I am surprised that there is so much margin. Is this because:
1. Amazon product delivery is so convenient that users don't mind paying little extra or
2. Walmart discounts products valuing their warehouse space more. Thus not realizing there was demand for the product elsewhere or at a different time.
Seems like it would be simple for Walmart to figure out this arbitrage and shelve products for longer time. Any thoughts ?
3. When buying things from Amazon, if I don't meet the $25/$35 limit or whatever, I will sometimes, stupidly, search for something else I need from the store and will pay up to $5 more for it through Amazon. Things like folder separators, a pack of staples, etc.. You can get these things for $1 or $2 at Walmart, but on Amazon, maybe $4, $5.
> Things like folder separators, a pack of staples, etc.. You can get these things for $1 or $2 at Walmart, but on Amazon, maybe $4, $5.
In germany buying stuff in bulk sometimes requires to travel like 50km, I've seen people plenty of times make bulk buys over amazon, because it is more convenient.
Exactly both - this is a temporary sort of arbitrage but is great for both these entrepreneurs and the end consumer in the short term. I will be surprised if they survive in the long term, since most of their business model is designed around the lack of Walmart and Amazon talking to each other. I think it would take a relatively simple collaboration between the two (though that might never happen) to completely destroy this business.
I think pricing trends monitoring aka camelcamelcamel.com would be enough for Walmart to figure this out. They don't need to actually talk to each other IMO
Likely. They’ll probably stick some ML or data science person on it at Walmart Labs who ends up doing better at it than CamelCamelCamel because it’s his/her full time job and because they have a PhD in statistics or some similar field. Also because Walmart has near unlimited money to throw at these kinds of problems.
Indeed, which is why it has probably skated under the radar for this long. I imagine this company’s success will eventually be its downfall in that the second when Walmart and Amazon see how much money is being made over this kind of arbitrage and that kind of money becomes significant they will quash it like a fly on the wall.
I will occasionally search Amazon for things whose prices I know, like Trader Joe's items or something I bought at a local store. Sometimes Amazon sells it themselves, in which case the prices are reasonable. But often, somebody random will be selling it at a large markup.
My theory is that plenty of people are not particularly price sensitive and just want the thing to appear. I'm stubborn enough (or cheap enough) that I'm very reluctant to reward the arbitrageurs. But I'm sure many aren't.
I have a similar feeling when I look at houses to buy online.
If I see the house was bought for 40%+ less just a few years ago, I refuse to give an offer. Even if the price seemed reasonable and it interests me. I refuse to reward people who bought low and want to flip it for much higher (if it increased reasonably, fine)
Certainly those increases in price are because the person put significant time and money into improving the property. It's not any more of a "reward" than your salary is "reward".
Not certainly - it's very common for a neighborhood to shoot up in value (because of something that individual homeowners don't do, like a major employer moving in or getting successful, or a train station being built, or a nearby neighborhood getting full), and so the market value of the same home at the same condition can increase dramatically just because the neighborhood has more demand.
40% in 2-3 years is pretty unlikely, even in the hottest markets. But even still, does that mean you discontinue shopping in the neighborhood altogether? Because all the surrounding homes would have seen the same increase?
Sorry, I mean yes it's uncommon, however it's also predictable. Iif you know where a new factory is going ahead of time that drastically alters the probabilities.
I have been looking at houses as well, and I do this too. My main reasoning though is that there is generally a lot less value left to capture in these houses because as the house trades hands, most of the 'low hanging' remodels/improvements get picked. And of course the other risk, is that there is some 'hidden' issue that is driving the turnover (noisy neighbors, under a common airplane flight path, or something like that).
How do you know they didn't invest a significant amount to fix issues? What they paid for it isn't a useful measure if you don't know the condition it was in.
Comparable sales prices for recently sold similar homes would seem a better measure.
So, either they put in a bunch of work to make the house more attractive or the overall market price rose 40%. In either case you just want to exclude the house because you don't want someone to make a profit?
Better to find the cheapest house that fits your want list regardless of past ownership.
The house I bought doubled for the last owner during his 6 years here. It doubled for me in half of the time since. The past owner wasn't greedy the market moved on its own.
Amazon spent decades of building the brand of "if it's on Amazon it must be a good deal" and now Amazon marketplace allows third party sellers to exploit that image to the occasional buyer who does not really understand what Amazon marketplace is.
Or they just dont care. Walmart sets a price to move X amount of merchandise. This guy sells to a small fraction in comparison. Lets say 1% (as an example).
If Walmart increases the price, they could easily lose more than 1% of their other customers by attempting to capture this guys profits.
The margins can be big! I've compared Walmart or Target products on Amazon vs. in the store. Sometimes they are 200% higher, however it tends to be on low priced products.
A bottle of vitamins on Amazon might be $9, but you can order them right now and get them delivered to your door. In the store it's $5. A LOT of people are willing to buy from Amazon evening knowing it's more.
Shelf space is valuable, and customers like full shelves. Walmart warehouses as little as possible — everything gets pushed out to the stores. So you’ll have regional and seasonal variations where a store will overstock to push more product.
When that season ends, it’s more useful for the store to unload the inventory for cash quickly and switchover to the next thing.
