Amazon + Half.com Arbitrage
This week I was introduced to the genius world of Half.com + Amazon arbitrage.
What's that, you ask? Let me explain.
Apparently there are a few people who have written some programs which look at Half.com (through the eBay APIs) for products at cheap prices, then automatically post those products on Amazon's Marketplace (through Amazon's APIs) for a markup.
Once the product sells on Amazon's marketplace and the developer receives notification, they automatically buy the product from the Half.com seller, telling them to ship it directly to the address of the Amazon buyer.
Of course, they also watch the Half.com listings at all times to ensure they aren't bought and if they are, they cancel their Amazon listing immediately.
This is so genius. You can easily take 30% premiums with virtually zero costs day-in and day-out. Once the program is written, you literally don't have to do any work. Allegedly, one developer is pushing ~$350,000/mo of goods this way. We looked up a couple of his listings and they were between 25%-45% markup, meaning he's likely making between $87,000-$150,000/mo. Not bad.
I'd love to see this on a larger scale, perhaps with more retailers. I'd love to see the developer keep the data and use that for predicting eBay auction prices and using eBay along with Half.com. There's a whole slew of things you could do with this type of data.
One interesting side note is that apparently in most cases the Amazon Marketplace is worth more than Half.com.
What's that, you ask? Let me explain.
Apparently there are a few people who have written some programs which look at Half.com (through the eBay APIs) for products at cheap prices, then automatically post those products on Amazon's Marketplace (through Amazon's APIs) for a markup.
Once the product sells on Amazon's marketplace and the developer receives notification, they automatically buy the product from the Half.com seller, telling them to ship it directly to the address of the Amazon buyer.
Of course, they also watch the Half.com listings at all times to ensure they aren't bought and if they are, they cancel their Amazon listing immediately.
This is so genius. You can easily take 30% premiums with virtually zero costs day-in and day-out. Once the program is written, you literally don't have to do any work. Allegedly, one developer is pushing ~$350,000/mo of goods this way. We looked up a couple of his listings and they were between 25%-45% markup, meaning he's likely making between $87,000-$150,000/mo. Not bad.
I'd love to see this on a larger scale, perhaps with more retailers. I'd love to see the developer keep the data and use that for predicting eBay auction prices and using eBay along with Half.com. There's a whole slew of things you could do with this type of data.
One interesting side note is that apparently in most cases the Amazon Marketplace is worth more than Half.com.
posted by Ian Sefferman at 12:18 PM
3 Comments:
It is probably true that Amazon Marketplace is worth more than Half.com, but that is due in part to the simple case of fees. Assuming that I understand the fees on both sites correctly, as a seller on Amazon, you have the 15% commission, the $0.99 per-transaction fee, and then closing fee of $1.20 on books. Half.com only charges the 15% commission or less depending on the final price.
So, lets say using this idea you find a $20 book on half.com with an $3.70 shipping cost that seems like the average there, you would need to mark it up 32% to $26.40 to just break even at $0.04. That would be $26 sold price + $3.49 shipping reimbursement. Then you subtract $3.90 in commission, $0.99 in transaction fee, and $1.20 in closing fee. That equals $6.15 in fees bringing your Amazon take-home to $23.74 or $.04 profit.
If you could get the 40% markup or $28 sold price, you would make $1.40.
Now I know you can pay for a pro merchants account on Amazon to eliminate the $0.99, which would make sense if you could make this work and have more than 40 items every month. Overall the key to making a decent little amount would occur if you could find a steady stream of books on half.com that could bring a sold price high enough to make the percentages work. For instance a bunch of $50 books marked up 30% would bring you $2.85 in profit each. If your program would really mean virtually no work on your part, bring on $2.85 all day as long as you get enough inventory to make it worthwhile.
The idea itself seems great, who would not want to take advantage of a market difference like this to make a super easy profit, and I guess some people are making it work out. It just seems a little hard to believe the two markets between Amazon and Half.com or so inefficient that one could push $350,000 worth a month.
In addition, you could consider the fact that you have no quality control over the condition of the books nor shipping, a few no-shipments or condition problems with books could start hurting you feedback and costing you money in refunds.
All that said, if I had the programming ability, I would still probably give it a shot, just because it does sound interesting in principle.
How are you pulling products from Half.com????
Yes. I believe people can do that. Actually www.equidation.com put both eBay and Amazon's prices together for comparision. It makes this process much easier. The most interesting part is that it also have recent sold and expired listings. Here is a sample list for the recent sold some cars. Check it out.
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