On value
A few weeks ago, I went looking online for a table to put in my home office to give me some additional workspace. One click led to another, and eventually I found this craft table at Target. But the shipping charges seemed awfully steep, so I decided to google and see if I could find it for less. I soon found it for quite a bit less on eBay, so placed the order. When it arrived a few days later, I was somewhat taken aback to find that it had been shipped directly from Walmart.
Lots of eBay sellers use drop shippers (which means that they never touch the product), but this was my first experience buying from someone re-listing something from a mainstream retailer. For a few minutes of her time, and the cost of the eBay listing, the seller had leveraged the difference between what Walmart charged and what I was willing to pay for a quick $20 or so profit. She’s received slightly over 1200 feedbacks in the past year; if my transaction was typical, that means she’s made at least $24,000. My guess is it’s more, since many buyers don’t bother with feedback.
Is this outrageous? Some people seem to think so — a few people gave her negative feedback when they got the shipment that shows a lower retail price than they paid. I gave her positive feedback, since the item was delivered as described, in good shape. And how is this fundamentally different from what mainstream companies do every day?
James Fallows has a fascinating article in this month’s Atlantic, on the Chinese manufacturing plants where most brand-name electronics are made. One of his points is how little of the money spent by consumers goes to the manufacturers, whether the owners of the factories or the assembly line workers.
The Times today had a blog post about Sarah Jessica Parker’s new line of very inexpensive clothes, and some of the commenters wondered about where/how they were made, given the low prices. There’s a Frances Perkins quote that I love, about how "the red silk bargain dress in the shop window is danger signal." But, as we’ve learned, expensive prices are no guarantee of safety or good working conditions.
The freegans think that they’ve solved this dilemma by not spending money to buy things, but that only works for them because the rest of us are so wasteful. (And I include myself in that, even if I make myself feel better by giving things away on Freecycle instead of putting them in the trash.) And we’re wasteful because things are so darn cheap.
June 21st, 2007 at 11:43 pm
I looked at that eBay page, Elizabeth, and the seller indirectly states what he or she is doing. It’s clear in any case that this is not someone sending you her old used whatever. If it’s new, it’s coming from somewhere, so….As I recall, Sauder’s in Ohio, so at least part of your product is home-grown.
I guess I think it’s possible to avoid a lot of this by being oblivious to a good deal of the consumer culture. Or maybe just by being bored by it and irritated by poor quality. I decided I’m done, for instance, with particleboard furniture. If I’m going to buy any more furniture, I’ll buy it from the guy who made it and who can tell me where the wood came from. My daycare provider just had a “new” wood floor installed in the back room; that wood can’t be newer than 60 years old, maybe came from an auction. Yes, there are a couple of pieces of furniture I could really use now — a couple of desks, some bookcases, a new kitchen table — but it’ll be a few years before I can pay someone to do the job right. Till then there’ll be empty spots in the house and I’ll wait. Eventually A. will need a desk and either I’ll get her something good that she can take with her or we’ll head over to university surplus.
As for electronics, well, again, I think it’s the same story. I used my college stereo system, plus a 1970s Pioneer turntable, for about 20 years. Then I bought some rather expensive components from a Canadian outfit that manufactures and assembles all the pieces, and even most of the machinery to make the pieces, themselves. Other components came from similar high-end places in the US.
I use computers for an average of 8 years, and I don’t care at all that most of the money I pay for Apple stuff doesn’t go to the manufacturers. I’d think something was wrong if it did. The manufacture is the least skilled part; you’re paying for exceptionally good design. I just bought (on eBay, from an actual person) a used iSight camera that looks and works like a piece of lab equipment.
I used to buy A’s clothes on eBay — these days we seem to get hand-me-downs by the bushel — but when I did I used to buy those old Hannas with the made-in-Sweden and made-in-USA labels.
Similarly, with the food…I recognize that this is partly a function of where I live, but man, there’s a lot of organic, locally produced food here. And one small girl and I don’t eat all that much food. We also have a backyard with copious garden space, and friends with farms. So here, at least, there’s no reason to buy food full of Chinese preservatives. (That doesn’t solve your problem when you need antibiotics, though I imagine if you want the stuff made in England or New Jersey you can get it.)
