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Adventures in Aeron Chair Arbitrage

249 points by omarish 15y ago

rohin 15y ago
One additional point not mentioned in the post (written by me). If you buy a used Aeron chair, it's very likely you can sell it for the same price a couple of years later. Essentially you can lease the chair for free.
- whatusername 15y ago
  This point also applies to the $1 chair.
  - georgemcbay 15y ago
    The $1 chair is very unlikely to still be a chair in a couple of years if it is sat upon for ~4160 hours. Perhaps you could still sell it for $1 as firewood, though. If you're happy with a "doordesk" and a metal or wooden folding chair, more power to you. I bought my own personal Aeron years ago, I've used it at multiple different companies and at home when I was freelancing. In the approximately 10 years I've been sitting very comfortably on that ~$800 chair I've gone through dozens of thousands of dollars of now obsolete computer equipment (desktops and laptops). From that perspective combined with the fact that the chair is still in very much like-new condition, even paying $800 for it was well worth it, IMO. I'm also quite fond of the Ikea Galant height adjustable desk I also bought ~6 years ago, and that one doesn't have the premium price of the Aeron. I do like a good value... IME, the Aeron actually is a good value despite the high price.
    - whatusername 15y ago
      Granted. There is completely a place for good tools that make you more efficient and work better/longer/etc. My point was more that you could replace Aeron Chair with X (where X is anything that doesn't have a steep depreciation curve -- ie - something that's not a car or PC) If you buy a used "X", it's very likely you can sell it for the same price a couple of years later. Essentially you can lease "X" for free.
wycats 15y ago
It's worth noting that $300 for a day of manual work is considered a good salary in many parts of the country (and even in San Francisco).
- rohin 15y ago
  Agree 100%. However we had to front $1500 in capital and we nearly lost it all when the check initially wouldn't clear.
  - chlee 15y ago
    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).
    - deleted 15y ago
      [deleted]
    - bostonvaulter2 15y ago
      What about square?
      - bri3d 15y ago
        In my experience, many Craigslist buyers (especially of high-value / high-margin items) tend to be rather afraid of buying things on Craigslist, and would be unlikely to swipe their credit card with the seller's phone. Naturally this tendency will vary from market to market, and SF would probably be a good place to experiment with using Square in CL transactions.
      - chlee 15y ago
        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.
fookyong 15y ago
Great post. I think this is one of the fundamental lessons that all startups going through an incubator should learn: have a product, find a customer. The most basic, lowest-common-denominator example of this is arbitrage. Buy one product for X and sell it for X + 10%. If you can't do that with one product successfully that you know there is already a market demand for (e.g. chairs) then how on earth are you going to do it for your startup?
- borism 15y ago
  If you can't do that with one product successfully that you know there is already a market demand for (e.g. chairs) then how on earth are you going to do it for your startup? umm, by building something new, not reselling existing stuff?
brador 15y ago
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.
- krschultz 15y ago
  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.
  - binarysolo 15y ago
    You used to be able to easily scrape through CL RSS -> Yahoo! Pipes. Dunno if you're able to these days though.
- the_cat_kittles 15y ago
  cl updates every 15 minutes, its pretty much useless to scrape continually. If you really need to be first to the info, just scrape for a window on either side of when it updates I guess...
codenerdz 15y ago
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 neither buyer nor seller expect it and their view of the marketplace is limited to the time they hit search. And it is this view that they will use to determine a good price for an item. When I need to buy something that I need NOW, I try to choose the nearest, cheapest item, satisfying my requirements that is CURRENTLY available. Historical information doesnt come into play. Ebay: * Since I already have access to historical information(completed items) and I can use it to figure out how much to sell my stuff for, I dont see what Priceonomics bring to the table here. Again Im trying to figure out where you guys are going with this. From technology standpoint, all this content scraping, indexing and searching is interesting, but what problem are you solving and how do you plan to make money with it(short of arbitrage of aerons)
- gcb 15y ago