You can always spot a struggling general retailer when you see “holes” in the aisles or low-density merchandising... it’s a sign that the vendors are tightening credit terms.
Amazon has a less competitive market position because people are buying stuff for convenience and there’s a high transaction cost due to shipping. Every major retailer is launching subscribe and save programs to nip at those Amazon convenience shoppers. Amazon needs the job-lot people because they are the only folks who can get a tube of toothpaste for 1/3 the retail cost. It’s a great strategy, until some psycho tampers with product by putting poison in toothpaste or acid in shampoo.
I follow this company and guy... they have a bunch of partnerships with distributors and manufacturers directly which result in higher margins. Saying they buy at Walmart and sell on Amazon is only part of the business.
Good for him, but I really wish for a better class of business journalism. He's been doing this 4 years, and never made more than $150k/year. So he definitely isn't somebody who "makes millions".
Hmm. Seems unlikely given the manual nature of shopping at WalMart, shipping costs, returns, etc, on an $8M revenue base.
Edit: He contradicts himself..."four years later, we're a team of 11 and we're doing well over $200,000 in sales per month"
$200k/month isn't even close to $8M/year. And you aren't netting 7 figures with $200k/month and 11 employees. Now I'm thinking this is just a puff piece for his get-rich-quick lecture series. Too bad, as it's probably still a decent story with the actual figures. Just not a rags to riches one.
I'm also having trouble visualizing 11 people buying $8M (retail) worth of stuff from WalMart in shopping carts. That's $2k per day, per employee, every day.
This "company" may be doing something else, additionally to these flipping schemes. Seminars are mentioned. Consulting may be something else. Or some other form of ecommerce.
So, if you knew how to make money doing x and genuinely wanted to share that info, how would you do so effectively without being perceived as a scam artist?
I am trying to do exactly that. One establishment would not post the flyer "because it might be a pyramid scheme." So simply being free seems insufficient.
Not in this case. I live in a town with a high unemployment rate and lots of homeless. I am newly off the street and would like to help people in dire straights. They don't have money to spare.
Well, at the moment, I am just trying to direct people to a couple of websites. I have created flyers and I am looking for bulletin boards to post them. I would be willing to do meet-ups or something.
Maybe if I were representing some religious organization, people might buy that I am just well meaning. But, I don't do religion.
I work for a service called Textbroker. Unlike Upwork, it is not a race to the bottom. You can start off making very little and grow your income, potentially to a middle class level. It helped me get off the street.
I sometimes recommended them to online friends who had just lost a job or whatever, but they didn't get it. They didn't see what I saw.
So, I started a blog to try to explain how to make it work for you:
A couple of people I know socially are interested and have given me some useful feedback. I updated the flyers and one website because of the feedback I got.
I think I need to make local contacts and establish trust. Maybe do some volunteer work. I am not sure.
I would like to start here, but also actively encourage people to get into things like Etsy. There is good internet service in this town. But, I think they just need to get the word that it can be done. Remote work and gig work seems to be kind of big city, cosmopolitan culture. This is an area that historically did a lot of logging and fishing.
There is interest in, for example, IT related meetups. But nothing seems to actually be happening.
The article might be exaggerating but it did state that he had 'millions in profits' at first paragraph.
Salary is a different matter, CEOs of new companies dont earn from annual revenue but more from stock sales and gains.
Paying 150k is also before taxing and profits and is an expense in wages.
Taking a quick guess and say that this person has 1 million in profits, but most likely 1 million to 2 million in gross profits instead of net from what I can think is more likely and 150k in his salary as well as wages for 11 people and warehouse rent which likely reaches 700k to 1 million, he likely has around 3 to 3.5 million in revenue and net profits of likely 50k as thats your average web retailer net margin
They are currently doing $200k in sales but "Since he started selling on Amazon, Grant says the business is on track to top $8 million in total sales by the end of this year."
He's doing $200k in sales per month now.... Black Friday and Christmas are just around the corner and are probably 80% of their business (just my guess). Either way retail sales are not linear.
So "28-year-old runs a small business that makes millions selling on amazon" would be more accurate than the actual title. But they probably get more clicks phrasing it more like a pyramid scheme ad ("Make 6 figures from home selling ____!")
His high salary was $150k. You can still make millions without taking it out in the form of a salary. If he owns the company and the value of his equity increases into the millions, then he’s making millions. It sounded like he was reinvesting the money back into the business too. It’s probably a smarter use of profits if he has predictable margins that scale.
He’s pretty honest about that in the article, anyone can do it; he wants them to; and he’s spending his personal time trying to convince others to.
The reinvestment is for something better than a juiced up valuation. He’s likely parlaying his profit into more inventory or scaling the team that he will profit from. Reinvestment isn’t always about selling the company.
Agree the large reinvestment is necessary for any growing business. But if you want that equity to be worth much there has to be something there to buy.
exactly, lets say he really does make 200k in sales per month. and lets say he happens to enjoy 100% profit margin (very impossible) thats 200k-100k-50k (amazon fees) leaves him with 50k profit per month. 10 employees excluding him is 25-35k range, and 1.5-2k rent for warhouse and 1k for all utilities and shipping supplies. that leaves the guy making around 10k a month before taxes. very far from ‘millions’
The level of hate towards someone who is successfully working for himself, making $150k a year, no being beholden to meetings, stand-ups, managers that don't understand how special the posters are while shaking as a leafs in November being afraid that they won't be able to afford the next rent increase in Silly Valley or that as they turn forty is just amazing.