Maybe it comes from being tight, I don’t know. I don’t feel like I’m living some wacked-out hippie lifestyle. It just seems like if you bypass a lot of this way of living — buying lots of stuff, throwing it away because you’re tired of it or it was cheap to start with and has broken — the quandaries don’t really arise, so much. None of this is genius, it’s just the stuff our mothers taught us: Buy good quality, save up and pay for it if you have to, take care of it, and keep it forever.
But then it ain’t people like me who make the economy go ’round.
June 22nd, 2007 at 9:11 am
I second Amy’s thoughts, although with a small tweak. My parents are extremely wasteful, but my *grandparents*. Wow. They grew up on farms during the Depression. They re-used everything. And this modern argument that people back then had more time (for sewing and mending, for canning, for gardens) I think is a crock. Their work hours were incredible. They just had no choice, so they never complained.
On the idea of what constitutes value these days, I do think it’s all about that element of time. The true value-add to any product in the modern world is that which saves you time. Elegant design? All well and good, if it means you don’t have to read the manual to use the device. If you look for a table on eBay, and someone has taken the time to list it there, an argument could be made they’ve provided a service. I understand the logic behind that.
It still doesn’t feel like an honest living, though, perhaps because the work itself is so unnecessary. At the end of the day, Elizabeth could easily have found her table elsewhere. So her seller is not providing a new, needed product or service … s/he’s just getting something in front of buyers a little faster than the other guy. It’s too zero-sum for my taste.
Although who am I to talk? It’s not like anyone would need me to manage software development projects after a nuclear apocalypse!
June 22nd, 2007 at 9:34 am
I feel about my consumer habits the same way I feel about childcare. I wish I had more money to spend so that the people providing a good/service could be paid what they truly deserve and not just what the (incredibly skewed toward middlemen) market will bear.
We are slowly trying to realign/reorganize our family budget so that we can spend our money in ways that will benefit the people who provide a good/service to us (as opposed to some giant store or business that collects most of our payment as its markup and passes on very little to the people doing the actual work), starting with our food budget. We’ve joined a CSA and are seriously considering buying a chest freezer so that we can order bulk amounts of beef and poultry from Virginia livestock farmers. I think it will be a long time, though, until we can afford to live that way when it comes to clothes and housewares.
June 22nd, 2007 at 12:29 pm
Elizabeth, I’m a frequent reader but I don’t think I’ve ever posted. I was very interested to see the Frances Perkins quote–b/c I’ve always had the feeling, as I read your blog, that you’re at least a Seven Sisters grad, if not an MHC grad. You just seem very familiar to me.
And so–did you go to MHC? You can email me, if you’d rather not answer in your comments…
June 22nd, 2007 at 5:23 pm
Jen, I’d say usability is part of good design. My iBook has made me stupid. I haven’t dealt with spyware, firewalls, or viruses in years. The word ‘registry’ makes me giggle. Not sure where the Unix book went, either, even though I know there’s a nifty little BSD engine whirring around in here somewhere. I never have to futz with it. Same with the iSight. I plugged it in, and shazam. Instant grandma.
Re negative feedback: The “this seller ripped me off” attitude bothers me. No, the seller did not rip them off. They were the ones who offered the money, and the seller delivered as promised. Nothing stopped them from typing “walmart-dot-com” into their browser and doing some comparison shopping. Or letting some engine comparison shop for them.
The thing I’m looking at is the payoff. The margin he’s making isn’t that high, even though he hasn’t got the storage overhead. $20 is what, 18%? Less eBay and Paypal charges? Call it 14% all told, and then you’ve still got taxes (incl. 15% SE tax), unless you’re committing tax fraud. The volume he’d have to do on his own to make decent American money that way is tremendous — he’d be in front of the computer all the time managing her sales, esp. given the transparency of bad feedback on eBay. My guess is this sort of thing pays off great if you’re in a poor country where the money goes far, but I don’t see it as a great business inside any first-world country. Not unless you can do it on a tremendous scale. 14% isn’t enough otherwise.
So I dunno, Elizabeth, maybe lazy Yanks are providing some benefit to enterprising types in dirt-poor countries this way. 😉 Worth a microloan or two, I’d say.
June 22nd, 2007 at 5:31 pm
Erika, no not Mt Holyoke — I just found the site googling for the quote, which I ran across years ago, when I was an intern for the ILGWU (the “look for the union label” union). Sorry.
