Note the primary method that costed the man in the example here is return fraud. Both amazon and Paypal/eBay make return fraud very easy to do. And thus the system should be viewed as very unattractive to anyone selling stuff. You could quickly start turning a loss.
I also like how magically his entire inventory became "reserved" for a month. Competitors (with his own product) figured out how lock down his items preventing him from making further sales, which each sale guarenteed them a profit.
By the way, here's how to lock down someone's sales from Amazon's pages:
"Sometimes buyers purchase in-stock items along with advanced-sale items. When this occurs, the in-stock items might not ship until all the items in their order are ready for shipment. This item will be shipped out once the advanced sale item is in stock and ready to ship."
Order all of your "competitor"'s items and put a preordered item in with them set to simultaneously ship. Cancel them as you get orders. You can guarantee yourself their inventory until you can resell it at a higher cost while they eat the fees.
If that happens, you can contact Amazon seller support and have them cancel the order. Also, you can restrict the quantity any one customer can buy from you.
> I also like how magically his entire inventory became "reserved" for a month.
In fact I watched that happen. I'd put a Ripple Rug in my Amazon cart but didn't check out. As I recall it was just under $20 with Prime shipping.
When I came back to the cart a day or two later it was unavailable.
I checked the cart from time to time, and finally it came back at around $26. (It wasn't a full month, but it was a while.)
Went ahead and ordered it. It is a little tricky to form tunnels with it and keep them from collapsing, but if your cat is a natural tunneler he will probably make his own tunnels.
It turns out our tortoiseshell kitty is more of a jumper and climber, so she mostly just uses it as a lumpy rug for a nap when the sun hits it. We have one of those crinkly hoop tunnels too and she barely uses it. But give her a chance to climb on top of anything and she's there!
I thought about returning the rug but figured nah, it wasn't worth the effort and it didn't seem right to stick the seller with a return when there was nothing wrong with it but it was just not quite kitty's thing.
Now I just checked today and it's priced at $44 on Amazon shipped from the seller, or $40 direct from the seller for the new model with the round corners. Yikes, that's quite an increase, but probably still worth it if your cat is a tunneler.
BTW if you like cute cat photos, their website has some fun ones (even if you have no interest in the rug): http://ripplerug.com/
I'd aim more for Aliexpress to Amazon arbitrage. I've seen people selling stuff with 3-10x markup, Realtek SDR dongles, bluetooth speakers, etc. It's nuts. And I've seen people who know that still pay for it because they didn't want to wait for shipping.
The problem with this would be shipping times. I'm assuming this set up would be to list items on Amazon that you can purchase for cheap on Aliexpress? If so, Amazon buyers might not be happy with long ship times from China.
If they're shipping crates over to the US and sitting on the inventory then they're not doing arbitrage. That's vanilla reselling. They're even providing a service by offering considerably quicker shipping times.
Arbitrage makes money purely off of information disparities between the parties. The guy who is better plugged into the market is able to mark up items in the middle of a transaction without having to take on any risk or provide any service.
Arbitrage != asymmetric information. Arbitrage just means bridging different markets with different prices for the same item. The parties in one market may well be aware that the prices are different in another market, they just can't/won't/don't bother to access the other market.
Information disparity between parties in contrast is referred to as "asymmetric information".
The case of importing from Ali, holding inventory, then reselling in the US is still not arbitrage. Arbitrage is by definition riskless simultaneous buying and selling of the same product in different venues.
Since the Ali importer is buying and selling at different times, the importer is assuming the risk that the market clearing price in the US will change before their inventory can be sold.
One academic definition of arbitrage includes zero risk, but usually not in contexts where it refers to something that happens in the real world, perhaps given that it's impossible in reality.
Selling on Amazon has costs and benefits. This sort of scheme and Amazon's relative lack of merchant support are a few of the costs, but the benefits are that you get an incredibly stable, reliable, visible, trusted platform with a built-in audience.
I worked for a few years helping build a community around an arbitrage app (scan barcodes at Walmart, calculate your Amazon profit). There's really no end to people's ingenuity when it comes to identifying market inefficiencies. There's always going to be someone willing to take a risk and profit from it.
