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Comment by AussieWog93 | Hacker News Reader

>Nice, what are the gross/profit margins of an eBay store?

For us (retro games), it's about 50% overall. Of course, this varies greatly from product to product.

Interestingly, most of our higher value products tend to also be higher margin. We've increased revenues significantly by focussing more energy on getting promotions right for said high value, high margin listings.

>Know it depends on what you sell but always interested in launching one.

Then do it. Buy something undervalued from Facebook Marketplace and flip it, or import a small batch of a product with low local competition from Alibaba.

You can optimise from there, but starting small is absolutely a great way to learn the ropes. Worst case scenario, you've lost a couple of hundred bucks and learned a valuable life lesson.

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This is what worries me, about our society and way of life in general.

I look at your margins, high ~50%. I look at what you sell, retro games. Not a necessity and also not something that more can be made of, so fairly safe. Unless there is a downturn, then I hope that you have something tucked away.

I look at the recommendation: "Buy something undervalued from Facebook Marketplace and flip it, or import a small batch of a product with low local competition from Alibaba."

And I look around and see the same pattern being repeated. People becoming middle men, inserting themselves in supply chains and charging margin. Rise and repeat and you get more people just repackaging and charging more for what are simple products or things that people might want but do not need.

I dislike this sort of activity because the more margins that are paid mean the more money is siphoned off, fine for luxury good not so great for necessities.

I worry because as more of our economy is devoted to this activity, when there is a downturn large numbers of people lose their jobs.

I hate it morally because it goes against my views of a "good" society. We have created societal structures where people are close to the decision making process where as before we had Kings and courts. We have the ability to do the same with manufacturing, where the people could order directly and not through the "courts".

The guy is basically a flipper and provides no value. He buys up stuff off the market at a low price using his existing capital and then puts it back on the market at a higher price.

It’s literally no different than the market manipulation you’d see on World of Warcraft or some other game where there’s a marketplace. People with a ton of money would buy up items at a lower price and then relist them at a ridiculous price - all the while having bots to watch for any listings that were significantly under theirs to make sure no one would buy except from them.

I hate how this is considered a “business”. What a joke.

So they already replied and said they buy wholesale or refurbish, but even if they were purely flipping that still provides some value. If they can buy low and turn around to sell high, the obvious question becomes "why doesn't the original seller just sell at the higher price if that's what it goes for?"

Either they are better at reaching customers who are willing to pay more (which provides value, that's a sale that wouldn't have happened if the customer doesn't know to look where it's cheaper) or the original seller just wants cash now and doesn't care about getting max price (in which case the reseller is being paid to supply liquidity and take on some risk of not being able to offload it or it goes down in price).

I think that resellers have some use in a market.

Rye bread for an example, I like rye bread but only eat it occasionally. Same with tomatoes and avocados. I and the farmers and manufactures can't deal with trying to juggle and maintain inventory.

But cars on the other hand, if you were to set up your manufacturing side with some inventory(so not JIT), you could make every car to order.

Imagine a world where you could go online, pick exactly every option and feature and then have the car delivered in a couple of weeks.

Instead of the current reality of dealerships who hold a large amount of inventory, have to negotiate for deals and search for the features you want.

I view it the same way that I viewed High Frequency Trading, sure the dealers and traders provide "liquidity" but the value for their margin they take is marginal.

> Imagine a world where you could go online, pick exactly every option and feature and then have the car delivered in a couple of weeks.

You can do this now: https://shop.ford.com/configure/edge/model/customize/se It just ends up being delivered/sold through a dealer. OK, so these days it will be more than a few weeks...

>It’s literally no different than the market manipulation you’d see on World of Warcraft or some other game where there’s a marketplace. People with a ton of money would buy up items at a lower price and then relist them at a ridiculous price - all the while having bots to watch for any listings that were significantly under theirs to make sure no one would buy except from them.

I don't get it how are they manipulating the market? Are they really cornering the market? If they haven't cornered the market, and are matching just below the price of competitors, isn't that the exact competitive behavior we want, driving down price?

