6 ms·

This makes me wonder if it might be possible, for certain commodities, to buy out the entire market (across all retail websites) and immediately offer the items

This makes me wonder if it might be possible, for certain commodities, to buy out the entire market (across all retail websites) and immediately offer the items for resale at a higher price in order to expose naked offers. Though unlike doing the same on commodities exchanges, it would probably never be a profitable enterprise, as these naked sellers will simply cancel orders they can't fill.

shawnz 9y ago
> these naked sellers will simply cancel orders they can't fill. And risk the negative feedback?
- paulcole 9y ago
  They won’t get negative feedback but run a very real risk of getting booted off the platform. Preshipment Order Cancellation is a big part of the Order Defect Rate. Let that get too high and you won’t be selling on Amazon again. In most cases it’s worth taking a loss on an order to avoid canceling it.
ikeboy 9y ago
I've bought Amazon out on some items when they have a sale and then sold later for a profit. The best items to do this on is discontinued items that will still be in demand, as you can sure that eventually there will be no stock. Or when they have a significant sale on items that still sell reasonably well at regular price. The significant shipping fees for reselling mean you need to have a large discount. You also have costs of returns, storage, etc. You typically want a minimum of 15-20% gross ROI after those fees. For example, I've bought shavers at $180 and resold at $290-$300, from Amazon and on Amazon.
- amelius 9y ago
  I appreciate the frankness, but this is a lot like the usurious trade of concert tickets: not a very noble thing to do, to make an understatement.
  - a_t48 9y ago
    On the other hand, isn’t the alternative the product being impossible to find? Storage ain’t free.
  - ikeboy 9y ago
    It's fairly simple to show that trading in concert tickets is Kaldor-Hicks improving given reasonable assumptions. I've made the argument in the past. In this situation, it's arbitrage across time, and provides a benefit to customers buying later. It's meeting demand, which is good. It's only a tiny minority of my business, because it's a lot easier to buy in bulk from wholesale in many cases. I have talked to people that do millions just using this model, there's nothing wrong with it. Generally when Amazon has a sale they strictly limit how many you can buy to 3 or 27 or something, so it's not like you're buying out the market - just taking savings from when it's on sale and meeting demand at a different time.
    - Retric 9y ago
      You can't increase tickets for a popular event, but an optimal strategy will not sell out every ticket to every concert. Thus ticket resellers are a net loss of sales.
      - ikeboy 9y ago
        Ticket resellers only exist when the people selling the tickets directly price them below the market clearing price. Ticket resellers move tickets to people willing to pay more, which means they have a higher utility. If there were enough tickets for everyone that wanted to pay the set price there would be no room for profit for resellers. Oh and in general you can increase tickets by booking a larger place or doing whatever it is on multiple dates.
        leereeves 9y ago
        Measuring utility of luxury goods by price is saying that rich people enjoy the concert more than poor people, which is clearly untrue. Rich people pay more not because the concert offers more utility but because the same number of dollars offers less utility.
elil17 9y ago
Two futures traders actuall managed to buy every onion in America in 1955. They tried to sell them all in Chicago which lead to a massive price crash their and shortages everywhere else. Congress then passed the Onion Futures Act. https://en.m.wikipedia.org/wiki/Onion_Futures_Act https://en.m.wikipedia.org/wiki/Onion_Futures_Act
- pjc50 9y ago
  That's fantastic. It can sit alongside the https://en.wikipedia.org/wiki/Video_Privacy_Protection_Act https://en.wikipedia.org/wiki/Video_Privacy_Protection_Act as an example of fixing the narrow problem while carefully avoiding fixing or even considering the wider perspective.

shawnz 9y ago

> these naked sellers will simply cancel orders they can't fill. And risk the negative feedback?

paulcole 9y ago
They won’t get negative feedback but run a very real risk of getting booted off the platform. Preshipment Order Cancellation is a big part of the Order Defect Rate. Let that get too high and you won’t be selling on Amazon again. In most cases it’s worth taking a loss on an order to avoid canceling it.

ikeboy 9y ago

I've bought Amazon out on some items when they have a sale and then sold later for a profit. The best items to do this on is discontinued items that will still be in demand, as you can sure that eventually there will be no stock. Or when they have a significant sale on items that still sell reasonably well at regular price. The significant shipping fees for reselling mean you need to have a large discount. You also have costs of returns, storage, etc. You typically want a minimum of 15-20% gross ROI after those fees. For example, I've bought shavers at $180 and resold at $290-$300, from Amazon and on Amazon.

amelius 9y ago
I appreciate the frankness, but this is a lot like the usurious trade of concert tickets: not a very noble thing to do, to make an understatement.
- a_t48 9y ago
  On the other hand, isn’t the alternative the product being impossible to find? Storage ain’t free.
- ikeboy 9y ago
  It's fairly simple to show that trading in concert tickets is Kaldor-Hicks improving given reasonable assumptions. I've made the argument in the past. In this situation, it's arbitrage across time, and provides a benefit to customers buying later. It's meeting demand, which is good. It's only a tiny minority of my business, because it's a lot easier to buy in bulk from wholesale in many cases. I have talked to people that do millions just using this model, there's nothing wrong with it. Generally when Amazon has a sale they strictly limit how many you can buy to 3 or 27 or something, so it's not like you're buying out the market - just taking savings from when it's on sale and meeting demand at a different time.
  - Retric 9y ago
    You can't increase tickets for a popular event, but an optimal strategy will not sell out every ticket to every concert. Thus ticket resellers are a net loss of sales.
    - ikeboy 9y ago
      Ticket resellers only exist when the people selling the tickets directly price them below the market clearing price. Ticket resellers move tickets to people willing to pay more, which means they have a higher utility. If there were enough tickets for everyone that wanted to pay the set price there would be no room for profit for resellers. Oh and in general you can increase tickets by booking a larger place or doing whatever it is on multiple dates.
      - leereeves 9y ago
        Measuring utility of luxury goods by price is saying that rich people enjoy the concert more than poor people, which is clearly untrue. Rich people pay more not because the concert offers more utility but because the same number of dollars offers less utility.

elil17 9y ago

Two futures traders actuall managed to buy every onion in America in 1955. They tried to sell them all in Chicago which lead to a massive price crash their and shortages everywhere else. Congress then passed the Onion Futures Act. https://en.m.wikipedia.org/wiki/Onion_Futures_Act https://en.m.wikipedia.org/wiki/Onion_Futures_Act

pjc50 9y ago
That's fantastic. It can sit alongside the https://en.wikipedia.org/wiki/Video_Privacy_Protection_Act https://en.wikipedia.org/wiki/Video_Privacy_Protection_Act as an example of fixing the narrow problem while carefully avoiding fixing or even considering the wider perspective.