Opinion

Felix Salmon

Amazon arbitrage of the day

By Felix Salmon
August 20, 2009

One of the best travel books ever written (indeed, one of my favorite books, period, ever) is The Surprise of Cremona by Edith Templeton. Unfortunately, it’s not easy to find: your best bet is to track down the 2003 Pallas Athene paperback with an introduction by Anita Brookner.

If you go to the Amazon page for that book, you’ll find there are “7 new” copies for sale. The cheapest is $20; the most expensive is $166.18. Woody’s Books, for instance, is selling the book for $27.50 — plus a $125.79 “sourcing fee”, plus $3.99 shipping from New Jersey — $157.28 in all.

On the other hand, if you check the book out on Amazon.co.uk, you’ll find “6 new” copies for sale, including Woody’s UK, which will sell you the book for £12.99, plus a sourcing fee of just £0.01. Shipping, to the US, is £3.08, for a total of £16.08, or about $26.51 in dollars — less than the sticker price on the US book before the massive sourcing fee. And yes, the book is still shipped from New Jersey.

In other words, the same book, from the same US-based seller, being shipped to the same US address, costs either $26.51 if you buy it on Amazon.co.uk, or $157.28 — pretty much six times as much — if you buy it on Amazon.com. There might be a good reason why Woody’s is doing this. But I don’t think it reflects particularly well on Amazon.

Comments
13 comments so far | RSS Comments RSS

I remember this one time during my undergrad years, the university book store ran out of used copies of a textbook, leaving only new, hardcover ones at over $100. It was much cheaper to buy a new soft cover version ($10 or so) from amazon.co.uk. At the end of the semesterI made a significant profit reselling that book since my only local competition was asking for over $70.

 

Yesterday you posted the bike/car datapoint post and you had some really knowledgeable bike comments pop up. We’ll see if you get any knowledgeable online book dealers chime in on this.

Having inexpertly dabbled in the online book field years back, this looks like it could be an example of a drop shipper, which it technically illegal on Amazon, and which they penalize severely because of the very reason that you pointed out in your last sentence. Without having the actual copy of the book in stock, a drop shipper posts the book on amazon (or elsewhere) at a price that allows them to buy a copy from another seller and ship to their customer at a profit. The copy listed on both amazon.com and .co.uk looks like they could safely make a profit if someone bought their copy; an unlikely occurrence, but within the realms of possibility if you have a lot of books listed on a lot of sites.

A drop shipping operation requires upkeep of massive datasets that a dealer has to create, routinely check against the existing market on numerous book selling sites, then lists the adjusted ‘inventory’ with inflated prices. However, these fixed datasets function in a static marketplace, and so a quoted price could put a drop shipping in the odd position of either canceling the order or eating the loss when market forces cause book prices in all venues to shift suddenly (like you recommending a book, for example).

Looking at the sellers feedback is advised in these cases- books coming from somewhere other than where the dealer is located, lots of ‘out of stock’ feedbacks, etc are clues that something like this could be going on.

Cheers,

Posted by Mark Beauchamp | Report as abusive
 

And then go check the price on abebooks.com: 4.27. ( http://www.abebooks.com/servlet/SearchRe sults?isbn=1873429657&sts=t&x=36&y=13 )

I used to write code for a company (not Woody’s) whose main business is book arbitrage of exactly this sort. There are lots of interesting questions around pricing the books for maximum profit.

Posted by Rather Not Say | Report as abusive
 

@Mark

The key for a consumer to get the best price is simply to use a book price comparison tool such as this one: http://www.allbookstores.com/book/compar e/1873429657 .

If you’re buying a used book on Amazon instead of the amazon copy, you should assume it will be drop shipped and also that it doesn’t much matter; our average drop ship book quality was just as good as the used books we had in our warehouse. I’ve never understood why people get so up in arms about drop shipping, as long as the company has decent customer service.

Posted by Rather Not Say | Report as abusive
 

@ Rather Not Say

It’s been a long time since I talked books… back in the day, I used addall.com – I like the allbookstores features though.

I see your point- no hurt to the customer, no foul; but (from what I recall) amazon.com has requirements that a dealer has the book physically in stock- their requirements, not mine. It (personally) wouldn’t bother me one bit to see someone profit by connecting a paying customer with a product, but it’s obvious that amazon sees it as a risk.

The reason most people (read: other dealers) get ticked is don’t like being the middle-men and taking only part of the final cut.

Posted by Mark Beauchamp | Report as abusive
 

I “purchased” a book (not from amazon) recently where:
– The day after purchase I was told the book had shipped, but would take up to ten days to reach me.
– Ten days later, I got told the book was not in stock and they cancelled my order.
It’s pretty clear to me that I just wrote them an option whereby they got 10 days to try and find a profitable source. So even if it can sometimes be irrelevant to the consumer whether something is drop shipped, it can also enable unethical business practices like the one I encountered. Bottom line: as a consumer, I applaud Amazon’s policy.

Posted by axg | Report as abusive
 

This is only slightly related, but I frequently get movies and TV series from Amazon UK – and get them much earlier than I can here for better prices. Love the Brit TV show Shameless, but only series one has been released stateside. Amazon UK has series 1-5 for $45, whereas I’d be stuck waiting and probably paying $30/season. Read a WaPo review of book about the Baader-Meinhof complex and saw that a movie had been made out of it. Thought the American theatrical release was still months away and the book at hardcover prices, Amazon UK was offering a discounted package deal on a paperback version of the book and the DVD for $15.