It was directed at the general posture of comments disassembling and not believing his business model, saying that he cannot be as good as Walmart at predicting demand and hence should go out of business, etc.
Nice to know that 28 is still considered a noteworthy age for things like this. It must be getting pretty close to the cutoff though. You don't often hear titles like "32 year old creates successful business"
There's practically unlimited money to be made in the "I'll teach you to be rich" industry. It's much less work and much more lucrative than retail arbitrage.
It seems he is already moving on by entering the self help/motivational speaker industry.
> As his business is increasingly run by his team, Grant has reduced his salary down to $60,000 a year and now dedicates much of his time to getting that message out. He consults and teaches e-commerce classes through the same blog he has been using to track his performance.
Retail arbitrage is already very popular on Amazon. It might not have much of a future though with Amazon heading towards not accepting those invoices when reviewing an account.
I think the opportunity is probably too small and time consuming for big business to come in and destroy the opportunity. Similar to how small eBay sellers are able to import stuff straight off alibaba and make a profit.
Back in the 80's, it was practical to buy software packages in the US and resell them in Europe at a substantial markup. After a while, more and more businessmen started doing this until the price differential disappeared. Classic arbitrage.
My father did this. Also he imported stuff from Taiwan and crudely ported the software for European market for a 200% markup. Literally unpack, throw a floppy disk in it, pack, sell.
Title should read: 28 year old used to make millions buying from Walmart, selling on Amazon; because he certainly will have to live with competition and reduced margins from now on.
Not really. The company I work for has a similar setup; we bid on wholesale lots from the same places that Big Lots and other wholesale-to-retail outfits buy from. We flip those items both in our storefront and on eBay and Amazon. We don't do FBA but that's because we have a huge warehouse and competent shipping staff at our disposal. We clear enough for 10 competitive salaries and a comfortable income for the owners, and the rest is reinvested into the company.
The company has been around for nearly 20 years (I've been with them off and on for seven of those years), and was one of the earliest online closeouts retailers back in the 90s. This is nothing new.
Lol, good luck is all I have to say to you. Invest well=)
If you honestly think this is sustainable, you are mistaken.
You are lucky to have done well all these years, but as more people get smarter, bye bye margins.( Same thing in every business.)
More and more people will get into this space.
Sure, you may be able to survive because you geta volume discount on shipping, but that's all dependent on you sourcing the product that these new people will be doing because all it takes is a smartphone and dream....
all dependent on you sourcing the product that these new people will be doing because all it takes is a smartphone and dream
And capital for up-front costs, and a willingness to take the risk to buy stock you might not sell, and space to store the stock before it ships, and people to do fulfilment, and knowledge of how to sell through Amazon (or any other site)...
If it was that easy then everyone would be doing it already. You can build a sustainable, profitable business doing reselling (thousands of people do) but it's hard, and risky, and that puts most people off.
People buying random clearance items from Walmart to sell on Amazon has zero impact on our business. We buy wholesale lots for thousands of dollars at a time, stock them in a huge warehouse, and employ a team of workers to sort, evaluate, list, and ship the items. A single person working from their basement can't even touch that.
It's been sustainable for the nearly 20 years the owners have been doing it, and the rise of Amazon and eBay has caused an explosion of growth over the majority of that time.
As for myself, my role there is multifaceted (mainly IT and website management, and helping out everywhere else as needed). I'm paid better than I was in government work, and I'm enjoying it a lot more.
There's a pure software arbitrage play as well, take for example, simple green which you can't buy from amazon direct but you can from a 3rd party reseller which ends up being a direct arbitrage from walmart.com.
Interestingly enough it seems that public mentions of this don't destroy business. Here is a Planet Money podcast from 2015 http://www.npr.org/sections/money/2017/07/26/539552579/episo.... I thought at this time the days for arbitrage like this would be counted. Apparently not.
There was a line in the article like “anyone can do it if they put in the work”. It’s still work with some risk, so I don’t think articles like this hurt the biz too much.
I think the reason is that it's a local arbitrage, and it's limited in sypply. He is buying from his local stores, who probably have limited amount of such products on sale. So there's probably room for more doing the same strategy.
The exploitation of the strategy can be limited by two factors: "labor" and "capital". It sounds like labor is the more limiting factor, though.
Also, some of these prices aren't set at maximum profit per item, but there are other factors involved. For example clearing warehouses or attracting customers.
In many cases, I suppose Walmart should be coming up with a way to sell direct to Amazon, but that may not be what they want, strategically speaking.
I wonder if Walmart simply can't afford to play arbitrage with clearance stock at the size of their organization. The amount of manpower and shipping time they would have to add to localized stock management might end up eating away at any additional profits.
From their perspective Ryan is probably helping them out by emptying their clearance stock faster. If the local manager was smart he'd keep his number on speed dial.