  also, judging from most deals i made on ebay/craigslist, 101% of them required me to call/email the seller to make sure what they were selling. specially for the lower-than-market value ads. and NOT excluding expensive ads such as cars. that alone would be a complex problem alone.
- nlh 15y ago
  You sort of answered your own question -- in both examples you specifically pointed out work that you have to do in order to calculate a price -- you need to sift through Craigslist items, keep track of what you find, apply a calculation, and come up with an estimate. Same for eBay. The work you're doing there takes time and has value, and Pricenomics is trying to capture that. I'm not intimately familiar with the company nor do I know if they'll figure out a viable business model, but I do see the intrinsic value in what they're proposing.
  - codenerdz 15y ago
kenjackson 15y ago
My roommate in grad school did this. He'd buy toys on clearance from local toystores, and then sell them on EBay for twice the price. He wasn't selective at all w/ respect to the actual toy. Just looked for large markdowns. He made decent money, but said that putting stuff in boxes and going to the post office was a hassle. He eventually stopped -- he was finishing med school at the time.
callmeed 15y ago
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 occasionally I'd hit gold and find a vintage Hawaiian shirt that fetches $200 (and cost $2). In the end though, you realize it's just a way to make some extra money. It's not a "business" IMO–and definitely not a scalable business. But you learn what sucks (like dealing with shipping & getting photos from a camera to eBay pre-Smartphone) and realize other people also feel that pain. That's where your business is. UPDATE: Downvotes, seriously? Read my reply down this thread. Some people on here are, frankly, ridiculous and have no clue how to engage in a meaningful discussion.
- ssharp 15y ago
  > 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 value and by being able to hold onto something until it sells for a proper value.
  - fennecfoxen 15y ago
    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.
- zecho 15y ago
nomadomatic 15y ago
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 make sure everything is as it was stated. You put the items, their details and their new prices (with your margin markup) online for buyers to peruse. If interested, they'll come by and pick up whatever they want. Like an online pawn store w/ local centers, except there's no pawning, just selling & buying.
- stinkytaco 15y ago
  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.
- marquis 15y ago
  There are people offering these services, for example Ebay has a Trading Assistant program.
- brc 15y ago
  Pawn shops make all their money on the interest on the loans. The buying and selling of goods is really the side line lower-profit leader to get people in the door. Most of the items for sale as just items that the owner failed to collect. There is a world of difference between a straight 2nd hand goods dealer and a pawn shop. Most of that difference is in the profit margin.
lambtron 15y ago
there have been stories of people who scavenge for used/old/rare books and resell them for an exhorbitant mark up (http://www.slate.com/articles/arts/culturebox/2010/10/confessions_of_a_usedbook_salesman.html http://www.slate.com/articles/arts/culturebox/2010/10/confes...) some arbitrage of used goods can be a business; but it ultimately depends on the effort required and sustainable the income generated.
- brc 15y ago
  Someone I know runs a very profitable business that is essentially a rare book finding/agency business. They provide a 1800 phone number + internet site. People who are looking for an out-of-print book give them the details. They search for the book. When they find it, they add 20% the price, charge the buyer, purchase the book at the list price and have it shipped to the buyer, and keep the 20% without ever touching the book. Essentially it's an agency business - I've often wondered why people don't find the books themselves, but it's a time/doing business internationally/inexperience type of thing. They would rather pay the extra 20% and have someone else deal with it. The true value of the business in in the dealers database which allows them to find a book very quickly by drilling down into who is most likely to have a copy, plus they have an exclusive deal with point-of-sale booksellers, whereby anyone who wanders into a bookstore looking for an out-of-print book can be given somewhere to go.
jrvarela56 15y ago
How did this make it to the top of the page?
- mapster 15y ago
  hackers like scrappy stories?
- mturmon 15y ago
  The abiding fascination of HN for Aeron chairs? http://www.hnsearch.com/search#request/submissions&q=aeron&start=0 http://www.hnsearch.com/search#request/submissions&q=aer...
ew 15y ago
You do realize that by having your buyer PayPal you the money you basically lost $50 on PayPal deposit transactions. I would have had him send me a corrected cheque instead.
kev009 15y ago
