Economics in Ciudad Dario: The Business of Running Lines

This is the second installment in a series.  Check out the first installment here.


Liniero: A traveling door-to-door salesman, who sells common household items on credit.

So how doe running a liniero business work?  What do the linieros sell?  How do the linieros get their merchandise?  How could they make so much money? (Especially taking into account that they have to make a trip to the person’s house every time a payment is due.)

The business works as follows: at the top, the head of the operation uses start-up capital to buy stock from El Salvador and stores it somewhere in his house.  He hires distributors, and the distributors contract the actual linieros.  Each distributor hires numerous linieros to cover different routes, and assigns some linieros to sell stock, other linieros to collect payments, and a third group to do a little bit of both.  The distributor is essentially a middle man, who makes sure the linieros are covering their routes, collecting payments from the debtors, and keeping their hands out of the money jar.

I’ve heard that the liniero takes a 30% cut.  I am not sure how the rest of the money is divvied up, but the heads of the operations (people who “tienen lineas” or “have lines”) tend to be wealthy individuals.  Their wealth is probably due to the fact that they were likely already well-off before starting the liniero operation (they are the ones who put up the start-up capital), and to their ability to run numerous liniero operations simultaneously.  So, I would imagine their cut is larger than that of the liniero or the distributor, but I don’t know.

Linieros sell anything that sells, and what sells tends to be general household items.  Appliances, clothes, cloths, bed sheets, towels, flip-flops, pots and pans, dishes, silverware, hammocks, mattresses.  They carry a random assortment of these items around with them everywhere they go.  A liniero is, therefore, pretty easy to spot on the street.  He is that man (almost all linieros are men) carrying a large heavy duffle bag around.  A friend of mine who once worked as a liniero told me that the best part of his day was when he would sell the iron he was forced to lug around in his bag of goods. (The other source of complaints are the mirrors.)

How does the business make money?  The head of the operation buys a large shipment of household goods at the wholesale price.  He then doubles the price of the items for customers who pay upfront, and triples the price for those who pay in installments.

Why are people paying triple what the head of the operation paid for the same item?  Who are these people?  Is the whole business just one big scam?  I will try to answer these questions in the next installment.