My experience, from shopping in Walmart quite frequently, is that they are highly disorganized and un-nimble. I guess this affords the opportunity for persistent arbitrages. For example, my local Walmart supercenter routinely runs out of certain products (not usually the same products). Sometimes it feels like GUM (An iconic USSR department store in Moscow). I gone shopping and found them missing any kind nutcracker ( a basic utensil), grapefruit juice, landscaping mulch, etc (many more examples). At the beginning of August the garden center had already moved out all its mulch for the year and filled the shelves with de-icing salt lol. The people who run the place do not seem to understand opportunity costs: they lost a sale in me and I am pretty sure nearly no-one is buying de-icing salt at the beginning of August. This is a northern USA store but where I live the weather is in the 60-70 through October: grass still grows, gardens still can be mulched. The stores are overstaffed with floor people (seemingly wandering around Lord of the Flies style) but not only 3-4 of 20 checkout lanes are open at a given time. Nearly every single canned good is dented or has a dirty lid. Their self checkout POS run on Windows 7 (lol) and update firmware automatically when they reboot which is hardly ever but for a power outage. If there are intermittent power outages in a storm a POS could reboot on the first outage and be bricked on the second one while updating firmware. There are so many opportunities for improvement with Walmart but the capital cost of a competitor entering the industry is so high. I am not sure if Amazon can be a real competitor (I think they largely serve different sets of customers).
I'm wondering if he's working with Gary V? The other day a friend shared one of his "hustle" videos on Social Media where Gary is hawking this and I'm wondering if it was actually "embedded marketing" for this guy.
Back few years ago I was able to make extra $10,000 on Amazon by selling $200 packs of $2 for around $240 + shipping, because everyone thinks they are super-unique. Meanwhile a mere trip to a bank is required with request for a "$200 BRICK". I takes about 10 business days for BEP to ship it to your bank and you can order multiple times, no problem. My best month was December of course with I believe $18,000 in one month because everyone want to have a pack to give out as a x-mas gift. The work took my friend that I outsources about 3 hours a day. I only checked on her on the weekend and if she has any issues (merely). I remember how upset she was at me cause she knew the business but she couldn't afford to get Bricks from Bank herself.
Eventually Amazon banned me for selling currency instruments, but it least 10 months.
Years ago, right before everyone had a smart phone, I had a Palm tx.
I was at a going out of business sale at Goodguys.
I saw Halo 3 Collector's edition on sale for $5.00 a game.
I didn't know anything about video games, but in the back of my mind, I remember a friend telling me, "Don't rule out computer Games."
I crossed the street, and got on Larkspur's Library Wifi. It was always on back then. Went to ebay, and even though my TX was slow, I started seeing $50 sales on eBay.
Went back in, and bought all the games on the shelf. People were laughing when I bought all of them.
The Salesman, laughingly said, I have three more boxes in the back. "Want them?" Me, "Yes"
I still don't know why they had so many Halo games, and nothing else?
Anywho--went home, and in the next few months, made $10 grand net on those games, and many happy moms. "I don't know what's in that game, but my son hasen't left his room."
That it. Money gone. Never had a deal like that.
(I have had a hard time competing in business. I just don't like the game of selling. When I had that Palm TX, I had such a gift. I could check out prices before I bought.
I thought I found the keys to the city of selling. A year later, it seemed like everyone had a smart phone. Ugh.)
I recently bought something from eBay (didn't search on amazon for some odd reason), and I received it from Amazon. Turns out the seller has an Amazon prime account, and all he does is provide the ebay-buyer's address on checkout.
He netted $2 on a $12 product, and I found it amusing.
He shouldn't share it so long as it's more profitable than what he can get paid to share it by running seminars, selling e-books, minus expenses such as getting this article "published". There's not much in the article to suggest that is the case.
A gas station convenience store clerk gets a salary in part from selling sugar water that promotes tooth decay and cancer.
What's the difference?
Everyone has to make a living, and our economy is not structured to prefer "positive" output, it only cares about profit. If you call this guy into question, you should be looking at the larger picture.
Is it possible this is just a bit of PR spin by Wallmart to position themselves as being cheaper than Amazon or have I been working in marketing for too long?
More likely a PR piece by Amazon- hey, go do sale arbitrage for us and we can both make money.
Remember, FBA charges you money to use it beyond the cut Amazon seller already pay to sell in the platform.
(Neat thing: a friend of mine was one of the devs on the Amazon FBA seller app that lets you scan barcodes at other stores and see how much you'll make selling it on Amazon)
I read this article as a PR placement by Amazon. Amazon finds the guy (because they have the data on his sales) and connects him to the journalist, because Amazon wants to grow its Seller marketplace in the face of competition from Ebay and Alibaba/Taobao.
My friend does exactly this between IKEA and Ebay.
Here in Australia, IKEA does not ship (not sure if they do else where) so she buys a heap of items at the Ikea stores and flips them online. She's been doing it for years and does pretty well at it.
Here in Australia, IKEA stores are few and far between so her arbitrage is a huge value add for a lot of her customers since IKEA cannot (won't?) ship and traveling X KM's to pickup an item isn't an option for most. Personally, I'd rather buy X item from another retailer that has a product similar to the Ikea equivalent rather than use a middle man but. People really want to buy IKEA goods rather than the alternative.
I can't see how this gentleman's equivalent will stand up in the long run but till then since Walmart's goods are less unique and more importantly, much more accessible. But still he's exploiting an OK market for now.