Why doesn't he also sell on eBay at the same price he lists at on Amazon? The arbitrage only works if there is a price differential between the two; by selling direct on both platforms there is no price difference to arbitrage. The arbitragers have also done him the service of free research to prove that demand on the other platform exists : he can even look at the auction records to estimate how much demand there is.
I was wondering the same thing but then thought perhaps Amazon fulfilment services are likely very attractive to him. But then he mentioned how he only had 1 return for rugs sold through his own site. So it sounds like he sells through Amazon and his own site, why not expand to eBay as well? Bad return policies maybe?
Enough of them don't that this eBay game becomes profitable. Consider the trouble and expense: All they're really doing is point-and-click throughout. You just need a few.
You are correct about this. As someone who sells a product on eBay and also contends with the counterfeits who are actually cheaper than mine. I still get plenty of sales, as do the cheaper counterfeits. It seems like people do not pay much attention.
eBay doesn't generally help shoppers make a good decision. Beyond the fact that the web site is a mess, they don't seem to care at all about listings which seem to attempt to match searches with results that aren't what people are looking for. For example: listings only selling the original box an item came in and not the item, listings for a part or manual - both of which make "price: low to high" searches useless.
Looking for certain used electronics (recently music synth stuff, in the past vintage test equipment), I tend to have to select a lot of filtering options: "North american sellers only", "Condition: Used", etc.
Amazon is just as bad, if not worse. (Not trying to excuse Ebay here.) I'll frequently do a search on Amazon and see some ultra-low price on something, then click on that to see the product. Half the time, the product page will have a bunch of different options, and the ones you want all cost far more, and only the ugly pink one is cheap, or the one in extra-extra-small. Or sometimes, I won't even be able to find the one at that ultra-low advertised price. Or it'll be in the "other sellers" section, along with a gigantic shipping fee.
Ebay doesn't show the lowest-price option by default; its default is "best match", whateverTF that is. You have to explicitly choose "lowest price + shipping". I'm in the habit of always doing this, and generally researching things to death when buying online to make sure I get the best deal, but I know I'm not a normal shopper. Most people just see something that looks good and click on it and buy it.
Now that's yet another marketplace they have to deal with. And when he was selling on Amazon, his product was in the Amazon warehouse. It wasn't until later that he began shipping things himself.
I don't pay for Amazon Prime, so between shipping and sales tax it often makes financial sense for me to buy a product from an eBay seller over Amazon even at a higher price. You'd think Amazon would want to stop this by banning Prime accounts used to ship to too many different addresses or something.
They shut them down once caught, and then it's easy to open another account and pay for prime all over again. There are some seriously big sellers who do this: http://www.ebay.com/usr/working*hard
You can search on ebay for "2 day shipping" and almost all of them are people doing this
> "The Juligo headlamp has become a top-selling item on Amazon. And we all know what happens to top-selling items: They get arbitraged. Other people -- Becker’s peers -- are now selling her headlamp on eBay and making a few extra bucks off her work. Does it bother her? “I think it’s awesome,” she says. “I can earn some income, and they can earn some income. It’s really fun to watch that.” "
of course she doesn't mind, her "product" is basically a quality control sticker.
> She developed a brand called Juligo, a niche in camping equipment, and found a particular hit with a headlamp. It’s just an ordinary, generic light made by a Chinese manufacturer, which she had stamped with her brand. “I’ve sold tens of thousands of those buggers, a ridiculous amount,”
however, would she still think it's awesome if someone else purchased those same headlamps from the Chinese manufacturer, put the same/similar sticker on it, had no quality control, and flooded eBay at lower cost?
The primary reason people use eBay over Amazon for the same product isn't lack of price comparision, it's shipping. A lot of these resellers offer to ship the product to a broader range of companies than Amazon. Anyone who has lived outside of the US will know exactly what I'm talking about. I live in Canada and Amazon.com will list a simple product for $20 and the same one will be $35 in Canada, for no apparent reason (that goes well beyond tarrifs). Plus shipping will be another $10 when it's nearly free in the US.
