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Adventures in Aeron Chair Arbitrage

blog.priceonomics.com

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Re: Adventures in Aeron Chair Arbitrage

#31

Post by zecho »

fanboy123 wrote: post #29
zecho wrote: post #22

Earlier quoted context omitted.

Exactly. It's a hobby, but while scaling it up is hard to do, it is not impossible. Two stories. I wrote a program awhile back that would look for iPod Touches on my local Craigslist and would analyze the price for many different versions. If an individual iPod was available and was below mean price within a given time frame, I'd send the seller a note almost immediately. Then, if I purchased the item, I'd relist it…

Arbitrage is technically a set of simultaneous transactions where you buy and sell at the same time. Purchasing something and reselling it later for a higher price is not arbitrage. It is usually used to describe a riskless transaction.

If you want to get more precise, the benefit of simultaneous or near simultaneous transactions is reduced risk that prices will fluctuate. Arb is just an exploitation of different prices in different markets.

Re: Adventures in Aeron Chair Arbitrage

#32

Post by fennecfoxen »

ssharp wrote: post #20
callmeed wrote: post #14

Did you really think arbitrage of used goods could be a business? I think the best thing these types of experiments do is expose pain points and inefficiencies that you can make businesses out of. When I was in my ramen phase of startup life (and newly married), I used to (among other things) buy clothes at local thrift stores and resell them on eBay for a decent margin. You quickly learn what brands/items sell and o…

> Did you really think arbitrage of used goods could be a business? Yes. Some examples (depending on how loose you want to get with the term arbitrage. I'm using it as its used in this article) would include antiques/collectibles and used cars. It's obviously much better to operate in areas where 1) value is unclear and/or 2) goods may take time to sell. With those things, you can get an advantage by knowing the valu…

Indeed. What do you people think business is? Plenty of people operate perfectly reasonable used-goods businesses of the same nature at flea markets and the like. The question for Hacker News types is whether the business is scalable (depends on the local supplies of used goods, among other things) and whether there are more interesting businesses for you to be in.

Business needs to be demystified. Look at Princess Kate. Her family's business (worth millions, or billions, I forget) basically started with assembling party supplies into convenient boxes. If that's a business, anything can be a business.

Re: Adventures in Aeron Chair Arbitrage

#33

Post by phil »

quanticle wrote: post #30
callmeed wrote: post #14

Did you really think arbitrage of used goods could be a business? I think the best thing these types of experiments do is expose pain points and inefficiencies that you can make businesses out of. When I was in my ramen phase of startup life (and newly married), I used to (among other things) buy clothes at local thrift stores and resell them on eBay for a decent margin. You quickly learn what brands/items sell and o…

>Did you really think arbitrage of used goods could be a business? Isn't that basically the business model for antique dealers and pawn shops?

Yeah, but that suggests that the success condition is running a pawn shop. Probably not what you're after if you are a software startup that's just taken seed investment.

Re: Adventures in Aeron Chair Arbitrage

#34

Post by callmeed »

quanticle wrote: post #30
callmeed wrote: post #14

Did you really think arbitrage of used goods could be a business? I think the best thing these types of experiments do is expose pain points and inefficiencies that you can make businesses out of. When I was in my ramen phase of startup life (and newly married), I used to (among other things) buy clothes at local thrift stores and resell them on eBay for a decent margin. You quickly learn what brands/items sell and o…

>Did you really think arbitrage of used goods could be a business? Isn't that basically the business model for antique dealers and pawn shops?

err, yes, and I suppose used cars too. Maybe I should have been more specific.

But pawn shops don't get into YC and I doubt Cal Worthington ever raised a series C round on Sand Hill Road. Those types raise money via bank loans (if at all) and most people in the valley would call them "lifestyle businesses".

My point wasn't if such businesses exist but rather if Priceonomics really thought they could form a scalable business doing this. My guess is that they didn't (again, I don't know them and I'm often wrong). Rather, I think it was more of an experiment that would expose real business problems, validate ideas, create a case study, and/or make a little extra cash.

Re: Adventures in Aeron Chair Arbitrage

#35

Post by stinkytaco »

nomadomatic wrote: post #18

It’s unlikely Priceonomics could build a massively successful business arbitraging used goods if we have to take possession of them. Did you consider letting the buyers and sellers do the leg work? Setup a distribution center. Sellers who want to offload stuff scan the items and their details to you and you give them instant, fair quotes. If they like your offer, they bring the items to your center, and you check to…

This sounds more or less like a consignment store and pretty much what the amazon marketplace does, but with the work done by a middle man instead. The question is, would people be willing to put up with the higher price or reduced profit required by adding a middleman, or would someone always undercut you because they were willing to go straight to the consumer? It reminds me of all those "ebay shops" that popped up 5 years ago and just as quickly disappeared, though this could be as much about ebay changing their focus as any business pressures, I don't know enough about it to say.

