"I can get much better value on eBay!" - the dark side to a great bargain

[*CountessA*]

http://www.dispatch.com/live/content/local_news/stories/2010/12/30/nationwide-employee-sentenced-to-212-years.html?sid=101

Agents with the FBI Cybercrime Task Force and the U.S. Postal Inspection Service found that Bi had sold more than 35,000 computer games with a retail value of $700,000.

The spreadsheet listed more than 50 eBay and PayPal accounts, all with different names. Bi told investigators he used other people's information on the accounts because eBay and PayPal had suspended his accounts and do not allow a new account with the same name and address as a suspended account.

Investigators found that Bi had sold the games from 2005 through December 2009 for $10 rather than the $20 retail price for an original new game. He also had allowed customers to download games purchased over the Internet, using a server he leased under the name TML Direct.

BNWT posted this link in the media thread, and I've just used this example in a thread about identify fraud in eBay and PayPal. This thread is focusing on something different... the "Wow, What A Bargain!" factor. I'll call it the WWAB factor from now on.

WWAB can give a false impression that the legitimate price for an item is overpriced. "I can get it much cheaper!" we might exclaim as we look at a shop or in a catalogue. But think about it: if someone is selling an item for half the RRP, how can that possibly be legitimate?

Sellers of such items sometimes use the line that they don't have the overheads of shop premises and staff. Buyers have this ingrained in them as well, so that it's a subconscious rationalisation for a bargain that's too good to be true. But the truth is that no one can afford to sell an item THAT cheaply unless there's something dodgy about it.

Possible reasons for finding an item online with a WWAB factor:

  1. It might be fraudulent / counterfeit - copied by the seller.
  2. It might be an imported fake (Chinese copy) - sold by the seller (and he might have "asked no questions" but that doesn't excuse him).
  3. It might be the result of a theft - stolen from the shop by an employee, stolen by a postal employee, stolen in a break-in, somehow obtained illegally.

When we see an item with WWAB factor, it can pay to ask ourselves - "Is this too good to be true?" A bit of research about the price of an item generally can give us some idea of just how low the price could actually go if it were legitimate and the seller were making the bare minimum of profit. Clearly no seller can afford to give away an item for less than he paid for it. Clearly no seller can afford to make NO profit. So what is the minimum profit he could make? And what is the average discount / margin which a seller has for the item in question?

(A bit of research usually turns up the answer. It varies for the type of item.)

And if it's too good to be true, it cannot be true. These are the possible results if we follow through with buying such an item:

  1. We receive a fraudulent / counterfeit / fake item.
  2. We receive a stolen item.
  3. We receive nothing - and the seller's skedaddled off to enjoy his profits for selling a non-existent item.

[tellomon]

*snipe*

[tellomon]

This Thread
has been
dormant
too long.

Therefore:

This should be a Public
Service Announcement
of "Your Thread Sucks, Inc."

[callostemma]

It all comes down to our greed of wanting something for next to nothing,
(drat  how dare they outbid me!)

[*CountessA*]

I was outbid today...  :violin:

It was a letter rack from 1900, and my heart wasn't 100% in it. I actually want something about 60 years older than that. I decided on my maximum bid, set the bid to snipe, and lost out.

However, I am satisfied that my final bid was the highest amount I was willing to pay for the letter rack.

Antiques and vintage items are in a different category to items attracting WWAB, though.

[lacey]

That's right Tessa.  A business has to double the price they paid for it, to cover delivery, wages, Ins, rent and all other stuff involved in running a business.  If someone can offer an identical item (same brand and all) for 1/2 RRP or less, it's definitely hot.  And if they get caught, so be it. I have no sympathy.

[*Brum6y*]

A sound approach and a healthy philosophy, Countessa - and one I observe myself.

Here's hoping an 1840 letter rack passes your way.....

[golden]

I can agree with most of it but what about books??

I hardly ever go to a shopping centre, but you do walk past legitimate sellers (ABC, Collins etc) who have books out the front reduced from $59.95 for eg to $9.95 as an example!!  Did the bookseller buy them for $49,95 try and sell them for $59,95 and just have to cop the loss? Or does the publisher wear the downturn? Or does Burnside just say now I get $1 per book not $25, Its one of the only items that have a RRP printed on the book in every nations dollar value yet seems to be the worst culprit..  Maybe its just an exception to the rule??

[*CountessA*]

No, Golden - on the contrary.

Booksellers are among the most besieged sellers. They are lucky to get 30% discount from the publisher - no returns in most cases, so what the seller buys the seller must somehow sell.

If you see a bookseller selling books reduced from $59.95 to $9.95, it's probably what is known as a "loss leader". The seller puts some books sure to attract customers out in the front, with a special reduced price that doesn't even BEGIN to cover the cost price, in the hope that the buyer will not just buy that one book but other books as well (at retail price).

Another possibility is that the reduced book may be a "remainder", sold by the publisher or distributor at vastly reduced price. Quoting: "Remaindered books are books that are no longer selling well and whose remaining unsold copies are being liquidated by the publisher at greatly reduced prices. While the publisher takes a loss on the sales of these books, they're able to make some money off the sale and clear out space in the warehouses. Copies of remaindered books are marked by the publisher, distributor or bookseller, to prevent them from being returned. 'Remainder marks' have varied over the years, but today most remainders are marked with a stroke with a felt-tipped marker across the top or bottom of the book's pages, near the spine."

Bookstore chains and supermarkets also have greater buying power than the average bookshop, so they can squeeze a higher discount out of the publisher or distributor. However, this additional discount is usually not passed on to the customer in the form of margin parity - except in a few titles that are specifically designed to lure in the customer.

I prefer not to have remaindered books unless it's a cheap title I'm only going to read once. I refuse - absolutely flat-out refuse - to support supermarkets with buying DVDs or books. They get the best discount of all, directly competing with smaller shops that cannot possibly sell at less than RRP, and give an entirely false impression that booksellers are somehow raking it in. I support specialist bookshops and specialist music shops, appreciating their first-hand advice and recommendations. However, I do buy from Amazon if I cannot obtain a particular title locally or if a title's out of print or if the only edition I can buy locally is an American edition with American spelling and grammar - (Yes, I admit it. I am a secret agent of UK-Spelling, MI20, a division so secret that you will just smile as you read this, thinking I'm making it up...)

[low-enghooi]

Booksellers are among the most besieged sellers.

I could be wrong. My thinking is a lot of good booksellers do not have good business sense.