This is why 3rd party arbitrage is good for the economy. It fills in gaps in supply/demand.
Edit: also I should note that Ripple Rug looks awesome. Buying one for my cat. Articles like this talking about your business experience are good marketing engines :)
i wonder since he started shipping on his own, can't he put a note in the box and ask people to check if they paid more and give bad ratings to ebay sellers ?
In theory he could just have people pay him the lower price and go through the eBay/Amazon "return" without actually shipping it back. I'm sure there is something against that in Amazon ToS though, and since the eBay resellers aren't actually doing anything illegal it could bring him legal trouble from them as well.
We did attempt this, eBay would not allow it. I personally bought my own product from the arbitrager on eBay. waited for delivery. then initiated a return. They get a free shipping label from Amazon and email it to me the eBay buyer and charge for it. They charge about $10 shipping for that free label that came from my own store. when I contacted ebay and said "technically" the return is complete as this is where the destination would send it, they said until it has been actually shipped it doesn't count, even though it was coming to me anyway. the ebay seller then hits me with a 20% restock fee, together that arbitrager made off with over $20 from the buyer.
I wont even begin about how they use an Amazon issued credit card to get an additional 3% cash back on the purchase, or that they use an Amazon affiliate link to get another 5 to 8% commission. That is a whole story in itself.
If the item is provided to Amazon in it's own shipping-worthy box wouldn't Amazon just ship it as-is? Boxing it again only adds labor[1] and material costs.
Granted, that would only work if you only bought one item. If you bought multiple items they would have to be packaged together in another Amazon-branded box.
Maybe you mark the order as a gift? I've ordered some bigger things from Amazon like desktop PC cases that have arrived in boxes that have the name on them.
Hello everyone. This is Fred Ruckel, the Ripple Rug inventor. I am so pleased this story has sparked a conversation amongst some of the tech elite so to speak. The article only lightly touches on all I uncovered, there is much more to come. I have a long evidence trail that shows Amazon employees are behind the vast majority of arbitraging. That's right, the people we trust with our product are the ones actually stealing it.
The plain box shipping issue provided us a direct evidence trail proving it is happening internally at Amazon. I have tracked it down the the Hebron Kentucky warehouse. Together with Entrepreneur Magazines editor we conducted a test buy/sting op. He ordered it; I tracked it on the back side of my Amazon seller account. I watched as the person used their prime account to ship it from my own inventory to the magazine editor. We have all the tracking data, blank boxes, even their real names on their Amazon account. I ran this operation a handful of times, always with the same results. This is an internal operation at Amazon.
When I informed Amazon about the issues at Hebron, and offered my evidence, everything went haywire. Within few hours of reporting it, my entire inventory was placed in reserve (over $10,000 worth) and locked down for all of June. I was completely locked out of my own inventory. Amazon was also the multi-channel fulfillment center for my website. In a blink, both of my sales channels were shut down entirely. The arbitragers flexed their muscle to show me who' the boss' in the situation was. Both my website and Amazon were now out of stock in retaliation to my reporting it to Amazon. Ironically, all my inventory was sidelined at that very same Hebron fulfillment center. This was no coincidence. Hebron center is the root of the arbitrage ring in my situation, but other warehouses participate as well. I found 3 other centers also have arbitrage rings, or they work together, but I have data for all of it.
I proved conclusively, and repetitively that there is corruption within Amazon. I ran the same operation over and over yielding the same results. It may not be Amazon itself, however Amazons employees are running the show when it comes to the high level arbitraging. I recorded phone calls, have screen shots of everything. I sent Amazon lengthy message detailing everything. Amazon has turned a blind eye. These Amazon employees have the ability to manipulate the package details, inventory status, boxing preference, pretty much free run of the Amazon computer systems to do as they wish. they actually 'ghost' information so it looks as if nothing was manipulated (lucky i screen shot everything).
Lastly, when i tracked the real names of these people involved, they all live within a few miles of an Amazon fulfillment center and the all have computer science background. this is not a small isolated incident. I can prove millions in losses to this scheme, and with some digging, it might be billions.
