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August 18, 2006
Is there no arbitrage in online retail?
(Posted by francois to: interesting links | marketing | pricing )
When Ritz Camera told me it would cost a flat $250 to fix my Canon 10D digital camera without even looking at it, it caused me to pause and look at what my options might be.
Since I bought the camera a few years back Canon came out with new models that seem to deal with the issues I was having with my early digital SLR - especially those related to focus and sharpness. Switching brands isn't really an option, as I have generally been happy with my EOS cameras and assembled 4 different lenses for it so far.
Instead of fixing my existing camera (which one day started to develop a dark band on the bottom of my pictures - indicating some sort of miss-alignment of the mirror system as far as I can tell) - I decided to look at the alternative of buying the new 30D.
My surprise came when I started looking for the best price for the 30D. If you look around you can see prices as low as $639 for the body without shipping charges. When you look at 3rd party sellers on Amazon.com or if you check eBay, prices do not seem to go below $1,000 for a new Canon 30D body.
Is there no arbitrage in online retail? Or am I missing something? Could someone actually make $500 per camera by buying and reselling online?
It is not a business I want to get in, but unless I am missing something (which I often do), then the theory that online retail, with all of its online-transaction "data exhaust," would "even out" the power balance between buyers and sellers does not hold true...
What is it that I am overlooking??
[Tags: arbitrage buyer power ads online commerce ]
Posted by francois at August 18, 2006 6:30 PM | Bookmark This
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Comments
Good pick for a camera. You can always opt to get a 20D.
Nowadays a slightly used one goes for $700.
Posted by: chris lee at August 19, 2006 2:21 AM
why would I do that, if i can get a brand new 30D for $639?
Posted by: francois gossieaux at August 19, 2006 8:03 AM
Francois - What is it that I am overlooking?? Not a thing! I know for sure arbitrage is happening on the auction sites - I do it every day and even wrote a book on it. In fact, some online Retail purchases resold at online auction can yield profit. I think the power balance you mention still lies in peoples eagerness to seek lower pricing before purchase vs buying the first thing they see. -Don
Posted by: auction-arbitrage at August 19, 2006 5:03 PM
Don - thanks for responding to my post. I know there will always be some delta and some room for arbitrage and profit making with online auctions, but I was puzzled at the magnitude of the price delta for those cameras.
Posted by: francois gossieaux at August 19, 2006 5:38 PM
I've been watching the ebay market for some years now.. Unfortunately, there aren't any limits to what people can charge for any given item and sellers will do it if there are willing buyers out there. What's funny is that some people will buy the first thing they see without doing any research.
Posted by: Maria Palma at August 22, 2006 5:59 PM
I would be very careful! If you see an online advertised price of 75% or less of the MSRP of a new digital camera, it is likely a scam. Sites come out every single day that will scam you. They work one of two ways:
One, they will sell you the camera body only - and I mean the camera body only. No battery, no body cap, no charger, no instruction manual, no strap, nothing. By the time you've bought everything that comes in the retail box, you haven't saved a dime.
Two, they require that you pay by money order. This is the oldest scam in the book. There is absolutely no way to get paid back for fraud this way. If you use your credit card to buy a money order and then never get your camera, the credit card company can do nothing because technically you received the services you paid for (money order). Anyone who asks you to pay with a money order is a crook.
Unless it's a site like Ebay or you're buying a used camera, don't pay much less than what Amazon or other large companies charge. Otherwise, you could easily be getting scammed.
Good luck!
Posted by: Amber at December 1, 2006 9:39 PM
Thank you Amber - I am a seasoned online purchaser - having bought anything from books to adventure trips to luxury cars online - and clearly this time I got burned :)
What happened with this vendor is that I was sold a Chinese model with nothing on it...not even a manual. I could not cancel the order until I spoke with a human being...And even though I always check on a vendors reputation using CNET or similar services, this time I ended up on a vendor rating site that only listed crooks (i found out by doing a Google search afterwards...all of them had "DO NOT BUY FROM THEM" in the first comments).
The good news is that I was able to get out of it with no loss. But it makes you wonder how many people are being taken to the cleaners this way.
Posted by: francois gossieaux at December 4, 2006 6:49 PM