Interesting take on the money, Amy. Could be wrong, but I’d guess that the seller is US based, and a SAHM who does the auctions while the kids are sleeping.
Merseydotes, do you know about Mt Vernon Farm’s buyer’s clubs?
http://www.mountvernonfarm.net/
June 22nd, 2007 at 6:33 pm
Elizabeth, read the ridiculing replies to the negative comments. I bet that’s a hotheaded businessman, not a SAHM. With that many auctions going on at once, I’m also guessing the seller is checking in a bit hyperactively during the day — not just to look at sales, but to scout for deals from other retailers where there’s a reasonable markup to be set. That’s a research-intensive business. Must maintain a certain level of inventory, which means must find enough low-priced products to make the markup.
June 23rd, 2007 at 5:31 pm
I think the only part about this that would bother me is that I don’t like to buy from Walmart, however indirectly. So, in this case, I guess I’d feel duped. It’d probably be my own fault…but I’d still feel that way!
June 23rd, 2007 at 8:12 pm
But TC, you wouldn’t have been duped at all. You’d have been naive, maybe, about how retail commodities work, but nobody would have been tricking you. Sellers aren’t obliged to tell you who they’re buying from or who they do business with. Apart from which, it’s not as though the other big boxes, wholesalers, or manufacturers who sell that kind of stuff are Scandinavian social paragons either. I think if you want to avoid taking part in that kind of commerce you really have to go outside of it and buy different kinds of products (which is akin to what Elizabeth was saying in the first place, I think).
June 25th, 2007 at 1:38 pm
That’s really fascinating. It’s a classic bit of arbitrage.
I think the negative reactions have a lot to do with the fact that people think they are getting a bargain on eBay. Instead, they find that they’ve just purchased marked-up discount merchandise–something that they could have just as easily ordered for themselves if they had known where it was coming from.
Of course, the economist in me says that as long as you paid what you were willing to pay for the product, then you are receiving appropriate value for it.
I would still be taken aback, though, to order something from an eBay seller and discover that it had been drop-shipped from a major retailer. The seller does not disclose what s/he is doing–the only flag is the notice that s/he doesn’t guarantee that the item isn’t available more cheaply elsewhere. I also think people react negatively because they feel like they’ve been made into a sucker. The seller certainly isn’t adding much in the way of value to the product. But, as you point out, neither do most brand-names add much value, and there’s certainly a premium there.
PS: I pasted the item name into Google, and the Walmart site was the fourth link in the list. I am surprised, though, at the sheer price variation for this product. Kohl’s has it listed at $250, while Walmart’s version retails at less than $100. Can they really be identical? Oh and your seller doesn’t seem to be the only eBayer running this particular arbitrage scheme…though reading the snarky feedback responses, I can’t help but wonder if they aren’t the same person. In this case, I think the listings are actually deceptive, as s/he writes that items “maybe shipped directly from our warehouse or from our supplier”, which implies that there is a warehouse of discounted merchandise at the seller’s disposal, rather than all items drop-shipped from major retailers.
In fact, I was still curious about this, so I poked through more eBay listings. Reselling drop-shipped items from Walmart seems to be a very common business model. In all cases, the sellers mention their “warehouse” (though with the disclaimer that some products are shipped direct from the supplier). I do think this is deceptive, though clearly most of the buyers are happy with their transaction. Still, it’s enough to make me wary of purchasing “new in box” from eBay without doing significant research of my own to make sure that I’m getting best price. Caveat emptor!
http://cgi.ebay.com/NEW-Sauder-Sewing-and-Craft-Cart-Table-Cabinet-Desk_W0QQitemZ270135171434QQihZ017QQcategoryZ4836QQcmdZViewItem
June 25th, 2007 at 3:50 pm
Ebay items often go for the same or slightly more than “market value” (understood as the lowest price one would find from a reliable retailer for the same item). I once purchased a poster for slightly more than I could have gotten it direct from the same vendor; in that case, I only looked at auction prices on Ebay.
But I agree with Mrs. Coulter: caveat emptor. Never assume that Ebay provides the best deal, for used or new items. Even without fake bidding and other manipulation, it merely reflects the market price for an item ON EBAY at the particular moment one buys it.