My advice to you is to focus less on the hassle caused by eBay arbitragers and focus more on growing your product lines... I sell on AZ and have experienced various issues with return fraud, competitors messing with listing descriptions, Chinese counterfeit takeovers, feedback fraud, etc. At one point I had a competitor order & ship 40+ items and then return them all in unsalable condition.
You can only fight it so much before you realize your energy is best spent growing your bottom line rather than trying to solve the 1% that is a nuisance. Best thing to do is document everything though and keep a well-regulated forward press on the AZ Seller Support, as you've been doing. But don't let it consume you.
It is a shame that Amazon allows its employees to act against its own customer's interests. Amazon stands to lose a large amount of money if sellers and buyers begin to mistrust it.
One thing to bear in mind: whenever you see someone arbitraging your product, take it as a reminder that we always instinctively underprice our products; it seems to be hardwired into our brains to do that. But when you see customers willingly pay more than your asking price, let that prompt you to review this fact and increase your prices.
58 comments
[ 3.0 ms ] story [ 118 ms ] threadI also like how magically his entire inventory became "reserved" for a month. Competitors (with his own product) figured out how lock down his items preventing him from making further sales, which each sale guarenteed them a profit.
By the way, here's how to lock down someone's sales from Amazon's pages: "Sometimes buyers purchase in-stock items along with advanced-sale items. When this occurs, the in-stock items might not ship until all the items in their order are ready for shipment. This item will be shipped out once the advanced sale item is in stock and ready to ship."
Order all of your "competitor"'s items and put a preordered item in with them set to simultaneously ship. Cancel them as you get orders. You can guarantee yourself their inventory until you can resell it at a higher cost while they eat the fees.
In fact I watched that happen. I'd put a Ripple Rug in my Amazon cart but didn't check out. As I recall it was just under $20 with Prime shipping.
When I came back to the cart a day or two later it was unavailable.
I checked the cart from time to time, and finally it came back at around $26. (It wasn't a full month, but it was a while.)
Went ahead and ordered it. It is a little tricky to form tunnels with it and keep them from collapsing, but if your cat is a natural tunneler he will probably make his own tunnels.
It turns out our tortoiseshell kitty is more of a jumper and climber, so she mostly just uses it as a lumpy rug for a nap when the sun hits it. We have one of those crinkly hoop tunnels too and she barely uses it. But give her a chance to climb on top of anything and she's there!
I thought about returning the rug but figured nah, it wasn't worth the effort and it didn't seem right to stick the seller with a return when there was nothing wrong with it but it was just not quite kitty's thing.
Now I just checked today and it's priced at $44 on Amazon shipped from the seller, or $40 direct from the seller for the new model with the round corners. Yikes, that's quite an increase, but probably still worth it if your cat is a tunneler.
BTW if you like cute cat photos, their website has some fun ones (even if you have no interest in the rug): http://ripplerug.com/
Arbitrage makes money purely off of information disparities between the parties. The guy who is better plugged into the market is able to mark up items in the middle of a transaction without having to take on any risk or provide any service.
Information disparity between parties in contrast is referred to as "asymmetric information".
Since the Ali importer is buying and selling at different times, the importer is assuming the risk that the market clearing price in the US will change before their inventory can be sold.
I worked for a few years helping build a community around an arbitrage app (scan barcodes at Walmart, calculate your Amazon profit). There's really no end to people's ingenuity when it comes to identifying market inefficiencies. There's always going to be someone willing to take a risk and profit from it.
It's a bit more expensive than selling on Amazon, depending on the item.
Looking for certain used electronics (recently music synth stuff, in the past vintage test equipment), I tend to have to select a lot of filtering options: "North american sellers only", "Condition: Used", etc.
So if your search is ordered by price, it will show their listing first when in reality, the actual item you're looking for is much more expensive.
I have no idea why ebay allows this to happen.
Ebay doesn't show the lowest-price option by default; its default is "best match", whateverTF that is. You have to explicitly choose "lowest price + shipping". I'm in the habit of always doing this, and generally researching things to death when buying online to make sure I get the best deal, but I know I'm not a normal shopper. Most people just see something that looks good and click on it and buy it.