I can't tell if this is a joke or not? Some frail guys can't hack lugging chairs around so it's not a viable business model for anyone? This is a very viable business that you guys feel too entitled for. Open your eyes and guess what a pawn shop, antique store, used office furniture dealer, or IT equipment reseller do. It's not far off from this, but they aren't bitching about it and plugging a silly website.
- zem 15y ago
  it doesn't scale as well in terms of profits versus man-hours as the business models they're used to.
jpiasetz 15y ago
I see two problems with estimating price off craigslist. 1. List price is not the same as selling price 2. The averaging is being moved by "accessory items" i.e. http://priceonomics.com/computers/apple/macbook-air/ http://priceonomics.com/computers/apple/macbook-air/ shows a lot of things that aren't MacBook Airs in the low price bracket. Maybe tossing out anything that is a few SD away from the average would fix that.
the_cat_kittles 15y ago
The most fun I've had doing this sort of thing is going to goodwill outlets (aka "the bins" ...of crap) and looking for stuff to flip. You pay by the pound, and the more you buy, the better the per pound rate. And your helping out goodwill with landfill costs. And your reusing something that would otherwise be trash. Everyone wins! You would be astounded at what you can find there... things worth well over 100 dollars show up regularly.
dotBen 15y ago
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.
binarysolo 15y ago
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... :/
- binarysolo 15y ago
  Seems like I missed the edit deadline. More free advice: Most flippers derive market price by using pre-existing marketplaces data like eBay/Terapeak and Amazon new/used to figure out where the market roughly sits. These venues have strong incentives to regulate listings into consistent item buckets to make sure people can't (CL)SEO listings like CL spammers ("2011 Macbook Pro" vs "2006 Macbook Pro with Office 2011", or the giant paragraph of hot items in small text and white font to catch your search attention). Once you get that magical price point/band, you can pretty much go to town with some basic clustering analysis. [Disclaimer: worked on a few private, weekend projects in this specific niche.]
jroseattle 15y ago
Maybe an interesting exercise, although the acquired "learning" of difficulty/challenges in shuttling large bulky items around without owning transportation...seems like maybe you should have seen that one coming?
ImaBauss 15y ago
Just out of curiosity what language is priceonomics written in?
- midas 15y ago
  We use all kinds of cool tools (maybe we should put them all on the site somewhere?), but we use python mostly. We love python!
leoalmighty 15y ago
You could combine priceonomics data + taskrabbit work force to scale the arbitrage business on high value items. ;)
deleted 15y ago
[deleted]
omegant 15y ago
Are you scanning craig list manually?. If done with a crawler, how you mannage to keep your site unbanned?
hockeybias 15y ago
Interesting - thank you! And Happy New Year to you all!
abhimir 15y ago
While making a sweeping statement about such business models not working, I guess the op failed to take notice of Gazelle.com, which has been in operation for 3 years now, has raised $46.4M in total with the last round being a series D of $22M. And guess what their business model is, arbitrage on used electronic products. So safe to say, such models can and do work. I also believe that these models will increasingly become more mainstream, because they save people 'time', time which is increasingly becoming the most precious resource that we have. You save 2 hours of time for someone, and pay him $40-50 dollars less than craiglist or ebay, and I am sure you can find a large percentage of people for whom the opportunity cost of 1 hours is more than $20-25, and voila, you have customers.
mkag 15y ago
The variance you are exploiting in this arbitrage setup is a result of the inherent variance in information about the chairs, i.e. uncertainty. Since they are used, there is lemon's principle at work. You can argue that Aeron's don't really depreciate in quality that much though over time so that variance in unjustified and in fact there should be some exact market price (perhaps as a function of time used, or more simply just dependent whether its used or new). But the thing is, more likely than not, that variance IS justified. Some of the chairs may be less broken than others. Some of the sellers may be less dependable than others. You can of course condition on this stuff - pick the low price chairs and mark them up by being the most dependable supplier, vouch for the chairs, become an expert in the chairs and be better at out the lemon's, but those things all add cost, so NOT doing all that work is already priced into the market. But cool experiment nonetheless! I have also found that I can buy a used Aeron, use it for a few years, and sell it back for like the same price. Not really a quickly depreciating asset .... maybe better than the stock market the last few years ...

