet.
I guess they wanted to be clean from lowly puns?
Those jokes made a clean getaway.
"You never know who's swimming naked until the tide goes out."
-Warren Buffet
To channel money through a source or by an intermediary.
This isn't reddit.
In your dreams. This isn't 2008 Hacker News either.
True enough, but it's still not the place for stupid pun threads.
tl;dr: Thieves and crackheads are using Tide bottles as currency, because those are getting bought by some stores under their market value in order to turn a bigger profit.
Thank you. I quit reading after a while because the author wouldn't just cut to the damn chase already.
I used to work in a supermarket in Australia, and we had a very similar problem. We'd lose $10,000 a month in Olay products, virtually all of which would end up at the local markets. It's not as uncommon as you might think
This article makes Tide almost sound like its worth the extremely high cost. I buy store brand everything for the most part. Am I missing out?
Honestly, I don't know. I think a lot of it has to do with the fragrance. Wearing clothing washed with a different detergent feels odd, at least to me. Also, one of the main odors that defines a "household scent" is the detergent used in that household. Maybe these factors help drive brand loyalty?
It's possible that this is a viral marketing campaign to get you to think exactly that. Other comments go into detail, but it seems impractical to do this on a large scale as mentioned in the article.
But I still don't get it. Why Tide in particular? Why not any other high-price bulk retail product? Why not gourmet coffee grounds, for instance?
If you think a bit, you really can't come up with anything better. Gourmet coffee is a bad currency because it's very local and few people actually need it.
EDIT: And if it's already ground when you buy it, it's no good, by the way. ;)
Because Tide is universally popular in the US, amazingly so. You could go into a CVS or Walgreens in the US and 70%+ of the detergent on sale will be Tide branded.
Since people are always going to wash clothes, retailers can guarantee they'll shift, and it's virtually un-perishable - and because the margins on tide are rather low, shops will happily buy suspect goods: they're practically untraceable and will shift fast.
Practically everyone does laundry, but not everyone drinks coffee. And those who do drink coffee will have differing tastes and far more varying brand loyalty than the detergent market.
"...talking about moving the Tide to stores “back home”—which in their case is Vietnam."
Not only popular in the US!
Because it is ubiquitous, there is constant demand for it, a consistently high retail price, and there are plenty of retailers willing to fence it in large quantities.
Interestingly, it would also be rather easy to counterfeit, assuming the fragrance isn't impossible to nail down. Wonder how long before we see that start happening...
Collect empty bottles and fill them with cheap blue stuff, put a layer of real tide on the top for the smell and viscosity. Probably already is.
I used to work retail. Well, during Bush the 1st. Anyway there are multiple markets. Its not like on the internet where there's pretty much ebay and nothing else. Locality and physicality breeds multiple markets.
One is a kid can probably walk out of his parents basement with a bottle of tide and mom and dad probably won't notice quite as obviously as if the kid walked off with a $20 bill. So at least some Tide is from unemployed teens smoking up via mom's walmart bill. Obviously not terribly high volume, but...
Another is there is already a booming market in turning high value food stamp food into money for "whatever". Our food store was surrounded by bars where a cold steak presented at the bar resulted in maybe half price in cash being returned, more or less. Also you can buy a steak OTC, cooked even, from the bar, for cheaper than we sold them. Whatever drug market operating in steaks is parallel or in competition with the existing food stamp market in steaks. This also explains the anecdote WRT food stamp corruption the crooks are always buying stacks of steaks with food stamps... they're the universal currency, not doritos or rice bags or whatever. If you're trying to turn stamps into cash you buy steaks. (yes I'm old, and I'm well aware its a debit card like scheme now, but nothing really changes with the market)
One page:
http://nymag.com/news/features/tide-detergent-drugs-2013-1/#...
[...] the average U.S. consumer buys 68 pieces of clothing a year [...]
I'm speechless. Can that figure be true?
I imagine it depends on definitions. I bought a dozen pairs of socks in November; does that count as 12 pieces of clothing or 24 pieces of clothing? Do the hiking boots I bought count as clothing? And if a new parent is buying baby clothes, who is the consumer -- the parent or the baby?