Posted by Mike | Report as abusive
 

@axg

“It’s pretty clear to me that I just wrote them an option whereby they got 10 days to try and find a profitable source.”

Given the crazy competitiveness of the Amazon book market, I assert that it’s game-theoretically impossible for the booksellers to *not* drop-ship. In exchange, you get really low prices and a vast selection of used books, but the possibility of no book.

I suggest that if you *must* have the book, you should buy it new. Amazon’s inventory system is assuredly better and updated faster than that of the podunk used bookseller you bought it from, even if they have it in stock, and so you’re still taking a chance.

The discount you get on used books comes from the chance that you’ll get no, a drop-shipped, or a damaged book.

@Mark

Amazon “prohibits” drop-selling because it looks good to do so and people get angry about it.

Meanwhile, they have every incentive to allow it to occur, as it increases the range of used books they offer, lowers their prices, *and* makes Amazon itself seem relatively more reliable than the used booksellers. They get a cut when it works, and can shrug their shoulders and say “sorry, not our fault” when it doesn’t.

Posted by Rather Not Say | Report as abusive
 

Good tip – just ordered it for 1 penny from UK Amazon (plus £7 postage to Australia). Agree on the great value of DVDs from UK Amazon, and the variety…

 

@Rather Not Say

“Given the crazy competitiveness of the Amazon book market, I assert that it’s game-theoretically impossible for the booksellers to *not* drop-ship.”

Nonsense. Just don’t list things you don’t actually have- that makes it easy to not drop-ship.

You are saying that “crazy competitiveness” is forcing dealers to do something that amazon prohibits. And I know, I know, you say amazon winks at successful dropshippers because they get 15% of the deal; but amazon has to refund that % if the drop shipper can’t find the book, AND they lose some amount of good will and trust. That kind of loss isn’t immidiately tangible, but it’s a big deal to a big company like amazon.

“Amazon’s inventory system is assuredly better and updated faster than that of the podunk used bookseller you bought it from, even if they have it in stock, and so you’re still taking a chance.”

You’ve sketched a completely distorted picture of the world of used book sellers in which there are only sharks and podunk incompetents, and nuts to amazon’s used book customers.

I’ve known a lot of high quality booksellers, some with 500 book online and other with 50,000- most are keeping their brick and mortars open by having an online presence. They only list what they have in stock, they carefully assess and describe each individual book, personally send an email thanking the person for their order, wrap the book themselves and haul the book down to the post office themselves. And a bookseller like this has an inventory system that is assuredly better than any drop shippers. And, they have way better ratings from their customers.

I said before that it wouldn’t bother me one bit to see someone profit by connecting a paying customer with a product – but I have to question any argument that involves the disparagement of honest, hardworking booksellers and amazon.com itself in order to justify something that’s breaking amazon’s own rules.

Cheers.

Posted by Mark Beauchamp | Report as abusive
 

@Mark

I have no problem with your b&m stores selling books online and being nice about it. However, many companies sell only online, and must stay alive. And for them, the choice is: dropship and grow, or don’t and stagnate.

As for Amazon’s part in the issue, I didn’t argue that they don’t see *any* negatives from dropshipping, just that the positives outweigh those and that their revealed preference is to allow dropshipping.

> a bookseller like this has an inventory system that is assuredly better than any drop shippers.

But that wasn’t the comparison I made; I said that *Amazon* has a better inventory system than either drop-shipping or non-dropshipping booksellers. Futhermore, there’s guaranteed lag in using their API. My point was simple: when you buy a used book on Amazon, much of your discount is your risk of not getting the book, whether it’s in stock at the used bookseller’s or not.

By “podunk” I just mean relatively small; probably a bad choice of words. There’s no contradiction between being podunk and being competitive

And where did I disparage anybody? I don’t have anything against any booksellers.

Posted by Rather Not Say | Report as abusive
 

Amazon no longer requires that a 3rd party seller have a book in stock in order to list it for sale. That’s why there is a multitude of book re-listers that use software to “scrape” the internet for books to sell as their own including Woodys, quality7, internationalbooks, elizabethgates, etc. I recently noticed one re-lister selling books that had copied word for word our descriptions including the unusual typo in my listing. When I emailed them they stated “Many booksellers are doing this and it is allowed.” I doubt the illegality of selling another person’s property online because it would be so difficult to prove — but it’s a blight on Amazon to continue to permit such shenanigans and it hurts everyone – buyers and ethical book sellers.

Posted by Anon | Report as abusive
 

@ Rather Not Say

You said:

“But that wasn’t the comparison I made; I said that *Amazon* has a better inventory system than either drop-shipping or non-dropshipping booksellers. Futhermore, there’s guaranteed lag in using their API. My point was simple: when you buy a used book on Amazon, much of your discount is your risk of not getting the book, whether it’s in stock at the used bookseller’s or not.

By “podunk” I just mean relatively small; probably a bad choice of words. There’s no contradiction between being podunk and being competitive

And where did I disparage anybody? I don’t have anything against any booksellers.”

And before, you wrote: “I suggest that if you *must* have the book, you should buy it new.”

Here’s the disparagement (and I’m not claiming intent on your part, btw) – my claim is that a good booksellers inventory is just as reliable as amazon.com’s- that’s the assumption and the foundation of 3rd party selling on amazon.com.

And, ironically, it’s an assumption that’s built into the practice of drop-shipping.

Cheers.

Posted by Mark Beauchamp | Report as abusive
 

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