249 points by omarish 15y ago

rohin 15y ago

One additional point not mentioned in the post (written by me). If you buy a used Aeron chair, it's very likely you can sell it for the same price a couple of years later. Essentially you can lease the chair for free.

whatusername 15y ago
This point also applies to the $1 chair.
- georgemcbay 15y ago
  The $1 chair is very unlikely to still be a chair in a couple of years if it is sat upon for ~4160 hours. Perhaps you could still sell it for $1 as firewood, though. If you're happy with a "doordesk" and a metal or wooden folding chair, more power to you. I bought my own personal Aeron years ago, I've used it at multiple different companies and at home when I was freelancing. In the approximately 10 years I've been sitting very comfortably on that ~$800 chair I've gone through dozens of thousands of dollars of now obsolete computer equipment (desktops and laptops). From that perspective combined with the fact that the chair is still in very much like-new condition, even paying $800 for it was well worth it, IMO. I'm also quite fond of the Ikea Galant height adjustable desk I also bought ~6 years ago, and that one doesn't have the premium price of the Aeron. I do like a good value... IME, the Aeron actually is a good value despite the high price.
  - whatusername 15y ago
    Granted. There is completely a place for good tools that make you more efficient and work better/longer/etc. My point was more that you could replace Aeron Chair with X (where X is anything that doesn't have a steep depreciation curve -- ie - something that's not a car or PC) If you buy a used "X", it's very likely you can sell it for the same price a couple of years later. Essentially you can lease "X" for free.

wycats 15y ago

It's worth noting that $300 for a day of manual work is considered a good salary in many parts of the country (and even in San Francisco).

rohin 15y ago
Agree 100%. However we had to front $1500 in capital and we nearly lost it all when the check initially wouldn't clear.
- chlee 15y ago
  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).
  - deleted 15y ago
    [deleted]
  - bostonvaulter2 15y ago
    What about square?
    - bri3d 15y ago
      In my experience, many Craigslist buyers (especially of high-value / high-margin items) tend to be rather afraid of buying things on Craigslist, and would be unlikely to swipe their credit card with the seller's phone. Naturally this tendency will vary from market to market, and SF would probably be a good place to experiment with using Square in CL transactions.
    - chlee 15y ago
      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.

fookyong 15y ago

Great post. I think this is one of the fundamental lessons that all startups going through an incubator should learn: have a product, find a customer. The most basic, lowest-common-denominator example of this is arbitrage. Buy one product for X and sell it for X + 10%. If you can't do that with one product successfully that you know there is already a market demand for (e.g. chairs) then how on earth are you going to do it for your startup?

borism 15y ago
If you can't do that with one product successfully that you know there is already a market demand for (e.g. chairs) then how on earth are you going to do it for your startup? umm, by building something new, not reselling existing stuff?

brador 15y ago

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.

krschultz 15y ago
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.
- binarysolo 15y ago
  You used to be able to easily scrape through CL RSS -> Yahoo! Pipes. Dunno if you're able to these days though.
the_cat_kittles 15y ago
cl updates every 15 minutes, its pretty much useless to scrape continually. If you really need to be first to the info, just scrape for a window on either side of when it updates I guess...

codenerdz 15y ago

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 neither buyer nor seller expect it and their view of the marketplace is limited to the time they hit search. And it is this view that they will use to determine a good price for an item. When I need to buy something that I need NOW, I try to choose the nearest, cheapest item, satisfying my requirements that is CURRENTLY available. Historical information doesnt come into play. Ebay: * Since I already have access to historical information(completed items) and I can use it to figure out how much to sell my stuff for, I dont see what Priceonomics bring to the table here. Again Im trying to figure out where you guys are going with this. From technology standpoint, all this content scraping, indexing and searching is interesting, but what problem are you solving and how do you plan to make money with it(short of arbitrage of aerons)

