Do you know what the eBay High Demand Gadget Game is? Well, it’s when a company offers a much anticipated, high demand product with a low supply and you snatch a few up so you can post them on eBay for a nice premium. It’s actually quite fun, I haven’t participated in it much recently, but I had done it in the past with much success if you do it right. If you do it wrong, you could actually take a perfect arbitrage and profit scenario and end up losing money.
Is It Actually Low Supply?
You know the Apple iPhone that was just released? People were standing in line to get one… but they could’ve just gone to the Apple Online Store and ordered the 4GB version for $499 and the 8GB for $599 – shipping in 2-4 weeks. It’s not like the Nintendo Wii which you still can’t buy, unless you want to overpay for a bundle, without calling up stores beforehand to check on their shipment schedules. Check with the manufacturer to see if they’re actually going to be in low supply or not…
Is It Worth It?
First you must gauge the actual demand, check eBay prices to see how they stack up and take a 20% premium off the closing prices. The 20% is to discount the hype, pre-release promises to deliver, and to account for some of your transaction costs (sales tax, gas). If it’s still worth it for you to stand in line for however many hours before the store opens, you better get a comfy chair read and some sandwiches.
Check out this hilarious story about a woman who brought $16k to buy out a store’s supply of iPhones, paid the first kid $800 for his spot, and then found out she could only buy one phone (I thought the limit was 2, but it certainly wasn’t unlimited). She took a nearly winning proposition (8GB goes for around $700 on eBay, so she’d make maybe $150 or so after everything) and made it a losing one by paying out all these unnecessary incidental costs. The kid also got a phone too plus a few hundred bucks.
Don’t Buy On Secondary Market
So you see that hot gadget on eBay or Craigslist at a steal of a price and you figure you can turn around and resell it for a quick profit right? Avoid the temptation! Either something is wrong with that particular item or you’re going to get scammed, the seller has as much information as you and you’re likely walking into a bad scenario. If you want to invest in any secondary market, at least let it be the stock market so that when you lose money no one will make fun of you.
Sell It Immediately
Do not wait. Do not pass go. Sell it. Once you get it, get your butt on eBay or Craigslist and sell the sucker as soon as possible. eBay is nice because you can set a reserve and if it isn’t met to your satisfaction, you can simply return the product to the store and you’ll have lost nothing but eBay listing fees. Craigslist let’s you avoid all the fees of eBay, which can be hefty, but you do have to deal with people trying to wheel and deal and the occasional no-show at meets.
Why do I recommend selling it? There’s a reason why there’s a saying, “A bird in the hand is worth two in the bush” and that’s because it’s true more often than it is false. Think of all the people who could’ve sold a PS3 for over a thousand bucks when it was first released but decided to wait until Christmas because they thought the demand would spike along with prices. Unfortunately that didn’t come to fruition… take the money now.
Warning: The Craigslist Sale
If you do arrange a meeting, be sure to do it in a public place (not your house) and don’t bring the product with you, leave it in your car that is also in a public place. If you have a friend who you don’t mind imposing on, get them to come with you. Only take cash – accept nothing else. There are many unsavory characters who would love to come to you house or a dark alley, beat the crap out of you, and steal that gizmo. Be very very careful with this.
There you go, enjoy the life lessons from a recovering eBay junkie, go forth, and play the eBay High Demand Gadget game and rake in the cold hard cash!