The self help angle he's now peddling makes me suspicious that his income hasn't scaled as well as he would like now his business has grown.
He's now got 11 employee's and a much larger footprint. His business overheads would have significantly increased and dropping from $150k to $60k a year for his salary would indicate his business Net has either diminished or hasn't grown as expected.
Hence, peddling self help to generate additional income and exposure for his business.
Here in US people are doing that with IKEA. The closest IKEA is about 2.5 hours way and you can put in a order through them and they make a weekly trip to buy your item and you can pickup it up locally.
Their home delivery option still requires you to go in store, take the item(s) you want off the shelves, pay for it, take it over to the delivery counter and then negotiate with them on delivery availability.
You can't do it online or over the phone, and even in-store they won't tell you availability of slots or reserve you a slot while you go pick up the stuff.
Their customer service in this aspect is dreadful.
It's only marginally better than when they partnered with a local delivery company (Kings, at the Rhodes store) who were even worse - not delivering on the day I'd paid (extra) for, and then having the nerve to try and charge me for storage when I said they'd have to deliver it the next weekend.
IKEA in Bulgaria deliver and it's extremely affordable. Given that we've only had stuff delivered twice I can't vouch for how well they do it, but we haven't had any issues.
Edit: They deliver to the whole country, but if you're not in Sofia you're gonna pay more. Given that Bulgaria is like a small state in the US that'd probably be the scale I'd expect in the US, but I'd bet that you have more IKEA stores in your average US state than Bulgaria has country-wide.
There is a service like that in Charleston, SC as well. I have often wondered if these businesses are actually associated with IKEA in some way. It seems to be a strange business to be independently run, especially when there are quite a few of them out there.
Oh nice, thank you for the heads up. I'll let her know. I was unaware, she may be across it though.
I gave the impression that she exclusively deals with IKEA products but from what I understand it's more diversified than that but, I'd suggest it's still her bread and butter.
Looks like online ordering / home delivery is available in Western Australia and South Australia too (which apparently are not part of the eastern coast IKEA network). Delivery cost is $19.75, which is still crazy if you just want one $5 USB powered lamp... but less crazy if you're ordering several items at once.
Not that I checked eBay and noticed a lot of people selling IKEA USB lamps or anything ;)
Looks like there's no IKEA in New Zealand though. Hopefully your friend can still make her fortune selling across the Tasman and providing a great service to Kiwis!
I used to think IKEA was insane for running such a "20th Century" business model for shipping their products. The fact that you cannot purchase anything from IKEA's website and have it delivered without incurring a $129 delivery fee is crazy when taken at face value.
However, I've come to understand why they have limited their delivery service. Their flat pack products are their profit centers and the packaging that makes them so efficient to store in their storefront warehouses is simply not suited for shipping via 3rd parties (UPS, FedEx, etc). As an extreme example, consider their cardboard honeycomb + laminate furniture (the Hemnes stuff). It takes almost nothing to punch through the flat surfaces of those products if the force is concentrated on a small area and the box offers zero protection (padding) to prevent this. Even the higher end products are packaged as tightly as possible with sensitive surfaces directly touching the box they're packed in. While it's insane to charge $129 for get a pack of their excellently priced "ancillary" products shipped (kitchen utensils, cheap LED lightbulbs), those products are priced desirably in order to get you in the store. If IKEA sold those online with a modern shipping model, they'd forgo the chance of getting you to buy something that is actually profitable. IKEA can't redesign the packaging for their flat pack products without impacting the efficiency of their in-store inventory and they can't ship their existing packages without ironclad damage-free guarantees from the big logistics companies.
Even if they get a guarantee that the logistics company eats the cost of any damaged good, it would still negatively impact customer satisfaction when, for example, the bed they ordered for their new house shows up damaged and needs to be returned/reordered. Every time I've bought IKEA furniture, it's been for an immediate need, and I'm not going to be happy when I have nowhere to sit for 2-5 days because UPS crushed my package.
Unsure why you're being down voted. Your comment seems pretty accurate to me. Having broken and damaged flat packed goods I've bought from IKEA personally. I would guess another provider with this be UPS or Australia Post could be even less trusted than I.
That sounds about right, and I doubt that their warehouse people are fully equipped to package IKEA goods properly for shipping. When I have had orders shipped from IKEA online they have typically been poorly packaged, with pieces close to falling out of the boxes.
Every time I needed anything delivered from Ikea it was actually far cheaper to rent a Hertz van(they always have a rental place at every ikea over here) for 2-4 hours and just deliver everything myself. The total cost of the van rental was less than the delivery charge, and I didn't have to wait 1-2 weeks just to get a delivery time slot.
IKEA in china has always done delivery and even assembly. They wouldn’t sell much of anything otherwise as many don’t have cars and there is only so much you can do with a taxi. Surprised Singapore isn’t similar.
This is cool. It reminds me of another three person team I’m familiar with that works on Amazon Prime arbitrage full time. They have a warehouse and an employee responsible for overseeing shipments in and shipments out. The entire business revolves around algorithmically identifying non-Prime merchandise that is undersold because it lacks the Prime label, purchasing the inventory, then reselling it under the Prime label with delivery and tracking guarantees.