gcb 15y ago
also, judging from most deals i made on ebay/craigslist, 101% of them required me to call/email the seller to make sure what they were selling. specially for the lower-than-market value ads. and NOT excluding expensive ads such as cars. that alone would be a complex problem alone.
nlh 15y ago
You sort of answered your own question -- in both examples you specifically pointed out work that you have to do in order to calculate a price -- you need to sift through Craigslist items, keep track of what you find, apply a calculation, and come up with an estimate. Same for eBay. The work you're doing there takes time and has value, and Pricenomics is trying to capture that. I'm not intimately familiar with the company nor do I know if they'll figure out a viable business model, but I do see the intrinsic value in what they're proposing.
- codenerdz 15y ago

kenjackson 15y ago

My roommate in grad school did this. He'd buy toys on clearance from local toystores, and then sell them on EBay for twice the price. He wasn't selective at all w/ respect to the actual toy. Just looked for large markdowns. He made decent money, but said that putting stuff in boxes and going to the post office was a hassle. He eventually stopped -- he was finishing med school at the time.

callmeed 15y ago

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 occasionally I'd hit gold and find a vintage Hawaiian shirt that fetches $200 (and cost $2). In the end though, you realize it's just a way to make some extra money. It's not a "business" IMO–and definitely not a scalable business. But you learn what sucks (like dealing with shipping & getting photos from a camera to eBay pre-Smartphone) and realize other people also feel that pain. That's where your business is. UPDATE: Downvotes, seriously? Read my reply down this thread. Some people on here are, frankly, ridiculous and have no clue how to engage in a meaningful discussion.

ssharp 15y ago
> 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 value and by being able to hold onto something until it sells for a proper value.
- fennecfoxen 15y ago
  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.
zecho 15y ago

nomadomatic 15y ago

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 make sure everything is as it was stated. You put the items, their details and their new prices (with your margin markup) online for buyers to peruse. If interested, they'll come by and pick up whatever they want. Like an online pawn store w/ local centers, except there's no pawning, just selling & buying.

stinkytaco 15y ago
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.
marquis 15y ago
There are people offering these services, for example Ebay has a Trading Assistant program.
brc 15y ago
Pawn shops make all their money on the interest on the loans. The buying and selling of goods is really the side line lower-profit leader to get people in the door. Most of the items for sale as just items that the owner failed to collect. There is a world of difference between a straight 2nd hand goods dealer and a pawn shop. Most of that difference is in the profit margin.

lambtron 15y ago

there have been stories of people who scavenge for used/old/rare books and resell them for an exhorbitant mark up (http://www.slate.com/articles/arts/culturebox/2010/10/confessions_of_a_usedbook_salesman.html http://www.slate.com/articles/arts/culturebox/2010/10/confes...) some arbitrage of used goods can be a business; but it ultimately depends on the effort required and sustainable the income generated.

brc 15y ago
Someone I know runs a very profitable business that is essentially a rare book finding/agency business. They provide a 1800 phone number + internet site. People who are looking for an out-of-print book give them the details. They search for the book. When they find it, they add 20% the price, charge the buyer, purchase the book at the list price and have it shipped to the buyer, and keep the 20% without ever touching the book. Essentially it's an agency business - I've often wondered why people don't find the books themselves, but it's a time/doing business internationally/inexperience type of thing. They would rather pay the extra 20% and have someone else deal with it. The true value of the business in in the dealers database which allows them to find a book very quickly by drilling down into who is most likely to have a copy, plus they have an exclusive deal with point-of-sale booksellers, whereby anyone who wanders into a bookstore looking for an out-of-print book can be given somewhere to go.

jrvarela56 15y ago

How did this make it to the top of the page?

mapster 15y ago
hackers like scrappy stories?
mturmon 15y ago
The abiding fascination of HN for Aeron chairs? http://www.hnsearch.com/search#request/submissions&q=aeron&start=0 http://www.hnsearch.com/search#request/submissions&q=aer...

ew 15y ago

You do realize that by having your buyer PayPal you the money you basically lost $50 on PayPal deposit transactions. I would have had him send me a corrected cheque instead.