Are you asking about the WoW example?

Let's say an item's near true market value is something like 10 gold (not going to get into how that is determined but let's just go with it). It's going for 10g normally. You have 10,000g+. You decide to buy out the entire market from 0-25g. You can do this because the market for this item might not be gigantic and/or you have so much gold to afford this.

You relist the item for 30g. You setup a bot to buy anything listed under 30g before anyone has much of a chance to see it. The only listing people will see is yours at 30g and those above you. Since you cornered the market and are basically the only listing - everyone has to buy from you for 3x the usual price.

You do this long enough - you get a ton of gold out of it. Usually - the way the games try to correct this behavior so it doesn't happen all the time is through listing fees and other such things. It's to curb this kind of behavior - some even have listing fees that are directly tied to how much more you are selling this item over what you could get for selling it directly to an NPC. (To the point where it doesn't make sense to even list the item - only makes sense to sell it to an NPC)

It's extremely rampant in video games with any kind of market economy and thus why these mechanisms have to be put in place because otherwise it ruins the marketplace for many players. But - the great thing about our real world is that there are no controls for this! Thus, people can buy items for cheap, corner the market on that item, and make a killing. All the while - they take in real money from real people and give literally no fucking value to the system. They are purely rentiers.

So this ebay reseller has cornered the market on retro games? I find that hard to believe.

Thank you for your moral condemnation! It's especially appreciated as you fundamentally misunderstand how reselling works!

For what it's worth, most of my stock comes from smaller resellers themselves. I will buy large lots that are inefficiently packaged (say, an entire collection of 500 games) and split it into optimally-packaged smaller lots that collectively have more value to the consumer than the lot I bought. We also repair and refurbish huge amounts of consoles (and onsell what we don't refurbish to others who do) and would probably divert an entire pallet of faulty stock every 6 months from ewaste.

Of course, sometimes we do stumble across undervalued small lots and flip them for immediate profit. In these instances, we're absolutely flexing our capitalistic muscle all over people who can't afford to spend $20 on an undervalued N64 game worth 5x that.

>People becoming middle men, inserting themselves in supply chains and charging margin. Rise and repeat and you get more people just repackaging and charging more for what are simple products or things that people might want but do not need.

I understand where you're coming from, but I think you're misunderstanding why many people buy the things they do.

Most consumer purchases outside of food, rent and utilities aren't sacrifices made to made to optimally meet a physical need but instead a fun activity that the consumer engages in order to make them feel special/important.

You can see this in economic terms if you go to buy a second-hand appliance, for example. A current-model washing machine that costs $800 in store might cost $300 on Gumtree or Facebook.

Even accounting for the depreciation (which might be $50 on a year-old machine), less than half of the perceived value is actually in the washing machine itself. The rest comes from the luxury experience of purchasing a new appliance - looking up reviews online, comparing prices, convincing yourself that this particular model is optimal, going down to the nice store to get it, haggling the guy down and finally unwrapping your shiny new thing.

It may not be an optimal distribution of resources in terms of achieving mankind's greater goals, but most retailers are a luxury service just like wedding photography, fine dining or high-class escort services.

We exist to meet a demand.

The other reason that prices are way cheaper second hand is that the buyer is taking the risk of buying a lemon - versus some sort of guarantee (usually) when you buy new. The seller has more information about the object in question than the buyer (i.e. wifi card on laptop is flaky, for example), so buying secondhand implies more risk, which drops the exchange price.

I think that this affects the price of new vs used moreso than the experience of purchasing it.

Again, though, most of the economic value of that is in the experience itself. The retailer reassures you with a warranty and you do avoid the small risk of painful emotions (humiliation/disappointment) should something go wrong with an informal transaction.

The short-term failure rate of second hand goods is nowhere near the 50% that would be needed to justify the price difference in terms of pure rational economic terms, especially given that most informal sellers are happy to guarantee that a product is working at the moment of sale.

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