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Adventures in Aeron Chair Arbitrage

blog.priceonomics.com

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Re: Adventures in Aeron Chair Arbitrage

#81

Post by xsmasher »

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…

You're right, profit tops out well before you get to "big money," usually due to limits on either supply or time.

In the used clothes example you are either limited by time (I can only hit ten thrift stores in a week) or supply (there are only ten thrift stores in my area.) After that, how do you scale up?

Re: Adventures in Aeron Chair Arbitrage

#82

Post by philwelch »

quanticle wrote: post #51
fanboy123 wrote: post #29

Earlier quoted context omitted.

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.

I'm not sure I agree with the description of arbitrage as "riskless". The arbitrageur is accepting the risk that the arbitrage opportunity will go away in between the buy and the sell. This is true whether you're arbitraging salt via caravans across the Sahara or arbitraging currencies in millisecond trades.

It's the idea of simultaneous transactions that makes it riskless. Whether millisecond forex trades can be modeled as "simultaneous" is another question.

Re: Adventures in Aeron Chair Arbitrage

#83

Post by chlee »

bostonvaulter2 wrote: post #49
chlee wrote: post #7

Earlier quoted context omitted.

I used to do lots of reselling and arbitrage on Craigslist during my poor student days. Here's my experience. As a general rule of thumb, always ask for cash. Or ask for a cashier's check if the buyer is not comfortable with carrying large of cash around. Don't accept anything else (e.g. personal check or even paypal).

What about square?

I refused to deal credit card based payments b'c of chargebacks risks. With chargebacks, the credit card company will always side with their customers, often leaving the seller with no recourse to retrieve the money or the item sold.

In addition, there are enough scammers lurking around on craigslist that I didn't want to expose myself to those kinds of risks.

I was also buying/reselling items with fairly low-margins. Credit card processing companies e.g. square, paypal, etc. will only eat away at whatever little profit I was making at the end of the day.

Re: Adventures in Aeron Chair Arbitrage

#84

Post by gte910h »

chrisaycock wrote: post #57
fanboy123 wrote: post #29

Earlier quoted context omitted.

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.

> Purchasing something and reselling it later for a higher price is not arbitrage. Correct. It's called, "market making".

No, having fixed prices with a spread is market making. Taking other peoples offers is not market making.

Re: Adventures in Aeron Chair Arbitrage

#85

Post by philwelch »

callmeed wrote: post #67
notJim wrote: post #46

Earlier quoted context omitted.

This seems like Silicon Valley echo-chamber thinking at it's finest. If your definition of a scalable business is based on the number of VC rounds raised, or which prestigious incubator it comes from, then no, I suppose it's not a scalable business.

No my idea of a scalable business is correct: grow revenue without costs growing proportionally. Software is the perfect example: you write it once and (potentially) sell it infinity times. (Please don't nit pick my definitions unless you fundamentally disagree) Buying and selling used goods is absolutely not that. You're talking about searching, inspecting, paying (cash), storing inventory, selling, shipping, etc. A…

> searching, inspecting, paying (cash), storing inventory, selling, shipping, etc.

So Amazon was never a scalable business? Or netflix? You don't have to be sitting around a kitchen table selling nothing but bits for it to be scalable business.

Re: Adventures in Aeron Chair Arbitrage

#87

Post by gte910h »

callmeed wrote: post #67
notJim wrote: post #46

Earlier quoted context omitted.

This seems like Silicon Valley echo-chamber thinking at it's finest. If your definition of a scalable business is based on the number of VC rounds raised, or which prestigious incubator it comes from, then no, I suppose it's not a scalable business.

No my idea of a scalable business is correct: grow revenue without costs growing proportionally. Software is the perfect example: you write it once and (potentially) sell it infinity times. (Please don't nit pick my definitions unless you fundamentally disagree) Buying and selling used goods is absolutely not that. You're talking about searching, inspecting, paying (cash), storing inventory, selling, shipping, etc. A…

A scalable business is one where you find things get cheaper as you do more of the process. Software happens to be moreso than many other things (you still have to look at support costs, among others), but that doesn't mean it's the only industry.

Selling burrito franchises, car dealerships, and grocery stores all work very very well at scale, and are very scalable.

Re: Adventures in Aeron Chair Arbitrage

#88

Post by orangecat »

JoachimSchipper wrote: post #80
orangecat wrote: post #78

Earlier quoted context omitted.

The reverse can be true for both of those points. Raising the price to the market-clearing level increases the probability that it gets sold to someone who places a greater value on it.

Yes, but (value) - (price) still decreases. Higher prices are not good for the buyer, as should be obvious.

"The buyer" isn't necessarily constant. Suppose Alice values a widget at $100 and Bob values it at $200, and also that Alice spends much more time on Craigslist than Bob. If you sell a widget for $75 then Alice will probably buy it, which results in less consumer surplus than if you sold it for $150.

Re: Adventures in Aeron Chair Arbitrage

#89

Post by mattm »

funkah wrote: post #66
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…

Stop freaking out about downvotes. They are literally just meaningless numbers on a website.

Also, the upvote and downvote images are too close together. Sometimes I accidentally hit the wrong one - especially when browsing on my phone.

Re: Adventures in Aeron Chair Arbitrage

#90

Post by pbreit »

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.

> It is usually used to describe a riskless transaction.

In the academic sense, yes. In reality, no.

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