kev009 15y ago

I can't tell if this is a joke or not? Some frail guys can't hack lugging chairs around so it's not a viable business model for anyone? This is a very viable business that you guys feel too entitled for. Open your eyes and guess what a pawn shop, antique store, used office furniture dealer, or IT equipment reseller do. It's not far off from this, but they aren't bitching about it and plugging a silly website.

zem 15y ago
it doesn't scale as well in terms of profits versus man-hours as the business models they're used to.

jpiasetz 15y ago

I see two problems with estimating price off craigslist. 1. List price is not the same as selling price 2. The averaging is being moved by "accessory items" i.e. http://priceonomics.com/computers/apple/macbook-air/ http://priceonomics.com/computers/apple/macbook-air/ shows a lot of things that aren't MacBook Airs in the low price bracket. Maybe tossing out anything that is a few SD away from the average would fix that.

the_cat_kittles 15y ago

The most fun I've had doing this sort of thing is going to goodwill outlets (aka "the bins" ...of crap) and looking for stuff to flip. You pay by the pound, and the more you buy, the better the per pound rate. And your helping out goodwill with landfill costs. And your reusing something that would otherwise be trash. Everyone wins! You would be astounded at what you can find there... things worth well over 100 dollars show up regularly.

dotBen 15y ago

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.

binarysolo 15y ago

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... :/

binarysolo 15y ago
Seems like I missed the edit deadline. More free advice: Most flippers derive market price by using pre-existing marketplaces data like eBay/Terapeak and Amazon new/used to figure out where the market roughly sits. These venues have strong incentives to regulate listings into consistent item buckets to make sure people can't (CL)SEO listings like CL spammers ("2011 Macbook Pro" vs "2006 Macbook Pro with Office 2011", or the giant paragraph of hot items in small text and white font to catch your search attention). Once you get that magical price point/band, you can pretty much go to town with some basic clustering analysis. [Disclaimer: worked on a few private, weekend projects in this specific niche.]

jroseattle 15y ago

Maybe an interesting exercise, although the acquired "learning" of difficulty/challenges in shuttling large bulky items around without owning transportation...seems like maybe you should have seen that one coming?

ImaBauss 15y ago

Just out of curiosity what language is priceonomics written in?

midas 15y ago
We use all kinds of cool tools (maybe we should put them all on the site somewhere?), but we use python mostly. We love python!

leoalmighty 15y ago

You could combine priceonomics data + taskrabbit work force to scale the arbitrage business on high value items. ;)

deleted 15y ago

[deleted]

omegant 15y ago

Are you scanning craig list manually?. If done with a crawler, how you mannage to keep your site unbanned?

hockeybias 15y ago

Interesting - thank you! And Happy New Year to you all!

abhimir 15y ago

While making a sweeping statement about such business models not working, I guess the op failed to take notice of Gazelle.com, which has been in operation for 3 years now, has raised $46.4M in total with the last round being a series D of $22M. And guess what their business model is, arbitrage on used electronic products. So safe to say, such models can and do work. I also believe that these models will increasingly become more mainstream, because they save people 'time', time which is increasingly becoming the most precious resource that we have. You save 2 hours of time for someone, and pay him $40-50 dollars less than craiglist or ebay, and I am sure you can find a large percentage of people for whom the opportunity cost of 1 hours is more than $20-25, and voila, you have customers.

mkag 15y ago

The variance you are exploiting in this arbitrage setup is a result of the inherent variance in information about the chairs, i.e. uncertainty. Since they are used, there is lemon's principle at work. You can argue that Aeron's don't really depreciate in quality that much though over time so that variance in unjustified and in fact there should be some exact market price (perhaps as a function of time used, or more simply just dependent whether its used or new). But the thing is, more likely than not, that variance IS justified. Some of the chairs may be less broken than others. Some of the sellers may be less dependable than others. You can of course condition on this stuff - pick the low price chairs and mark them up by being the most dependable supplier, vouch for the chairs, become an expert in the chairs and be better at out the lemon's, but those things all add cost, so NOT doing all that work is already priced into the market. But cool experiment nonetheless! I have also found that I can buy a used Aeron, use it for a few years, and sell it back for like the same price. Not really a quickly depreciating asset .... maybe better than the stock market the last few years ...