Is it possible to make money in internet resale?
May 8, 2007 5:58 PM Subscribe
Does anyone have experience buying things off sites like Dealspl.us, Modoshi and Woot, then reselling them (with markup) on Craigslist and/or Ebay? How did it work out? Is it possible to make a living this way? Any tips?
jbickers: That argument holds for any time one site or store charges more than the absolute lowest price ever to appear on the internet. And yet lots of people make money selling things at higher prices.
posted by aubilenon at 6:43 PM on May 8, 2007
posted by aubilenon at 6:43 PM on May 8, 2007
I know plenty of people who buy cheap (but new and still sealed) CDs and sell them for $2 - $4 more on eBay and make a rudimentary living from it. It's very time intensive and requires a great deal of knowledge (of both music and the marketplace), but it works. One thing it has going for it is that the listing fee for something like a CD is very small, so if it doesn't sell it's not a great loss. This would be a bigger risk with more expensive items, such as electronics.
posted by Dee Xtrovert at 7:05 PM on May 8, 2007
posted by Dee Xtrovert at 7:05 PM on May 8, 2007
On one hand, Woot regularly sells out, which means that Woot priced their thing lower than they could have, which means that some people would have been willing to pay some amount more to buy those things from Woot.
But to go from that to a real arbitrage opportunity, there are a handful more things to take into account.
First, you need to have buyers. Woot sells out some bizarre things, so my hunch is that they're creating demand -- at least part of the reason people buy from Woot is that it's Woot and checking Woot is part of their routine or entertainment, and the same thing sold somewhere else wouldn't provide as much value to them as it would from Woot.
This will be magnified by the turnaround time -- if you could get a widget on ebay at the moment it sells out on Woot, you'd be in a better position to meet some of that demand than if you had to wait for Woot to mail things out before you could list it.
But even assuming that the demand remains as high as when Woot sold out, you need to connect to those buyers. You're competing with all of the other overstock stores on the Web selling the same thing for not much more than Woot, and you need to find some way to communicate to the people that would have bought on Woot that they should check eBay some time later and not just forget about it right away.
And then there's transaction costs. Whatever arbitrage you can take advantage of in price is going to be eaten away by Woot shipping costs, eBay listing costs, and the time and effort required to pick up, repackage, and ship out the things you bought then sold.
The efficient-markets position on arbitrage is that if an opportunity existed it would already have been taken advantage of. While that's an extreme position, there's a nugget of truth in it -- you're not the first person to consider Woot arbitrage. Every other seller trying to take advantage of that situation presses the prices lower and lower.
My own feeling is that Woot creates its own demand, and that Woot purchases are essentially impulse buys, and that demand for Woot-sold items dries up right after the day's sales end. I don't think you'd make much on an individual item, and by the time you figure in the volume you'd need to actually make significant amounts, and take into account the times you were wrong and lost some or all of your purchase price, you couldn't make a living on it.
(Besides, at the point that you can handle the required volume, you'd be better off dealing with the people that supply Woot, Overstock, and so on directly.)
posted by mendel at 7:52 PM on May 8, 2007
But to go from that to a real arbitrage opportunity, there are a handful more things to take into account.
First, you need to have buyers. Woot sells out some bizarre things, so my hunch is that they're creating demand -- at least part of the reason people buy from Woot is that it's Woot and checking Woot is part of their routine or entertainment, and the same thing sold somewhere else wouldn't provide as much value to them as it would from Woot.
This will be magnified by the turnaround time -- if you could get a widget on ebay at the moment it sells out on Woot, you'd be in a better position to meet some of that demand than if you had to wait for Woot to mail things out before you could list it.
But even assuming that the demand remains as high as when Woot sold out, you need to connect to those buyers. You're competing with all of the other overstock stores on the Web selling the same thing for not much more than Woot, and you need to find some way to communicate to the people that would have bought on Woot that they should check eBay some time later and not just forget about it right away.
And then there's transaction costs. Whatever arbitrage you can take advantage of in price is going to be eaten away by Woot shipping costs, eBay listing costs, and the time and effort required to pick up, repackage, and ship out the things you bought then sold.
The efficient-markets position on arbitrage is that if an opportunity existed it would already have been taken advantage of. While that's an extreme position, there's a nugget of truth in it -- you're not the first person to consider Woot arbitrage. Every other seller trying to take advantage of that situation presses the prices lower and lower.
My own feeling is that Woot creates its own demand, and that Woot purchases are essentially impulse buys, and that demand for Woot-sold items dries up right after the day's sales end. I don't think you'd make much on an individual item, and by the time you figure in the volume you'd need to actually make significant amounts, and take into account the times you were wrong and lost some or all of your purchase price, you couldn't make a living on it.
