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Wed July 27 2016 16:26:37

Story Captures Drama of Selling on eBay and Amazon

By: Ina Steiner

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Every online seller, entrepreneur, and inventor should read this story on Entrepreneur.com, which captures some of the drama of selling on eBay and Amazon caused by something called retail arbitrage.

We first wrote about the phenomenon of retail arbitrage in 2012, explaining how it allowed eBay sellers to carry zero inventory and make their business virtually risk-free by piggy-backing on Amazon and its Prime free 2-day shipping program.

Entrepreneur Magazine makes it personal, telling the tale from the point of view of a small entrepreneur Fred Ruckel, inventor of a cat toy called the Ripple Rug, and delving into the repercussions retail arbitrage has on other businesses.

The title implies it's a scam, though it stops short with the title, "Why It's Nearly Impossible To Stop This Amazon and eBay Scheme." The article refers to eBay sellers conducting Amazon arbitrage as "uninvited middlemen," a form of reseller, and even a parasite. 

Entrepreneur explains why people like Ruckel are so upset over the practice of retail arbitrage, including some loss of control over their brand - and also because returns are higher than they experience with their own direct sales. 

"They steal brands' marketing materials and make money off their products, creating all sorts of consequences for small retailers like Ruckel," the article alleges.

When customers return Ruckel's product sold by an eBay arbitrageur (possibly because they've realized they spent more on eBay than they could get it on Amazon), the customer may be out almost $10 thanks to the re-stocking fee the eBay seller charges, along with a shipping fee; Ruckel loses almost $20 in Amazon fees; and, just as we noted in 2012, the eBay seller still makes money on the return thanks to the restocking fee. 

Have you ever found yourself in a position similar to Ruckel's? Has eBay's VeRO program or the Amazon Exclusives program been helpful (or harmful) to you?

Let us know what you think of Entrepreneur's take on retail arbitrage - is it a fair assessment?




Comments (18) | Permalink

Readers Comments

Story Captures Drama of Selling on eBay and Amazon   Story Captures Drama of Selling on eBay and Amazon

by: Trying-My-Best This user has validated their user name.

Wed Jul 27 20:05:15 2016

Somebody needs to tell Me. Rucked that this is "a cost of doing business" online. Amazon doesn't care nor does eBay for that matter.

Story Captures Drama of Selling on eBay and Amazon   Story Captures Drama of Selling on eBay and Amazon

by: dander This user has validated their user name.

Wed Jul 27 21:30:25 2016

This guy can go to ebay and either use copyright laws or hit the sellers for the fraud. I have had ebay sellers buy my stuff and turn around and use my pictures and sell at a higher price. The whole gift receipt thing is fraud and Amazon needs to enforce their rules. I do feel the guys pain, I have come across companies that will not allow me to sell their products because of the fraudsters and arbitrage.

Story Captures Drama of Selling on eBay and Amazon   Story Captures Drama of Selling on eBay and Amazon

by: alaska This user has validated their user name.

Wed Jul 27 21:46:25 2016

I hate the drop-shippers who have no inventory. They know nothing about bookselling or rare book prices. Lately I came across two of these ''no inventory'' sellers who listed books that were not currently available. In both cases the sellers listed the book at around $2500. The books are worth a fraction of this price and if someone is stupid enough to order one, the seller will look for one online and cancel the order if one is not currently available. In the meantime people think that the book is worth $2500. Longtime antiquarian booksellers cringe when they see this practice. I see so many stupid prices for books on eBay and on Amazon. Many times there are over 100 copies available online for prices averaging, say $50. But some sellers list the book at $5000 and there is nothing special about their copy.  

Story Captures Drama of Selling on eBay and Amazon   Story Captures Drama of Selling on eBay and Amazon

by: FeelingFroggy This user has validated their user name.

Thu Jul 28 00:04:20 2016

It all boils down to BUYER BEWARE as seller may or may not be honest.

Just like the seller thinks the buyer may or may not be honest.

Story Captures Drama of Selling on eBay and Amazon   Story Captures Drama of Selling on eBay and Amazon

This user has validated their user name. by: LasVagueness

Thu Jul 28 02:17:41 2016

The best part of the link (revenge):

“He bought his own hat from an eBay arbitrager for $27 -- and then, before the arbitrager could go to Amazon and make the purchase, Wildermuth changed his Amazon listing price to $199. Result: The arbitrager could either lose $172 on the sale or cancel the purchase, which would damage the arbitrager’s eBay ranking. Wildermuth repeated this about 10 times.”

“I got these frantic calls [from the arbitrager]. He said, ‘Please don’t do this,’ says Wildermuth.”  

Story Captures Drama of Selling on eBay and Amazon   Story Captures Drama of Selling on eBay and Amazon

This user has validated their user name. by: Marie

Thu Jul 28 02:35:01 2016

@alaska

That high price you see on some of those items is most likely the seller intentionally setting an outrageous price on the product so that no one will buy it because they are currently out of stock.  Lots of sellers on Amazon and Ebay use this method.  If they have a listing that has a good sales history, sometimes this is what they choose to do to retain placement in the searches while they search for more inventory.  Many sellers have done this for as far back as I can remember.  Ebay only a year or two ago came up with keeping a listing active while allowing a seller to hide it from the public when it became OOS.  You still pay your listing fees while you have it on hold, but you also retain all the sales history and search placements when you bring it back live.

It's just a very old business practice that some still use.