They found out pretty quickly that many customers preferentially buy Prime listed items over non-Prime items, and specifically purchase items they can quickly resell for a profit.
There are definitely quite a few people out there doing this. This guy is neither the first nor the last to be doing this type of product channel arbitrage. There is an acquaintance of mine who lives no more than 8 minutes from me who does this as a side-job and it brings him in an extra couple hundred to a couple grand a month. He obviously spends time as shown in this video going to WalMart, buying certain items, and then listing those items as being for sale through Amazon. His margin takes a slight hit sometimes when uses Amazon Fulfillment services to keep the item in Amazon's stock but he also spends time shipping items from his own basement. I imagine his fingers get a bit dry and cracked after handling so many cardboard boxes after awhile.
Additionally, he does use price tracking and discovery tools to try and find the deals with bigger amounts of arbitrage between Amazon and WalMart. Because pricing is so dynamic and changing all the time, occasionally an item just barely breaks even as Amazon will sometimes magically update prices for its own goods to match or beat what might have been available at WalMart in their store. But it all depends and varies a lot.
Gary Vaynerchuk has demonstrated doing the same thing. But his sources are garage sales and dollar stores. He carries apps for EBay and Amazon on his phone so he can easily see whether the margin is worth his effort. He aims his advice at kids who can easily pick up $1-2K a month.
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[ 3.0 ms ] story [ 168 ms ] thread1. Amazon product delivery is so convenient that users don't mind paying little extra or
2. Walmart discounts products valuing their warehouse space more. Thus not realizing there was demand for the product elsewhere or at a different time.
Seems like it would be simple for Walmart to figure out this arbitrage and shelve products for longer time. Any thoughts ?
In germany buying stuff in bulk sometimes requires to travel like 50km, I've seen people plenty of times make bulk buys over amazon, because it is more convenient.
Wouldn't this fall foul to some kind of anti-collusion laws?
I doubt it amounts to enough merchandise for them to care about though, regardless of the margin. They make money on low costs and volume.
My theory is that plenty of people are not particularly price sensitive and just want the thing to appear. I'm stubborn enough (or cheap enough) that I'm very reluctant to reward the arbitrageurs. But I'm sure many aren't.
If I see the house was bought for 40%+ less just a few years ago, I refuse to give an offer. Even if the price seemed reasonable and it interests me. I refuse to reward people who bought low and want to flip it for much higher (if it increased reasonably, fine)
I suspect if you look around say the Tesla Gigafactory, local housing prices had a massive spike at some point.
Comparable sales prices for recently sold similar homes would seem a better measure.
Yes that is probably irrational "caveman" thinking. Never said it was logical.
The house I bought doubled for the last owner during his 6 years here. It doubled for me in half of the time since. The past owner wasn't greedy the market moved on its own.
If Walmart increases the price, they could easily lose more than 1% of their other customers by attempting to capture this guys profits.
A bottle of vitamins on Amazon might be $9, but you can order them right now and get them delivered to your door. In the store it's $5. A LOT of people are willing to buy from Amazon evening knowing it's more.
When that season ends, it’s more useful for the store to unload the inventory for cash quickly and switchover to the next thing.
You can always spot a struggling general retailer when you see “holes” in the aisles or low-density merchandising... it’s a sign that the vendors are tightening credit terms.
Amazon has a less competitive market position because people are buying stuff for convenience and there’s a high transaction cost due to shipping. Every major retailer is launching subscribe and save programs to nip at those Amazon convenience shoppers. Amazon needs the job-lot people because they are the only folks who can get a tube of toothpaste for 1/3 the retail cost. It’s a great strategy, until some psycho tampers with product by putting poison in toothpaste or acid in shampoo.
Being able to order online and have it magically show up later that day or the next is worth the markup.
But, the actual net margin is unclear. At least $150k, since he paid himself that. But it's not clear that it's millions.
Edit: He contradicts himself..."four years later, we're a team of 11 and we're doing well over $200,000 in sales per month"
$200k/month isn't even close to $8M/year. And you aren't netting 7 figures with $200k/month and 11 employees. Now I'm thinking this is just a puff piece for his get-rich-quick lecture series. Too bad, as it's probably still a decent story with the actual figures. Just not a rags to riches one.
I'm also having trouble visualizing 11 people buying $8M (retail) worth of stuff from WalMart in shopping carts. That's $2k per day, per employee, every day.
Ahh, yes, of course.
Your call on whether it's a genuine desire to share his success.
But, thank you.
In which case very cheap sometimes works. Like, "I'm not looking to make money but help me cover gas and venue rental"
Maybe if I were representing some religious organization, people might buy that I am just well meaning. But, I don't do religion.
:/
I sometimes recommended them to online friends who had just lost a job or whatever, but they didn't get it. They didn't see what I saw.
So, I started a blog to try to explain how to make it work for you:
http://writepay.blogspot.com
I also have a longstanding homeless site:
http://sandiegohomelesssurvivalguide.blogspot.com
I created flyers:
http://sandiegohomelesssurvivalguide.blogspot.com/2017/10/sp...
A couple of people I know socially are interested and have given me some useful feedback. I updated the flyers and one website because of the feedback I got.
I think I need to make local contacts and establish trust. Maybe do some volunteer work. I am not sure.