(Besides, at the point that you can handle the required volume, you'd be better off dealing with the people that supply Woot, Overstock, and so on directly.)
posted by mendel at 7:52 PM on May 8, 2007
I have a friend who makes unbelievable amounts of money (in excess of 6 figures) buying stuff at thrift stores, flea markets, auctions, and other places and selling them on ebay
I am in this business too, part time. However it's not as easy as it looks... some knowledge and lots of research goes a long long way. I don't make a living, but I know people who do.
posted by teststrip at 9:02 PM on May 8, 2007
I am in this business too, part time. However it's not as easy as it looks... some knowledge and lots of research goes a long long way. I don't make a living, but I know people who do.
posted by teststrip at 9:02 PM on May 8, 2007
I wouldn't be surprised if you could occasionally make money this way. I would be astounded if it were possible to "make a living" this way, unless your standards for "living" are a lot lower than mine are.
posted by Steven C. Den Beste at 9:13 PM on May 8, 2007
posted by Steven C. Den Beste at 9:13 PM on May 8, 2007
I've done this several times. In fact, I currently have some InFocus projectors listed on eBay. I've sold MP3 players, other projectors and Roomba vaccuums as well. Ultimately, I've earned some lunch money.
I find it really interesting to see how fast the eBay market adjusts to an influx of supply after a good Woot. A little over a week ago Woot sold some Sony MP3 players for $50; the going price on eBay was $120-$150. Mine (and most others from woot) sold for about $70.
It only works with higher margin items because the transaction costs pile up fast. It costs a few dollars to list the item. When it sells eBay takes a little over 3%, PayPal takes 3%, shipping, etc.
It would not be a good way to make a living, a handful of products at a time. And my recent difficulty ("difficulty" is too meek a description) in getting exonerated after my account was suspended for "abusing eBay" (I wasn't) made me realize that I wouldn't want my livelihood to be dependent on their arbitrary rules and rule enforcement. eBay uses statistical analysis to flag accounts and takes a "shoot first, ask questions later" approach.
Part of why Woot! arbitrage is possible is simply the short length of the Woot sale. Once the 24-hour window is gone, that low price no longer exists.
posted by reeddavid at 11:23 PM on May 8, 2007
I find it really interesting to see how fast the eBay market adjusts to an influx of supply after a good Woot. A little over a week ago Woot sold some Sony MP3 players for $50; the going price on eBay was $120-$150. Mine (and most others from woot) sold for about $70.
It only works with higher margin items because the transaction costs pile up fast. It costs a few dollars to list the item. When it sells eBay takes a little over 3%, PayPal takes 3%, shipping, etc.
It would not be a good way to make a living, a handful of products at a time. And my recent difficulty ("difficulty" is too meek a description) in getting exonerated after my account was suspended for "abusing eBay" (I wasn't) made me realize that I wouldn't want my livelihood to be dependent on their arbitrary rules and rule enforcement. eBay uses statistical analysis to flag accounts and takes a "shoot first, ask questions later" approach.
Part of why Woot! arbitrage is possible is simply the short length of the Woot sale. Once the 24-hour window is gone, that low price no longer exists.
posted by reeddavid at 11:23 PM on May 8, 2007
Ebay is becoming a buyers market so this is probably going to be far harder to pull off (basically, things aren't selling for as much as they once did).
The trick to pull it off is to have some sort of knowledge that gives you an advantage for reselling things. By just buying from low priced sites on the internet, it will be tougher because you'll be competing against any savvy business person who knows how to use froogle. (Then again maybe they haven't)
However, often stores markdown stuff in the shop that could be sold somewhat successfully online at a heavy mark up. To pull it off, you need to learn when stores mark stuff down, and what can be resold at a profit.
Back in the day, one of the big bookstore chains would sell books without covers or obscure tomes at discount prices. Eventually the ones that didn't sell would go down to a dollar. Many of these same titles would resell on Amazon for $20+. To pull this sort of thing off though, you had to know what books would resell and which were the ones even thrift stores can't give away.
posted by drezdn at 6:18 AM on May 9, 2007
The trick to pull it off is to have some sort of knowledge that gives you an advantage for reselling things. By just buying from low priced sites on the internet, it will be tougher because you'll be competing against any savvy business person who knows how to use froogle. (Then again maybe they haven't)
However, often stores markdown stuff in the shop that could be sold somewhat successfully online at a heavy mark up. To pull it off, you need to learn when stores mark stuff down, and what can be resold at a profit.
Back in the day, one of the big bookstore chains would sell books without covers or obscure tomes at discount prices. Eventually the ones that didn't sell would go down to a dollar. Many of these same titles would resell on Amazon for $20+. To pull this sort of thing off though, you had to know what books would resell and which were the ones even thrift stores can't give away.
posted by drezdn at 6:18 AM on May 9, 2007
Ebay is such a weird marketplace and tends to have seasonal fluctuations. Summers can be a tough time to sell because it's a time when people are less likely to be sitting in front of their computers. I am a FT ebay seller and agree that it is a LOT of work and I don't come anywhere close to making 6 figures. My advice is:
-buy your own postal scale and print your postage at home so you aren't standing in line at the post office all the time
-order packing supplies from usps.com, the priority ones are free
-put delivery confirmation on everything you ship. it covers your ass on multiple levels.
