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I Am A Complete Dumbass
Posted by KTK

OK, so Amazon.com offers these “Daily Deals”, right? They pick some item, discount it, and sell a certain number of that item on a given day at the discounted price, until they run out.

Recently they offered a deal on an item that, by coincidence, I had purchased not long before at the regular Amazon price. This annoyed me, because I thought I had been getting a good deal at the regular price (well below MSRP), but they were now selling the same thing for about $20 less than that. I wanted to get in on the really good deal, not just the regular good deal - but of course there was no point in my buying one now, since I already had one.

Then a brilliant plan occurred to me: I could buy one at the discounted price, wait until they had sold out, and then sell it at the regular Amazon price on eBay - thus earning the difference between the sale and regular prices, and essentially reducing my own previously-paid price to equal the sale price, after the fact. But then an even more brilliant plan occurred to me: I could buy a whole bunch of them, wait until the sale was over, sell them on eBay at the regular Amazon price, and earn 20 bucks per unit profit.

So, not to be greedy, I ordered 5 units at a cost of close to $300, and sat down to wait to start shipping them out and earn mass profits. At some point I discovered that I had misremembered my original purchase price; the price differential was actually only $14, not $20, but still, I stood in the way to earn a cool 70 smackers, and that ain’t hay. And at any rate, I knew I had a guaranteed market at that price, since that’s the price they were currently selling for (non-discounted) on Amazon. What could go wrong?

Well, the first thing that went wrong, in fact the moment I clicked the “Buy” button on Amazon, was that I began to feel like a dick. Yes, it’s cool to find deals and it’s the American way to buy and sell schlock merchandise like a bazaar barker in desperate pursuit of the most minimal cash payout, but I realized that I was essentially taking advantage of Amazon’s discount offer to make a profit for myself - and because the discount sale quantity was limited, in doing so I was blocking someone else from getting a good deal who probably only wanted it to enjoy the item for themselves. You can argue that that’s just capitalism at work, but it’s (in a very, very tiny way) one of the ugly things I object to about the way capitalism works - that the constant grinding pursuit of self-interest in every way and form overrides even the most minimal sense of generosity toward others’ welfare. And here I was behaving like an oil company in a nature preserve, just to get 14 fucking dollars out of somebody who wasn’t fast enough to get the discount. So as soon as I had thought about it, I went back to my Amazon account to cancel the order - and found that, in less than 15 minutes, they had already begun processing the order and it couldn’t be canceled. So not only did I feel like a dick, but I couldn’t undickify myself.

So, I sat down again to wait, feeling guilty and wishing I wasn’t in this mess. I began to wonder if I should donate the profits to a charity or something.

Eventually, a big box arrived with 5 identical items in it, all duplicating the one already sitting on my shelf at home. I stashed it away guiltily and didn’t deal with it for a couple of weeks.

Big mistake.

Eventually, I entered 5 identical sale notices on eBay and sat down to wait some more, because it takes a week for the auctions to end. Now, I’m not stupid, right? - before I began this whole adventure I had checked sale prices on eBay and confirmed that they were doing a brisk business in this item, at prices roughly approximating the Amazon non-discounted price. In part because I had only previously sold things on eBay once or twice and didn’t really know the system, in part because I wasn’t sure it would help, I hadn’t specified a minimum sales price on the auctions - but what difference would it make? The going market price was well above my purchase price, so my profits were secure.

After entering my items for sale, I checked a few similar listings just to re-confirm that the market was strong. And then made a sickening discovery.

Somehow, in the intervening couple of weeks between ordering the items and placing them on eBay, the bottom had dropped out of the market for them. eBay sale prices were now running well under the Amazon non-discount price; “Buy It Now” offers at the Amazon price were going totally unclaimed, and some auctions were actually ending below the discounted price that I had paid! And because I hadn’t specified a minimum price, I could potentially lose almost everything I had paid! But I couldn’t do anything about it - if I waited longer, the price would probably just drop further, and I had to get as much of my $300 investment back as I could. So I left the auctions up and hoped I was just seeing a momentary aberration in sales prices.

I forced myself not to monitor the auctions more than once every day or so for the next week, but on the ending day I was mortified: every single auction had ended within a dollar or two of the Amazon discount price that I had already paid, and most of them had ended well below that - in one case almost $10 less! The total combined sales of all items was $25 less than I had paid for them at the discounted price! Luckily, I had specified a $10 flat shipping fee, thinking it would cost less than that, so I had some buffer room, but it wasn’t looking good.

And of course, three of my buyers were from the midwest - not cheap to ship to - and the rest were all from California - as far away as it’s possible to get in the 48 States. And then PayPal took about $2 off the top of each order they processed, and eBay itself charged me more than $3 per order in fees . . .

End result, after splurging on a bulk purchase of a highly popular item at deep discount, selling into a strong, virtually guaranteed market with demonstrated demand almost $20 above my break-even price point, and paying all associated transaction fees (including the cheapest possible shipping method, even at the risk of not keeping my promises regarding shipping dates, because every other alternative was a disaster): I still felt like a complete dick and I lost $18.81.

Which, paradoxically, had the effect of making me feel a lot less like a dick. Instead of elbowing out others’ discount purchases for my own benefit, I actually wound up subsidizing my buyers’ discounts to the tune of an average of $3.76 below my own purchase price - which would have been a substantial savings for any Amazon customer who had not paid for “free” Prime shipping privileges, and at worst no more than $2 above discount (and as much as $10 below) even for those who had. So I did shift the market from Amazon to eBay, which is not what Amazon wanted, but from the broad perspective the only real loser (in various senses) in this scenario is me. So I’m really a kind of altruist.

Great.

April 7th, 2008 General, I do too have a life, Economics, Math, Fiasco, How Capitalism Will Ruin You | 6 comments