The latter point is probably not as important since we're talking about averages anyway.
I would imagine boots do not count since we're talking about detergent here, although some shoes can be thrown into the washing machine.
There are three comments about socks now :-) But to get to 68 you'd still have to buy 34 pairs of socks. Even if you exchange some of them for shirts, pants and underwear, you'd need a pretty big sock drawer if you keep adding and adding every year...
The latter point is probably not as important since we're talking about averages anyway.
Well, unless you say that the baby isn't a "consumer", in which case your average is the same total number of items of clothing divided by a smaller number of consumers.
I throw away socks as soon as they get holes in, which is pretty frequent (I don't make any effort to take care of them, they're just socks). To replace them I buy a set of 5 pairs maybe three or four times a year. It doesn't seem completely implausible.
If you include socks. Individual socks.
If we are counting an 8 pack of socks as 16 items of clothing, for example, 68 seems a sensible number. Counted otherwise the number sounds dubiously high.
I have 3 kids (singleton+twins). If my kids are not counted as consumers, then I hit this number by mid-year point each year (and we do use donated clothing from friends). If you count my wife (we buy under the same cards), 130-ish would be about accurate aggregated.
Whether this story is fully accurate or somewhat sensationalized, it seems as if the market accepts it. I was in a Duane Reade (convenience store/pharmacy, think CVS or Walgreens) recently in the LES, NYC and I was trying to figure out why they had alarm tags on most of the bottles of Tide, but none of the other brands that had similar value and value density. This explains a lot.
Perhaps the thieves are hoping for a clean get-away?
(Sorry ... someone had to do it)
The undercover cop selling the nail salon $1000-worth of stolen goods for $30, then busting them for a felony is a little harsh and dishonest. They relied on a trick, too (including expensive items, like quality headphones, with the Tide, ONLY to push the "retail cost" of the goods over the felony-minimum).
How is this not entrapment?
full text: http://nymag.com/news/features/tide-detergent-drugs-2013-1/#...
better yet: http://viewtext.org/article?url=http%3A%2F%2Fnymag.com%2Fnew...
I really like viewtext. To whoever made it, thanks!
Ronnie Roller (http://ronnieroller.com), who is also the creator of http://www.ihackernews.com
Reminds me of a story I can't seem to google where a D.C. council woman was killed and robbed for her credit cards, which were used to rent a tanker truck and to buy thousands of gallons of gasoline, which (the plan was) was to be sold for cash back to another gas station (at a discount) in order to buy drugs.
Bravo. Better than _The Suit is Back_ by a country mile. "If You're Watching, It's For You" (http://thelastpsychiatrist.com/2008/08/if_youre_watching_its...).
I guess this is why safeway locks up the most ridiculous things. Like toothbrushes!
Things like toothbrushes are locked up because they are relatively expensive but so small that they are easy to steal. You can just slide one up your sleeve while pretending to examine another one and then putting it back. It's not worth trying to identify or detain shoplifters over toothbrushes, but the costs of theft add up. Same thing with razor blades.
I have heard that razor blades are one of the most expensive items on a per-pallet basis that a supermarket sells.
and yet, the razor blades are right next to them not locked up. I remember that specifically because it seemed really strange
"Give 'em the razor; sell 'em the blades"
http://en.wikipedia.org/wiki/Freebie_marketing
Given you're replying to people talking about securing razors and making blades easy to steal, that's not really relevant.
It was late, and I apparently read that backwards.
Fair enough :)
Depends on the store I suppose. They are in my local drugstore, though it's a long time since I bought razor blades at a supermarket.
Used to work at a market as a grunt and later in mgmt doing orders. No supermarket orders pallets of blades. Cost per sqft to warehouse a pallet for years as they slowly sell or are stolen is too high.
If you're using it as a proxy for cost per volume then lately prices have exploded such that blades win, but the winners used to be pharmaceuticals, batteries, film (ye olden days), and oddly enough spices. Spices were good enough for galleons in the middle ages, so I guess its no great surprise. The price of a cardboard box full of genuine vanilla flavoring or maple syrup is fairly shocking if never considered before.
