How online sellers turn bargains into profits
With the start of the holiday shopping season, the National Retail Federation estimates 68.7 million Americans will shop online this Cyber Monday. But what shoppers might not know is that the item they just bought online could have been sitting in their local store for a cheaper price.
"CBS This Morning: Saturday" co-host Michelle Miller spoke with some bargain shoppers who buy products just to resell them online for a profit – a practice known as retail arbitrage.
Chris Anderson goes to great lengths to find a deal. Logging 40,000 miles a year in his van, he buys an item for a discounted price in one market, like a store, and then sells it for a profit in another market, such as Amazon.
When Anderson spots a promising item, he uses a smartphone app to see just how much and how often it's selling for online. Then he scales up, buying it again and again. It all goes into his van, and then to his 200,000-square-foot warehouse in central Pennsylvania. Once it sells, it goes to an Amazon fulfillment center and then on to the buyer.
Boxes of soy sauce that he bought for about $2,000 from a trader in Philadelphia will probably sell for $5,000 to $10,000, he said.
"How far have you gone to find your deals?" Miller asked.
"Oh, I've driven all the way down to Florida, all the way up to Maine, Massachusetts. Gone all the way out to Iowa. Pretty much anywhere," Anderson said.
"One of the more unusual things I found was a whole bunch of beer tap handles … I found about 200 of those at a store … and they're like $40, $50 on eBay and Amazon and I was buying them for $5 and sold them all real fast. People love them," he said.
While arbitrage is nothing new, outlets like Amazon, eBay, Craigslist, Facebook Marketplace and Poshmark have turbocharged the business. That's led to an online community of sellers who are getting in on the action, including Mike "Reezy" Rezendes. He's been selling products online for 15 years.
Rezendes said he's done $5 million in sales on Amazon alone, often spending thousands of dollars on a single shopping trip to flip all the merchandise for a profit.
"We have so much data available to us as sellers. It's not like back in the day when you ran a store and you ordered product, you don't know what's going to sell," Rezendes said. "Well I know what's selling, I know how fast it's selling, I know what it's selling for on average and so I know how much I can buy. There's not a lot of guess-work involved in it."
But Rezendes takes it a step further. His Youtube channel, "Reezy Resells," is dedicated to helping novice sellers stay in the black.
"For the longest time, I didn't tell anybody what I did, and I was super- like I thought I was like James bond, right. I was super quiet about it," he said. "I always wanted to help people and change the world … and then I was like, 'Oh this is how I'm going to do it. I'm going to teach people to make money online and they're going to appreciate that' … and oddly enough, I actually make more money now that I share information."
"So it's like the universe giving back," he said. "And that's what I'm a fan of."
Rezendes said he makes more money from his Youtube channel and social media than actually selling items.
"I didn't really start out helping people. I just started doing it," he said. "And then what happened was I would get messages from people and they'd be like, 'Oh, you helped me,' 'Oh, we're in Disneyland with kids, and it's all because of you.' You know, people would find me in public and approach me crying like, 'Oh, I paid off my college debt because of you,' and I'm like, 'Oh, wow.'"
While people like Rezendes make it look easy, there are plenty of risks involved.
"If this is going to be your actual way of making a living then there are hard costs that are wired into the process. So, it's not just the warehouse, and it's the time and it's insurance and it's being able to actually keep track of what you have," said CBS News business analyst Jill Schlesinger. "It's not for everybody and I think it's not for most people."
But that doesn't keep Anderson from living a life out on the road.
"I absolutely love it," he said. "This has been the best job I've ever had."
