Did you <i>really</i> think arbitrage of used goods could be a business? I think the best thing these types of experiments do is expose pain points and inefficiencies that you <i>can</i> make businesses out of.<p>When I was in my ramen phase of startup life (and newly married), I used to (among other things) buy clothes at local thrift stores and resell them on eBay for a decent margin. You quickly learn what brands/items sell and occasionally I'd hit gold and find a vintage Hawaiian shirt that fetches $200 (and cost $2).<p>In the end though, you realize it's just a way to make some extra money. It's not a "business" IMO–and definitely not a scalable business. But you learn what sucks (like dealing with shipping & getting photos from a camera to eBay pre-Smartphone) and realize other people also feel that pain. That's where your business is.<p>UPDATE: Downvotes, seriously? Read my reply down this thread. Some people on here are, frankly, ridiculous and have no clue how to engage in a meaningful discussion.
As a fellow data scientist and former Craigslist/eBay item flipper and deal site (SlickDeals, FatWallet) hobbyist, my tidbit of experience and Sidebusiness 101: profit comes when sellers don't care to maximize due to circumstance.<p>Those circumstances include lack of product knowledge, urgency to move item, and value for their own time/convenience.<p>For the first problem, people have tackled it with eBay/Craigslist listing misspeller searches or just manually emailing for more info. I once bought a new sealed copy of a collector's game, Panzer Dragoon Saga (eBay price ~$500+ back then) for $20 from a seller who was liquidating an old stash of games and listed the item as "Panzer Dragoon Saturn" and couldn't get any hits.<p>The problem of illiquidity has some fun implications assuming you're willing to take some product risk. Back when I was in grad school in the Bay Area, I was flipping Fujiiryoki massage chairs (MSRP 5k, buying around 1-1.5k, flipping around 2.5-3k) and there are plenty more items out there. This requires either good product knowledge (tons of old Chinese people who I knew wanted these) or a data-driven way of identifying high-price-point items without much/any historical pricing data. This is a rather solvable problem that hasn't been tackled (that I know of) and can be a value point for your site I'd think.<p>As for buying liquid items low, subscribing to CL RSS feeds with the right search terms <i>can</i> do the trick, though I neither confirm nor deny that I may have once written a CL page refresher to buy Burning Man tickets at cost (instead of from scalpers who were charging hundreds more). Back when I didn't really value my time, offering to pick up at a time of their location/convenience and pay cash.<p>Misc selling tips as an enthusiast: and legit work/school email or Googlestalk-able email establishes you as a "real" person. A phone number is almost a must-provide these days too. Pay low(er) and always in cash (or cert. check at bank) but assure the buyer that you'll be there and make the transaction convenient and easy.<p>It's an addictive hobby, I know... :/
<i>It’s unlikely Priceonomics could build a massively successful business arbitraging used goods if we have to take possession of them.</i><p>Did you consider letting the buyers and sellers do the leg work?<p>Setup a distribution center. Sellers who want to offload stuff scan the items and their details to you and you give them instant, fair quotes. If they like your offer, they bring the items to your center, and you check to make sure everything is as it was stated.<p>You put the items, their details and their new prices (with your margin markup) online for buyers to peruse. If interested, they'll come by and pick up whatever they want.<p>Like an online pawn store w/ local centers, except there's no pawning, just selling & buying.
I still dont get what priceonomics provides that craigslist or ebay doesnt.<p>Craigslist:<p>* Listings have "ASKING" prices and can easily negotiated down 5-20%. So even if you provide a historical information of "Asking Prices", its still not a 1-1 relationship to how much you expect to sell your item for or its "BUYING" price<p>* I do question the value of historical information on CL: Its never been available, therefore neither buyer nor seller expect it and their view of the marketplace is limited to the time they hit search. And it is this view that they will use to determine a good price for an item.
When I need to buy something that I need NOW, I try to choose the nearest, cheapest item, satisfying my requirements that is CURRENTLY available. Historical information doesnt come into play.<p>Ebay:<p>* Since I already have access to historical information(completed items) and I can use it to figure out how much to sell my stuff for, I dont see what Priceonomics bring to the table here.<p>Again Im trying to figure out where you guys are going with this. From technology standpoint, all this content scraping, indexing and searching is interesting, but what problem are you solving and how do you plan to make money with it(short of arbitrage of aerons)
Right now eBay is already sitting on this data. In addition to the sale/non-sale price data, recently they've began to encourage (and sometimes force) you to very specifically categorize the item you are selling.<p>Combine with geolocation data for the buyer and the seller and they probably have a greater trove of data then you could get even with a biz dev deal with Craigslist -- main issue is that you have no idea whether an item in a given post was actually sold, and if so for how much.<p>I fear Priceconomics.com, as interesting as it is, will just work hard to prove a business model for this data that if successful will just be exploited by some engineers working at eBay who spin up a product to compete.