If you demand pallet level ordering / money laundering it is surely laundry detergent. Nothing else comes close in cost at the required pallet level sales volume. Certainly not $1/gallon distilled water pallets or $5 bags of road salt.
Is this for real? Seriously this is the definition sensationalism.
Sounds way way less convenient than cash to me.
Stealing cash from a store requires armed robbery. Stealing Tide from that same store is only shoplifting.
Ok, but if I'm hanging out on the corner selling drugs, do I really want to deal with a bunch of laundry detergent tubs?
I'm not sure if that's the point. What they're doing is lowering expressed risk.
In a standard drug+robbery cycle (I'm guessing here):
Alice robs a Walmart/7-11/etc with armed force or intent to use armed force.
Alice gains $500.
Alice goes to Bob and pays the $500 to him for drugs.
Not only is Alice in danger (she can be prosecuted for armed theft), but the cash can be traced back to Bob putting him in danger. This also links Alice to Bob's drug dealing activities which stacks additional charges on Alice.
In a Tide-enhanced drug+robbery cycle:
Alice goes to the Walmart/7-11/Etc and walks out with 10 tubs of detergent (coordinating shift changes to make her escape). If caught, she can only be prosecuted for shoplifting which is at best a mark on the record.
Alice sells the tubs of Tide to Bob and grabs her drugs.
If caught with the tubs of Tide, Bob can deny any connection. In addition, as Cynthia, Darcy, Elizabeth, ... all shoplift Tide from the same store, that store's inventory of Tide detergent will be depleted. As it takes time for P&G to ship the Tide out, the store will have to rely on local-area suppliers of Tide which in turn will have bought the Tide from Bob at a markup.
As long as Bob is not caught with the drugs on him, he'll not face any charges (for possessing marked cash for example) as a bottle of Tide is deniable. Similarly, Alice will only face charges for shoplifting which carries a far more lenient sentence compared with grand theft.
As an additional twist, Alice sells the tubs of Tide to Carol (a Bodega Owner), and then uses the cash she gets from Carol to buy drugs from Bob.
They're not necessarily buying drugs directly with Tide--some of them are selling the Tide to a fence, then buying the drugs with cash. Even if that's not what's happening, it's possible that walking around with a ton of Tide is less suspicious than walking around with a ton of cash (at least until the police figure out what's happening).
but easier to launder
People are addicts. They don't have cash. They get cash by burgling houses; mugging people; shoplifting tide (and other products); or prostitution.
Getting cash by shoplifting has advantages over burglary, mugging, and prostitution.
People selling crack are criminals. They have some organisation and are usually involved in other crime. Once you have the network and are committing crime selling Tide is just more profit.
A new take on Money Laundering? rimshot
Of course it would come to this. People need to pay more attention.
What a strange article. Almost feels like an April Fools Day joke.
Indeed. I expected a revealing that Tide was used as an ingredient to make drugs, like how baking soda is used to make crack. I didn't expect "brand loyalty" to be the TLDR.
Yeah, this has all the signs of a viral marketing campaign to me.
But some folks with long-established accounts on here confirmed that they've seen evidence of the Tide underground economy in and around DC.
I think the world would be a more interesting place if it turned out that Procter and Gamble had subcontracted some PR firm who trolled the shopkeepers, police and crackheads alike.
I don't think anyone would sign off on a viral marketing campaign whose message was "buying our product might make it look like you're about to buy drugs".
Oh fucking great, so now we can have the DEA confiscate your car because you have some laundry detergent in the trunk.
The last half of the article detailing the "detective work" (read: harassing destitute drug addicts) made me sick.
this speaks to effectiveness of traditional regulations on currency.
How so? The drug dealers are converting Tide back to dollars, and a significant portion of their business is still done with paper currency.
The drug user is who acquires the Tide, and then barters it for drugs. As other have pointed out, shoplifting Tide carries less risk than burglary, armed robbery, prostitution, etc.
If anything I think this speaks to the resourcefulness of drug users, and/or, the effectiveness of black markets.
They feel the need to use something other than dollars.
Right, we agree on that. However, for the reasons I explained above, it's not because of regulations on the dollar.