Do More, Spend Less by Brad Wilson

Author:Brad Wilson [Wilson, Brad]
Language: eng
Format: epub
Publisher: Wiley
Published: 2013-01-10T05:00:00+00:00

Selling and Profiting from DVDs I Didn’t Own (Or How Amazon’s Canada Store and International DVD Arbitrage Helped Me Pay for College)

I was so excited about my new DVDs that I wanted more. The main hole in the collection was that there weren’t any box sets. A total of $10 off doesn’t mean much on $100. At the time, this included titles such as the James Bond collection, The Godfather set, and The Sopranos. I needed a better way to buy those than just walking into Best Buy like everyone else.

I found it north of the border. At the time, the U.S. dollar was strong—ah, the good old days—so every dollar was worth more than $1.50 in Canadian dollars. Conversely, $100 in Canadian was close to $60 USD. As I write this, they are essentially equal and convert at $1 each.

Amazon.com had recently launched a Canadian store, Amazon.ca, and for some reason the pricing was better up there relative to U.S. dollars. I could find DVDs that were selling for $60 USD on Amazon.com but only $75 CAD on Amazon.ca. Amazon’s well-known free shipping did not apply to international orders—mine were being sent from Canada to the United States—but costs were reasonable, between $4 and $5 CAD. Better yet, Amazon.ca had a generous $10 off $50 coupon code at the time, so instead of $75 + $4 to $5, I could pay less than $70 CAD, which meant less than $45 USD.

Although not as cheap as the $1 to $2 DVDs I’d bought previously, I acquired a few of the box sets I wanted to test my theory. All went well.

The bigger opportunity lay in arbitrage, one of my favorite sports.

Arbitrage, a term primarily used on Wall Street, is the practice of taking advantage of a price difference in two different markets. Think of it in terms of oil being traded in London for $101.25 a barrel and in New York at $101.50 a barrel. That is a small difference, but if you bought a ton of oil in London and sold a ton in New York before the price changed, you’d make a fortune. And if you bought and sold equal amounts, there would be no risk!

I’ve always loved inefficiencies and found it fun to see anomalies in a market and then plow through them until they go away. A financial friend of mine once called Brad’s Deals “consumer arbitrage.” I suppose I’m lucky I didn’t end up on a trading desk!

The arbitrage opportunity here involved eBay. The DVDs I was buying for less than $45 USD on Amazon.ca were selling on the auction site for closer to $60. Yes, almost retail. eBay is rarely the source of great deals. That said, I usually view eBay as a pain. I don’t want to have to buy boxes, tape, and lug a bunch of stuff to the post office or UPS Store, only to then have to worry about tracking and delivery.

That’s not true arbitrage, either, because you’re placing capital at risk.

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