You can search on ebay for "2 day shipping" and almost all of them are people doing this
of course she doesn't mind, her "product" is basically a quality control sticker.
> She developed a brand called Juligo, a niche in camping equipment, and found a particular hit with a headlamp. It’s just an ordinary, generic light made by a Chinese manufacturer, which she had stamped with her brand. “I’ve sold tens of thousands of those buggers, a ridiculous amount,”
however, would she still think it's awesome if someone else purchased those same headlamps from the Chinese manufacturer, put the same/similar sticker on it, had no quality control, and flooded eBay at lower cost?
This is why 3rd party arbitrage is good for the economy. It fills in gaps in supply/demand.
Edit: also I should note that Ripple Rug looks awesome. Buying one for my cat. Articles like this talking about your business experience are good marketing engines :)
I wont even begin about how they use an Amazon issued credit card to get an additional 3% cash back on the purchase, or that they use an Amazon affiliate link to get another 5 to 8% commission. That is a whole story in itself.
Does anybody know how this was done and what the secret was?
Granted, that would only work if you only bought one item. If you bought multiple items they would have to be packaged together in another Amazon-branded box.
[1] Labor and/or robot maintenance costs.
The plain box shipping issue provided us a direct evidence trail proving it is happening internally at Amazon. I have tracked it down the the Hebron Kentucky warehouse. Together with Entrepreneur Magazines editor we conducted a test buy/sting op. He ordered it; I tracked it on the back side of my Amazon seller account. I watched as the person used their prime account to ship it from my own inventory to the magazine editor. We have all the tracking data, blank boxes, even their real names on their Amazon account. I ran this operation a handful of times, always with the same results. This is an internal operation at Amazon.
When I informed Amazon about the issues at Hebron, and offered my evidence, everything went haywire. Within few hours of reporting it, my entire inventory was placed in reserve (over $10,000 worth) and locked down for all of June. I was completely locked out of my own inventory. Amazon was also the multi-channel fulfillment center for my website. In a blink, both of my sales channels were shut down entirely. The arbitragers flexed their muscle to show me who' the boss' in the situation was. Both my website and Amazon were now out of stock in retaliation to my reporting it to Amazon. Ironically, all my inventory was sidelined at that very same Hebron fulfillment center. This was no coincidence. Hebron center is the root of the arbitrage ring in my situation, but other warehouses participate as well. I found 3 other centers also have arbitrage rings, or they work together, but I have data for all of it.
I proved conclusively, and repetitively that there is corruption within Amazon. I ran the same operation over and over yielding the same results. It may not be Amazon itself, however Amazons employees are running the show when it comes to the high level arbitraging. I recorded phone calls, have screen shots of everything. I sent Amazon lengthy message detailing everything. Amazon has turned a blind eye. These Amazon employees have the ability to manipulate the package details, inventory status, boxing preference, pretty much free run of the Amazon computer systems to do as they wish. they actually 'ghost' information so it looks as if nothing was manipulated (lucky i screen shot everything).
Lastly, when i tracked the real names of these people involved, they all live within a few miles of an Amazon fulfillment center and the all have computer science background. this is not a small isolated incident. I can prove millions in losses to this scheme, and with some digging, it might be billions.
crazy days ahead
thanks for any insight you can provide
Fred
FWIW, these are going away come Sept 1, 2016 anyway: https://sellercentral.amazon.com/forums/thread.jspa?messageI...
My advice to you is to focus less on the hassle caused by eBay arbitragers and focus more on growing your product lines... I sell on AZ and have experienced various issues with return fraud, competitors messing with listing descriptions, Chinese counterfeit takeovers, feedback fraud, etc. At one point I had a competitor order & ship 40+ items and then return them all in unsalable condition.
You can only fight it so much before you realize your energy is best spent growing your bottom line rather than trying to solve the 1% that is a nuisance. Best thing to do is document everything though and keep a well-regulated forward press on the AZ Seller Support, as you've been doing. But don't let it consume you.