I would like to start here, but also actively encourage people to get into things like Etsy. There is good internet service in this town. But, I think they just need to get the word that it can be done. Remote work and gig work seems to be kind of big city, cosmopolitan culture. This is an area that historically did a lot of logging and fishing.
There is interest in, for example, IT related meetups. But nothing seems to actually be happening.
The article is just content marketing for him to sell his "get rich with an FBA business" course.
It doesn't say $8M/year, it says $8M total sales by the end of this year. So from the founding of his company, to the end of this year.
He said $8M total (over 4 years), not $8M a year.
If one is going to discredit the article, at least they could read it carefully.
That said, presumably the value of the entity could be a multiple of the revenue. Either way the article fails to shed enough light on it.
Salary is a different matter, CEOs of new companies dont earn from annual revenue but more from stock sales and gains.
Paying 150k is also before taxing and profits and is an expense in wages.
Taking a quick guess and say that this person has 1 million in profits, but most likely 1 million to 2 million in gross profits instead of net from what I can think is more likely and 150k in his salary as well as wages for 11 people and warehouse rent which likely reaches 700k to 1 million, he likely has around 3 to 3.5 million in revenue and net profits of likely 50k as thats your average web retailer net margin
$8 million is sales since starting.
So what would it be that someone was hypothetically paying for if they were to buy him out?
The blog following and sales classes probably are the key IP worth paying for.
The reinvestment is for something better than a juiced up valuation. He’s likely parlaying his profit into more inventory or scaling the team that he will profit from. Reinvestment isn’t always about selling the company.
So exactly like most of the 100s-of-millions valued internet startups?
(But in this case, actually making a profit)
> As his business is increasingly run by his team, Grant has reduced his salary down to $60,000 a year and now dedicates much of his time to getting that message out. He consults and teaches e-commerce classes through the same blog he has been using to track his performance.
I think the opportunity is probably too small and time consuming for big business to come in and destroy the opportunity. Similar to how small eBay sellers are able to import stuff straight off alibaba and make a profit.
Considering an even 10% markup, you could easily do $5M+ and only clear 500k profit. Curious what the numbers that matter are like.
The company has been around for nearly 20 years (I've been with them off and on for seven of those years), and was one of the earliest online closeouts retailers back in the 90s. This is nothing new.
If you honestly think this is sustainable, you are mistaken.
You are lucky to have done well all these years, but as more people get smarter, bye bye margins.( Same thing in every business.)
More and more people will get into this space.
Sure, you may be able to survive because you geta volume discount on shipping, but that's all dependent on you sourcing the product that these new people will be doing because all it takes is a smartphone and dream....
And capital for up-front costs, and a willingness to take the risk to buy stock you might not sell, and space to store the stock before it ships, and people to do fulfilment, and knowledge of how to sell through Amazon (or any other site)...
If it was that easy then everyone would be doing it already. You can build a sustainable, profitable business doing reselling (thousands of people do) but it's hard, and risky, and that puts most people off.
It's been sustainable for the nearly 20 years the owners have been doing it, and the rise of Amazon and eBay has caused an explosion of growth over the majority of that time.
As for myself, my role there is multifaceted (mainly IT and website management, and helping out everywhere else as needed). I'm paid better than I was in government work, and I'm enjoying it a lot more.
Also, some of these prices aren't set at maximum profit per item, but there are other factors involved. For example clearing warehouses or attracting customers.
In many cases, I suppose Walmart should be coming up with a way to sell direct to Amazon, but that may not be what they want, strategically speaking.
From their perspective Ryan is probably helping them out by emptying their clearance stock faster. If the local manager was smart he'd keep his number on speed dial.
Eventually Amazon banned me for selling currency instruments, but it least 10 months.
Years ago, right before everyone had a smart phone, I had a Palm tx.
I was at a going out of business sale at Goodguys.
I saw Halo 3 Collector's edition on sale for $5.00 a game.
I didn't know anything about video games, but in the back of my mind, I remember a friend telling me, "Don't rule out computer Games."
I crossed the street, and got on Larkspur's Library Wifi. It was always on back then. Went to ebay, and even though my TX was slow, I started seeing $50 sales on eBay.
Went back in, and bought all the games on the shelf. People were laughing when I bought all of them.
The Salesman, laughingly said, I have three more boxes in the back. "Want them?" Me, "Yes"
I still don't know why they had so many Halo games, and nothing else?
Anywho--went home, and in the next few months, made $10 grand net on those games, and many happy moms. "I don't know what's in that game, but my son hasen't left his room."
That it. Money gone. Never had a deal like that.
(I have had a hard time competing in business. I just don't like the game of selling. When I had that Palm TX, I had such a gift. I could check out prices before I bought.
I thought I found the keys to the city of selling. A year later, it seemed like everyone had a smart phone. Ugh.)
He netted $2 on a $12 product, and I found it amusing.
I've seen Ebay sellers with tens of thousands of items posted, all from Amazon.
A gas station convenience store clerk gets a salary in part from selling sugar water that promotes tooth decay and cancer.
What's the difference?
Everyone has to make a living, and our economy is not structured to prefer "positive" output, it only cares about profit. If you call this guy into question, you should be looking at the larger picture.
He has filled a gap in the market.
