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This is the answer. NPR Planet Money did an episode on this a while ago, long before there were any real or perceived shortages of any goods. Even in good times

This is the answer. NPR Planet Money did an episode on this a while ago, long before there were any real or perceived shortages of any goods. Even in good times, this strategy tends to work: > Sam Cohen's business works like this: He walks into a big retail store and buys a bunch of stuff. Then he sells it on Amazon for more. It's straightforward and surprisingly lucrative. > This is a multimillion-dollar business for Sam — and for lots of other people who do the same thing. It's called retail arbitrage... https://www.npr.org/sections/money/2017/07/26/539552579/episode-629-buy-low-sell-prime https://www.npr.org/sections/money/2017/07/26/539552579/epis...

tartoran 7y ago
Why not buy it directly from the supplier? Why pay tax and a mark-up when it can be obtained for a similar price the department store got it for??
- danhak 7y ago
  Small-time individuals don’t get the same sorts of deals as major retailers.
  - refurb 7y ago
    Exactly. And many manufacturers will have minimum purchases, i.e. you need to buy a pallet of these, we won't sell them individually.
- smnrchrds 7y ago
  I am not sure if manufacturers will be open to selling directly to someone who is not buying a large enough quantities. But even if they are, they probably won't sell them to retail arbitragers. I cannot remember if it was from the same episode or another Planet Money episode, but I remember them talking to manufacturers who were unhappy with their products being sold online for prices much different than they intended to. The gist of it is that, if you are for example Coca Cola, you want people to think of your products as an everyday item they can drink anytime, not a luxury to be saved for special occasions. And if you are Apple, you won't want your product to end up in the bargain bin. Pricing is part of a brand's marketing strategy and identity. People who price products way out of the range the manufacturer envisioned are detrimental to their brand image and long-term market share.
  - mooreds 7y ago
    It wasn't until the 1970s (in the USA) that retailers could determine the price of goods in their store. Before then manufacturers could dictate the price of their goods (laws protected that). So retailers competed on other dimensions (service, location) rather than price. I learned this (and a lot more) from "Goliath": https://www.simonandschuster.com/books/Goliath/Matt-Stoller/9781501183089 https://www.simonandschuster.com/books/Goliath/Matt-Stoller/...
- nitwit005 7y ago
  For some products it can be cheaper to buy retail. The retailers use their buying power to get a lower price than anyone else gets. There have been incidents where all the mechanics go buy their oil from Costco, or all the bakers go buy their butter from Walmart. The savings were enough to justify it. You can generally skip the sales tax if you have a business license, or there's some way of registering purchases as being for resale (seems to vary by state here in the US).
- adrianmonk 7y ago
  It could be because conditions change too rapidly. Whatever you are buying and selling this week, it might be different next week. I know someone who sells a lot of stuff on amazon. It's mostly books, but they do a little retail arbitrage type stuff too. Sometimes it can be as simple as a store in their area having bought too much of something, so they put it on sale, whereas a store in someone else's area didn't, so there's the price difference. Or it can be a discontinued product that is still in demand but stores in one city have extra whereas stores in another city are out. The whole point of arbitrage is that you identify and exploit price imbalances. But imbalances tend to balance themselves out eventually, so it's often a temporary situation.

tartoran 7y ago

Why not buy it directly from the supplier? Why pay tax and a mark-up when it can be obtained for a similar price the department store got it for??

danhak 7y ago
Small-time individuals don’t get the same sorts of deals as major retailers.
- refurb 7y ago
  Exactly. And many manufacturers will have minimum purchases, i.e. you need to buy a pallet of these, we won't sell them individually.
smnrchrds 7y ago
I am not sure if manufacturers will be open to selling directly to someone who is not buying a large enough quantities. But even if they are, they probably won't sell them to retail arbitragers. I cannot remember if it was from the same episode or another Planet Money episode, but I remember them talking to manufacturers who were unhappy with their products being sold online for prices much different than they intended to. The gist of it is that, if you are for example Coca Cola, you want people to think of your products as an everyday item they can drink anytime, not a luxury to be saved for special occasions. And if you are Apple, you won't want your product to end up in the bargain bin. Pricing is part of a brand's marketing strategy and identity. People who price products way out of the range the manufacturer envisioned are detrimental to their brand image and long-term market share.
- mooreds 7y ago
  It wasn't until the 1970s (in the USA) that retailers could determine the price of goods in their store. Before then manufacturers could dictate the price of their goods (laws protected that). So retailers competed on other dimensions (service, location) rather than price. I learned this (and a lot more) from "Goliath": https://www.simonandschuster.com/books/Goliath/Matt-Stoller/9781501183089 https://www.simonandschuster.com/books/Goliath/Matt-Stoller/...
nitwit005 7y ago
For some products it can be cheaper to buy retail. The retailers use their buying power to get a lower price than anyone else gets. There have been incidents where all the mechanics go buy their oil from Costco, or all the bakers go buy their butter from Walmart. The savings were enough to justify it. You can generally skip the sales tax if you have a business license, or there's some way of registering purchases as being for resale (seems to vary by state here in the US).
adrianmonk 7y ago
It could be because conditions change too rapidly. Whatever you are buying and selling this week, it might be different next week. I know someone who sells a lot of stuff on amazon. It's mostly books, but they do a little retail arbitrage type stuff too. Sometimes it can be as simple as a store in their area having bought too much of something, so they put it on sale, whereas a store in someone else's area didn't, so there's the price difference. Or it can be a discontinued product that is still in demand but stores in one city have extra whereas stores in another city are out. The whole point of arbitrage is that you identify and exploit price imbalances. But imbalances tend to balance themselves out eventually, so it's often a temporary situation.