With a consignment store the model works because you are willing to take the reduced profit to not have to put in the actual leg work it would require. People are also willing to pay the slightly higher prices because consignment tends to be in things like clothes that are difficult to buy online.

Re: Adventures in Aeron Chair Arbitrage

#36

Post by dotBen »

Right now eBay is already sitting on this data. In addition to the sale/non-sale price data, recently they've began to encourage (and sometimes force) you to very specifically categorize the item you are selling.

Combine with geolocation data for the buyer and the seller and they probably have a greater trove of data then you could get even with a biz dev deal with Craigslist -- main issue is that you have no idea whether an item in a given post was actually sold, and if so for how much.

I fear Priceconomics.com, as interesting as it is, will just work hard to prove a business model for this data that if successful will just be exploited by some engineers working at eBay who spin up a product to compete.

Re: Adventures in Aeron Chair Arbitrage

#37

Post by binarysolo »

As a fellow data scientist and former Craigslist/eBay item flipper and deal site (SlickDeals, FatWallet) hobbyist, my tidbit of experience and Sidebusiness 101: profit comes when sellers don't care to maximize due to circumstance.

Those circumstances include lack of product knowledge, urgency to move item, and value for their own time/convenience.

For the first problem, people have tackled it with eBay/Craigslist listing misspeller searches or just manually emailing for more info. I once bought a new sealed copy of a collector's game, Panzer Dragoon Saga (eBay price ~$500+ back then) for $20 from a seller who was liquidating an old stash of games and listed the item as "Panzer Dragoon Saturn" and couldn't get any hits.

The problem of illiquidity has some fun implications assuming you're willing to take some product risk. Back when I was in grad school in the Bay Area, I was flipping Fujiiryoki massage chairs (MSRP 5k, buying around 1-1.5k, flipping around 2.5-3k) and there are plenty more items out there. This requires either good product knowledge (tons of old Chinese people who I knew wanted these) or a data-driven way of identifying high-price-point items without much/any historical pricing data. This is a rather solvable problem that hasn't been tackled (that I know of) and can be a value point for your site I'd think.

As for buying liquid items low, subscribing to CL RSS feeds with the right search terms can do the trick, though I neither confirm nor deny that I may have once written a CL page refresher to buy Burning Man tickets at cost (instead of from scalpers who were charging hundreds more). Back when I didn't really value my time, offering to pick up at a time of their location/convenience and pay cash.

Misc selling tips as an enthusiast: and legit work/school email or Googlestalk-able email establishes you as a "real" person. A phone number is almost a must-provide these days too. Pay low(er) and always in cash (or cert. check at bank) but assure the buyer that you'll be there and make the transaction convenient and easy.

It's an addictive hobby, I know... :/

Re: Adventures in Aeron Chair Arbitrage

#38

Post by krschultz »

brador wrote: post #9

Any news from craigslist RE:bot policy update? That low altitude you're flying at can only keep you off radar for so long and you're building your entire business on shaky ground.

Can't you just get everything through RSS feeds? I don't think Craigslist would be able to even tell if you were doing it that way.

Re: Adventures in Aeron Chair Arbitrage

#39

Post by justincormack »

codenerdz wrote: post #11

I still dont get what priceonomics provides that craigslist or ebay doesnt. Craigslist: * Listings have "ASKING" prices and can easily negotiated down 5-20%. So even if you provide a historical information of "Asking Prices", its still not a 1-1 relationship to how much you expect to sell your item for or its "BUYING" price * I do question the value of historical information on CL: Its never been available, therefore…

There has always been a market for price info on collectibles antiques etc. they are just trying to make use of technology to expand this down to lower priced goods. Whether this is viable is less clear.

Re: Adventures in Aeron Chair Arbitrage

#40

Post by stryker »

callmeed wrote: post #14

Did you really think arbitrage of used goods could be a business? I think the best thing these types of experiments do is expose pain points and inefficiencies that you can make businesses out of. When I was in my ramen phase of startup life (and newly married), I used to (among other things) buy clothes at local thrift stores and resell them on eBay for a decent margin. You quickly learn what brands/items sell and o…

I'm going to assume that you're not talking about the secondary market for used goods, because that can most definitely be a business. See: ebay.com.

About arbitrage: I agree with you, to some extent. By definition, as more people notice the price differences and take advantage of them, the arbitrage will become less and less profitable. If you intend to build a business that will scale and prosper in the long term, you need to provide value to people and not tie yourself to short-lived arbitrage opportunities. I work in finance and that fact is plainly obvious to a lot of us.

However, there is value added when you give people information. Information isn't free. Someone has to go out there and find all the prices, organize them, and show them to people. The arbitrage differential will grow smaller and smaller as competition grows, but at no point will this information be free. Given the possibility to find cheaper prices, people will pay if it's worth their while. If it's not money, at least page views.

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