
Inside the strange world of Amazon-to-eBay arbitrage - jfeif
https://www.entrepreneur.com/article/278622
======
kevin_b_er
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.

~~~
Stratoscope
> 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/](http://ripplerug.com/)

------
landryraccoon
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.

~~~
Finnucane
The article says that he actually tried to do this, but was out-arbitraged--he
couldn't make his own listings stand out from the copies.

~~~
beamatronic
I am confused, don't shoppers do research and choose the item with the lowest
price?

~~~
mmagin
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.

~~~
brokenmachine
The thing I find most annoying on ebay searches is sellers who list multiple
items on the one listing.

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.

~~~
Grishnakh
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.

------
mrexroad
> "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?

~~~
kgwgk
Maybe someone could write another article talking about that kind of practice,
and ask her what does she think.

------
ultramancool
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.

~~~
jandrese
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.

~~~
nerfhammer
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".

~~~
pjlegato
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.

~~~
nerfhammer
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.

~~~
pjlegato
Actual arbitrage is very rare in the real world. If you're holding inventory
at all, you're not doing arbitrage.

------
paulcole
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.

------
atesti
>He won’t reveal how he shipped in a generic box; he calls it a trade secret.

Does anybody know how this was done and what the secret was?

~~~
Snuggly1
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.

crazy days ahead

thanks for any insight you can provide

Fred

~~~
kirse
It's partially the Brand-Neutral Box / Packing Slip services offered by
Amazon:
[http://www.amazon.com/gp/help/customer/display.html/?nodeId=...](http://www.amazon.com/gp/help/customer/display.html/?nodeId=201101040)

FWIW, these are going away come Sept 1, 2016 anyway:
[https://sellercentral.amazon.com/forums/thread.jspa?messageI...](https://sellercentral.amazon.com/forums/thread.jspa?messageID=3672102&tstart=0)

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.

------
rwallace
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.

------
dmix
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 :)

~~~
breakingcups
But in this case the Ebay seller just fills in the buyers address on Amazon,
so how does that work?

~~~
dmix
This is just one of the resellers but you're right it doesn't apply here.

------
grapeshot
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.

~~~
ikeboy
They don't allow Prime accounts used for resale.

~~~
aribtrageur2718
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](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

------
pranayairan
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
?

~~~
ianferrel
That might cause even more of them to make a return.

~~~
detaro
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.

~~~
Snuggly1
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.