-research your product really well so you can troubleshoot and intelligently answer questions
-keep track of all your expenses and mileage for tax purposes
-set up a spreadsheet tracking how much you are paying for your merchandise vs how much it sells for + expenses
-expect to hand over 20% of your earnings to the IRS
-if you don't hand over 20% to the IRS, plan on being audited, especially if you are a regular seller making any kind of income
-have return policies and be prepared to deal with the all kinds of random ebay disasters, such as stuff getting lost in the mail and stuff arriving broken
-spend a lot of time researching the ebay market and notice what sells and what doesn't. this will keep you from buying a lot of crap and listing it & having it not sell.
-always be very professional in your interactions with customers & leaving feedback.
posted by pluckysparrow at 7:05 AM on May 9, 2007 [1 favorite]
-buy your own postal scale and print your postage at home so you aren't standing in line at the post office all the time
-order packing supplies from usps.com, the priority ones are free
-put delivery confirmation on everything you ship. it covers your ass on multiple levels.
-research your product really well so you can troubleshoot and intelligently answer questions
-keep track of all your expenses and mileage for tax purposes
-set up a spreadsheet tracking how much you are paying for your merchandise vs how much it sells for + expenses
-expect to hand over 20% of your earnings to the IRS
-if you don't hand over 20% to the IRS, plan on being audited, especially if you are a regular seller making any kind of income
-have return policies and be prepared to deal with the all kinds of random ebay disasters, such as stuff getting lost in the mail and stuff arriving broken
-spend a lot of time researching the ebay market and notice what sells and what doesn't. this will keep you from buying a lot of crap and listing it & having it not sell.
-always be very professional in your interactions with customers & leaving feedback.
posted by pluckysparrow at 7:05 AM on May 9, 2007 [1 favorite]
There are some people who do it, as a read through the Fatwallet and slickdeals forums can attest. It appears that the value added part of doing this is research and convenience. In other words, you make money off people who don't know that Woot exists, or don't have the time or inclination to search the deals sites. Therefore, the amount of money you make is directly proportional to your ability to find rare deals and your availability to buyers who have more money than time. If you have ready access to a group of people who would pay you to essentially buy stuff for them, then go for it, but without access to these people you'll get nowhere.
The reason the deals sites exists is because they've figured out that they make more money actually helping people find deals(selling the research directly) than they would if they bought the deals and resold them.
I've sold a couple woots, but it's by no means a goldmine.
posted by Mr. Gunn at 9:27 AM on May 9, 2007
The reason the deals sites exists is because they've figured out that they make more money actually helping people find deals(selling the research directly) than they would if they bought the deals and resold them.
I've sold a couple woots, but it's by no means a goldmine.
posted by Mr. Gunn at 9:27 AM on May 9, 2007
I don't think this would work over the long-term, at least not via woot and such. Like mendel said, if you're really interested in making a living from sales, you need to be buying your product from wholesalers rather than end-sellers like these deal sites. Unfortunately, that means having a lot of start-up capital for product. I'm one of those "buys CDs and sells them for $2 - $4 more" people Dee mentioned, in a rather obscure subgenre market. I make a decent amount of sales, and yet I'm a little in the red and expect to be for a few more years, because every penny I make goes to new stock and supplies. To sell stuff successfully, first you need to buy a lot of stuff! For example, I guarantee that you'll eventually buy something that nobody but you wants, and when that happens, you'll need to be selling other things to make up for the cost. Something I have learned from the Ebay business: time sells (nearly) all things, but time also costs money.
Reeddavid's warning is important, as well, because you really can lose your Ebay account simply because someone (say, one of your competitors) reported a bunch of your items under the VERO program, or as "hateful and discriminatory", or whatever. There are probably ten different ways for somebody to axe your auction, and sellers have approximately zero rights on that site, so you should have a backup plan. IMHO it is as important to diversify in sales methods as it is in product. Think about where else you can sell and advertise your stuff (flea market? a personal website? other sites -- Amazon, CL, Myspace, Livejournal? festivals? local stores?) and develop those as well as Ebay.
posted by vorfeed at 12:41 PM on May 9, 2007
Reeddavid's warning is important, as well, because you really can lose your Ebay account simply because someone (say, one of your competitors) reported a bunch of your items under the VERO program, or as "hateful and discriminatory", or whatever. There are probably ten different ways for somebody to axe your auction, and sellers have approximately zero rights on that site, so you should have a backup plan. IMHO it is as important to diversify in sales methods as it is in product. Think about where else you can sell and advertise your stuff (flea market? a personal website? other sites -- Amazon, CL, Myspace, Livejournal? festivals? local stores?) and develop those as well as Ebay.
posted by vorfeed at 12:41 PM on May 9, 2007
I knew a guy around 1999 who had a business going where he and some commissioned "associates" would scour the city - flea markets, yard sales, church jumble sales etc - for used books, then sell'em on Ebay. The associates were all specialists in a particular field (eg romance novels, how-to books, history, etc) and they knew how to pitch the books. But I believe he got out of this by 2001.
posted by Artful Codger at 2:22 PM on May 9, 2007
posted by Artful Codger at 2:22 PM on May 9, 2007
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posted by jbickers at 6:39 PM on May 8, 2007