Monday, August 29, 2011

Craigslist Arbitrage - The Folly of my Youth

Craigslist arbitrage is a popular topic for blog articles recently. As I have just bought and sold something through Craigslist Saturday night, I thought I'd tell my story and jump on the bandwagon.

Like many of you, I love Craigslist. There's gray, there's blue, and it looks like it was designed in about 1996. What's not to love?

Anyways, two months ago, I was looking through the listings, and I came across what I thought was a pretty amazing deal. The listing stated that there were three long boxes of comic books that the owner was selling for $150 total. Long boxes contain between 250 and 350 comics a piece, so the worst case scenario for me was that I would be getting each comic book for twenty cents a piece. I figured somebody, somewhere would be willing to buy them off of me for at least fifty cents a piece, so I thought I could easily make a handsome little profit. I thought, "How can I go wrong?", and I bought the books from a guy in a pickup truck in the parking lot of a Taco Bell.

As you can imagine, the thought "How can I go wrong?" is probably the worst thought a person can think when they are making an investment, which was how I viewed the purchase. I was briefly interested in comics back in junior high, but I'm not exactly a collector, so the main reason I purchased them was not to appreciate them by reading them but to appreciate them by selling the for a high price.

As I started to go through the comics, I realized that most of them were from the 80s and 90s. When I did some research, I realized that most comics from this period aren't worth a whole lot due to two factors:

1) During this period, comic publishers printed a lot more books, and
2) People started taking a lot better care of the comic books that they had.

As such, with an abundance of comic books all in great condition, the comic books that I had bought were basically worthless.


Undeterred, I decided to post a handful of the comic books on eBay. None of them sold. I then tried listing them for two cents a piece in an effort to make up my costs in the shipping charges. One comic book sold. I probably would have continued reposting on eBay, but eBay stopped a promotion they had going in which the seller didn't have to pay anything at all if the item didn't sell. It didn't make sense to me to spend money to attempt to sell something that probably wouldn't sell.

So as you can imagine, I was in a bit of a funk. And not in a good way.

So, I decided to go back to Craigslist. First, I started by posting listings trying to sell them one box at time. I started at $100/box. Nobody bought one. Then I moved to $75/box. Nobody bought. I would have gone to $50/box, but my goal in buying them was to make a profit, and I wasn't ready to give up just yet.

As of two weeks ago, these three boxes (as well as two others I had bought in my initial zeal at the moneymaking opportunities in buying and selling comic books) still sat collecting dust in my extra bedroom. As my mother-in-law is coming to visit from North Dakota in September, my beautiful wife beckoned me nearer to her, and whispered faintly and lovingly into my ear, "I'ma cut you if you don't get these comics out of my house."

So, as you can see, the die had been cast, so I decided upon a new method: I was going to put the original three boxes up on Craigslist (I think the other two boxes have some more valuable comics, so I believe they will be worth the time [and potential stabbing that may transpire] by putting them on eBay), and I was going to keep lowering the price every two days until they sold.

I started at $400 (remember, my goal was to make money, so I might as well start high). No dice. I didn't hear anything when I listed them for $375 or $350 either. However, when I listed them at $325, I had two people contact me.

The first person was a jerk, and I think he just wanted to waste my time. He can go sit on a cheese grater.

The second person, however, actually committed to driving an hour to come over to my condo to check them out. Since he was driving that far, I knew that he was fairly interested. When he arrived, he looked through them, and said something along the lines of, "Well, I don't think I have too much use for these."

This is a classic negotiating move. My Craigslist posting had mentioned that I wanted to get rid of them so that I could have the space, so he knew that I wanted to get rid of them, so he knew that I would probably lower the price.

I replied to him, "I'm just trying to get rid of them. Is there any offer you think you could make?"

He said, "How low would you go?"

At this point, in retrospect, I should have said $250, which was how low I had told myself I wanted to go.

However, because I was worried that he really would walk out the door (and because I had been trying unsuccessfully to sell these comic books for the better part of two months), I said, "I could probably go as low as $200."

He too easily agreed to $200 (which is why I should have said $250: his saying he didn't want them was just a ruse).

He paid me, and I helped carry them out to his Escalade.

I think that my biggest lesson learned is that I need to be a better negotiator in person. If I would have said $250, I really think he would have gone for it, and, even if he didn't, I still could have lowered the price again to $200 and ended up in the same place.

Still, I'm happy that I made $50 on what my research had shown were worthless comics. $50 on a $150 investment is a 33% profit, which is none too shabby.

Have any of you ever sold anything through Craigslist, or tried buying something cheaper and then reselling it somewhere else? Let me know in the comments.

Update 09/12/2011:  I am pleased to mention that this post was featured in the Carnival of Personal Finance #326.


Ryan Finlay said...

Great story, people need to hear stories like them. I just wrote a post on negotiating Craigslist deals at my blog I earn my living buying/selling on craigslist. I've felt your pain a number of times! I'll be sharing some of my sob stories in future posts :)

-Ryan Finlay

Bryan said...

Hi Ryan, thanks for stopping by! I've got a lot to learn from you! :-)