One additional point not mentioned in the post (written by me). If you buy a used Aeron chair, it's very likely you can sell it for the same price a couple of years later. Essentially you can lease the chair for free.
Any news from craigslist RE:bot policy update?<p>That low altitude you're flying at can only keep you off radar for so long and you're building your entire business on shaky ground.
You do realize that by having your buyer PayPal you the money you basically lost $50 on PayPal deposit transactions. I would have had him send me a corrected cheque instead.
The variance you are exploiting in this arbitrage setup is a result of the inherent variance in information about the chairs, i.e. uncertainty. Since they are used, there is lemon's principle at work. You can argue that Aeron's don't really depreciate in quality that much though over time so that variance in unjustified and in fact there should be some exact market price (perhaps as a function of time used, or more simply just dependent whether its used or new). But the thing is, more likely than not, that variance IS justified. Some of the chairs may be less broken than others. Some of the sellers may be less dependable than others. You can of course condition on this stuff - pick the low price chairs and mark them up by being the most dependable supplier, vouch for the chairs, become an expert in the chairs and be better at out the lemon's, but those things all add cost, so NOT doing all that work is already priced into the market. But cool experiment nonetheless! I have also found that I can buy a used Aeron, use it for a few years, and sell it back for like the same price. Not really a quickly depreciating asset .... maybe better than the stock market the last few years ...
I see two problems with estimating price off craigslist.<p>1. List price is not the same as selling price
2. The averaging is being moved by "accessory items" i.e. <a href="http://priceonomics.com/computers/apple/macbook-air/" rel="nofollow">http://priceonomics.com/computers/apple/macbook-air/</a> shows a lot of things that aren't MacBook Airs in the low price bracket. Maybe tossing out anything that is a few SD away from the average would fix that.
there have been stories of people who scavenge for used/old/rare books and resell them for an exhorbitant mark up (<a href="http://www.slate.com/articles/arts/culturebox/2010/10/confessions_of_a_usedbook_salesman.html" rel="nofollow">http://www.slate.com/articles/arts/culturebox/2010/10/confes...</a>)<p>some arbitrage of used goods can be a business; but it ultimately depends on the effort required and sustainable the income generated.
My roommate in grad school did this. He'd buy toys on clearance from local toystores, and then sell them on EBay for twice the price. He wasn't selective at all w/ respect to the actual toy. Just looked for large markdowns.<p>He made decent money, but said that putting stuff in boxes and going to the post office was a hassle. He eventually stopped -- he was finishing med school at the time.
While making a sweeping statement about such business models not working, I guess the op failed to take notice of Gazelle.com, which has been in operation for 3 years now, has raised $46.4M in total with the last round being a series D of $22M. And guess what their business model is, arbitrage on used electronic products. So safe to say, such models can and do work.<p>I also believe that these models will increasingly become more mainstream, because they save people 'time', time which is increasingly becoming the most precious resource that we have. You save 2 hours of time for someone, and pay him $40-50 dollars less than craiglist or ebay, and I am sure you can find a large percentage of people for whom the opportunity cost of 1 hours is more than $20-25, and voila, you have customers.
Maybe an interesting exercise, although the acquired "learning" of difficulty/challenges in shuttling large bulky items around without owning transportation...seems like maybe you should have seen that one coming?
Great post. I think this is one of the fundamental lessons that all startups going through an incubator should learn: have a product, find a customer.<p>The most basic, lowest-common-denominator example of this is arbitrage. Buy one product for X and sell it for X + 10%. If you can't do that with one product successfully that you know there is already a market demand for (e.g. chairs) then how on earth are you going to do it for your startup?
The most fun I've had doing this sort of thing is going to goodwill outlets (aka "the bins" ...of crap) and looking for stuff to flip. You pay by the pound, and the more you buy, the better the per pound rate. And your helping out goodwill with landfill costs. And your reusing something that would otherwise be trash. Everyone wins!<p>You would be astounded at what you can find there... things worth well over 100 dollars show up regularly.
I can't tell if this is a joke or not? Some frail guys can't hack lugging chairs around so it's not a viable business model for anyone? This is a very viable business that you guys feel too entitled for.<p>Open your eyes and guess what a pawn shop, antique store, used office furniture dealer, or IT equipment reseller do. It's not far off from this, but they aren't bitching about it and plugging a silly website.