Story Captures Drama of Selling on eBay and Amazon   Story Captures Drama of Selling on eBay and Amazon

This user has validated their user name. by: White Rabbit

Thu Jul 28 07:06:58 2016

I just had this happen to me. I ordered some Supplies from Ebay from a guy selling from Israel claiming free 3 day delivery (a ground only product not ship able with us mail) after 3 days.. i get the ebay sale cancelled by the seller and refunded. There is no way to leave feedback on the seller and i was not consulted on the refund in any way. the item was then relisted and the price jacked up 10%. I bet money the seller has zero inventory and is buying on amazon and drop shipping. I called ebay and asked why i could not leave feedback.. they said they did not know why? but.. they would contact the IT dept and see why this was not an option..LOL YES Right! the Easter Bunny has arrived! they want me to believe that they are fair and treat sellers the same? no feedback option... zero

so yes, this is supported by Ebay. I did re order the needed item from another seller and hopefully it will arrive soon. :-)  a week later.

Story Captures Drama of Selling on eBay and Amazon   Story Captures Drama of Selling on eBay and Amazon

by: Chicago48 This user has validated their user name.

Thu Jul 28 07:08:10 2016

For this particular seller, it would be better to get on QVC than AMZ.

Story Captures Drama of Selling on eBay and Amazon   Story Captures Drama of Selling on eBay and Amazon

by: Chicago48 This user has validated their user name.

Thu Jul 28 07:17:03 2016

I was watching TV and there seems to be a "banned" customer in effect.  If a customer returns too many products to AMZ in a short amount of time, they are banned from the site.
Maybe something like that should be instituted for Drop shippers, since the return rate is high.

Story Captures Drama of Selling on eBay and Amazon   Story Captures Drama of Selling on eBay and Amazon

by: pace306 This user has validated their user name.

Thu Jul 28 09:29:04 2016

I'm not sure why it's a "scheme".

Plenty of large sellers I know, use Amazon as their warehouse. They sell on Jet, Walmart, ebay and Amazon itself and ALL their goods are in FBA.

When a sale comes in to any site, they get Amazon to ship for them. Yes under eBay rules they won't be top rated but they don't care. They care about making sales and profit not playing eBay word games.

The arbitrage issue is different. There the seller is %100 virtual and doesn't ever own the goods.

If you play that game and get caught short, then that's your own fault.

Btw- what does this have to do with the criminals over in ebays  VERO department, Ina?

Story Captures Drama of Selling on eBay and Amazon   Story Captures Drama of Selling on eBay and Amazon

by: mindelec This user has validated their user name.

Thu Jul 28 11:03:26 2016

So someone is buying this cat thing for $40 on amazon and selling it for $50 on eBay? By my math they might be making $4-5 per cat thing sold.  Not even worth the effort....

Story Captures Drama of Selling on eBay and Amazon   Story Captures Drama of Selling on eBay and Amazon

This user has validated their user name. by: The End

Thu Jul 28 12:38:19 2016

It's hopeless

Story Captures Drama of Selling on eBay and Amazon   Story Captures Drama of Selling on eBay and Amazon

This user has validated their user name. by: Marie

Thu Jul 28 13:33:32 2016

I agree with Pace.  It can be done properly.

And for those that are true drop shippers, that doesn't automatically make them a bad seller or some type of scammer.  A responsible seller can do it responsibly.  And many do.

Some are trying to paint sellers with a wide brush that is entirely inaccurate.

Certainly there are bad sellers that dropship and/or use Amazon in the way described here.  It is the minority NOT the majority.

Story Captures Drama of Selling on eBay and Amazon   Story Captures Drama of Selling on eBay and Amazon

This user has validated their user name. by: VV

Thu Jul 28 16:10:06 2016

The article was more of a veiled ad for DSDomination.com than anything.

Story Captures Drama of Selling on eBay and Amazon   Story Captures Drama of Selling on eBay and Amazon

by: 27tcle This user has validated their user name.

Thu Jul 28 19:18:42 2016

It's a hustle pure and simple. Nothing really wrong with it assuming you have a good appetite for risk and choose your product wisely. It is kind of funny that ebay is supported on the shoulders of amazon though. I LOL'd.

Story Captures Drama of Selling on eBay and Amazon   Story Captures Drama of Selling on eBay and Amazon

This user has validated their user name. by: White Rabbit

Fri Jul 29 10:50:42 2016

In my case this week, I found it to be very annoying to look for the best price, shipping and delevery time and purchase, then 3 days later.. (the shipping time said 3 days) to have it cancelled and relisted for more at the same time. This is not the way a company wants it's sellers to treat the buyers.

in Ebay's case this behavior was facilitated by allowing zero feedback for the seller. If I as a seller tried this I would have most likely gotten a negative from my buyer as that is normal procedure on Ebay for sellers as it is an option to leave feedback for cancelled orders by the seller without the buyer's request and agreement.

Story Captures Drama of Selling on eBay and Amazon   Story Captures Drama of Selling on eBay and Amazon

by: mcposty This user has validated their user name.

Mon Aug 1 12:42:41 2016

This isnt a scam, its a reasonable business..its used by amazon themselves, wayfair, houzz, home depot.

Its the arbiters business what he does with the merchandise.

Of course, it could be a head ache, but its all of their fault because they have empowered Amazon and ebay instead of using their own websites which theyd have more cobtrol.

Sadly, sellers greed have made them slaves to amazon and ebay, now they deal with the consequences.

Story Captures Drama of Selling on eBay and Amazon   Story Captures Drama of Selling on eBay and Amazon

by: mcposty This user has validated their user name.

Mon Aug 1 12:47:00 2016

White rabbit, heres a rabbit hole: ebay owns thousands of accounts which arbitrage..since its ebay they have zero risk, simply cancel.

Ebay uses itself



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