Remember, FBA charges you money to use it beyond the cut Amazon seller already pay to sell in the platform.
(Neat thing: a friend of mine was one of the devs on the Amazon FBA seller app that lets you scan barcodes at other stores and see how much you'll make selling it on Amazon)
Here in Australia, IKEA does not ship (not sure if they do else where) so she buys a heap of items at the Ikea stores and flips them online. She's been doing it for years and does pretty well at it.
Here in Australia, IKEA stores are few and far between so her arbitrage is a huge value add for a lot of her customers since IKEA cannot (won't?) ship and traveling X KM's to pickup an item isn't an option for most. Personally, I'd rather buy X item from another retailer that has a product similar to the Ikea equivalent rather than use a middle man but. People really want to buy IKEA goods rather than the alternative.
I can't see how this gentleman's equivalent will stand up in the long run but till then since Walmart's goods are less unique and more importantly, much more accessible. But still he's exploiting an OK market for now.
The self help angle he's now peddling makes me suspicious that his income hasn't scaled as well as he would like now his business has grown.
He's now got 11 employee's and a much larger footprint. His business overheads would have significantly increased and dropping from $150k to $60k a year for his salary would indicate his business Net has either diminished or hasn't grown as expected.
Hence, peddling self help to generate additional income and exposure for his business.
Paying some one else for the luxury and buying it through an online medium like eBay is a pretty decent alternative to a 2.5 hour drive.
Britain for example, since it's in English: http://www.ikea.com/gb/en/customer-service/faq/dispatch-and-...
Both well worth it when you're furnishing a new place and purchasing 4-digits worth of stuff.
Ikea does "show-rooming" right.
http://www.ikea.com/ms/en_AU/customer_service/ikea_services/...
You can't do it online or over the phone, and even in-store they won't tell you availability of slots or reserve you a slot while you go pick up the stuff.
Their customer service in this aspect is dreadful.
It's only marginally better than when they partnered with a local delivery company (Kings, at the Rhodes store) who were even worse - not delivering on the day I'd paid (extra) for, and then having the nerve to try and charge me for storage when I said they'd have to deliver it the next weekend.
They do ship, but only within a small radius of their stores.
Edit: They deliver to the whole country, but if you're not in Sofia you're gonna pay more. Given that Bulgaria is like a small state in the US that'd probably be the scale I'd expect in the US, but I'd bet that you have more IKEA stores in your average US state than Bulgaria has country-wide.
https://www.smartcompany.com.au/industries/retail/ikea-onlin...
Online shopping is already available in Tasmania, the Northern Territory, Queensland and the Australian Capital Territory.
I gave the impression that she exclusively deals with IKEA products but from what I understand it's more diversified than that but, I'd suggest it's still her bread and butter.
Not that I checked eBay and noticed a lot of people selling IKEA USB lamps or anything ;)
Looks like there's no IKEA in New Zealand though. Hopefully your friend can still make her fortune selling across the Tasman and providing a great service to Kiwis!
They definitely have a delivery service in the US.
http://www.ikea.com/ms/en_US/service-offer/delivery/
However, I've come to understand why they have limited their delivery service. Their flat pack products are their profit centers and the packaging that makes them so efficient to store in their storefront warehouses is simply not suited for shipping via 3rd parties (UPS, FedEx, etc). As an extreme example, consider their cardboard honeycomb + laminate furniture (the Hemnes stuff). It takes almost nothing to punch through the flat surfaces of those products if the force is concentrated on a small area and the box offers zero protection (padding) to prevent this. Even the higher end products are packaged as tightly as possible with sensitive surfaces directly touching the box they're packed in. While it's insane to charge $129 for get a pack of their excellently priced "ancillary" products shipped (kitchen utensils, cheap LED lightbulbs), those products are priced desirably in order to get you in the store. If IKEA sold those online with a modern shipping model, they'd forgo the chance of getting you to buy something that is actually profitable. IKEA can't redesign the packaging for their flat pack products without impacting the efficiency of their in-store inventory and they can't ship their existing packages without ironclad damage-free guarantees from the big logistics companies.
Even if they get a guarantee that the logistics company eats the cost of any damaged good, it would still negatively impact customer satisfaction when, for example, the bed they ordered for their new house shows up damaged and needs to be returned/reordered. Every time I've bought IKEA furniture, it's been for an immediate need, and I'm not going to be happy when I have nowhere to sit for 2-5 days because UPS crushed my package.
https://www.recode.net/2017/9/28/16377528/ikea-acquisition-t...
If you purchase in store hey do delivery, but the queues can be an hour on the weekends.
They have services like GoGoVan to get some bulky items home cheaper.
They found out pretty quickly that many customers preferentially buy Prime listed items over non-Prime items, and specifically purchase items they can quickly resell for a profit.
Additionally, he does use price tracking and discovery tools to try and find the deals with bigger amounts of arbitrage between Amazon and WalMart. Because pricing is so dynamic and changing all the time, occasionally an item just barely breaks even as Amazon will sometimes magically update prices for its own goods to match or beat what might have been available at WalMart in their store. But it all depends and varies a lot.
I want to build amazing software, and for that I need a larger company who can market my inventions and talk about it on conferences and road shows.
I will earn less, but I will be happy.