Ebay profits are made off the losses of brick and mortars, plain and simple. Â It is salvage, let's not elevate it, although we may benefit from it.
Salvage, yes. Necessary to an efficient market . . . also yes. Ebay flipping ensures that the good goes to the user who values it highest. Is that elevating it too much? (Shrugs.) One thing about Ebay flipping that nobody has mentioned yet is that it actually serves a more direct benefit to retailers than merely providing an alternative channel of liquidation. For example: Let's suppose there is a $4000 Kiton suit. It goes on sale for $2000 at the retail store (we'll call it "Retail") but doesn't sell. The discount store (we'll call it "Outlet"), buys it from retail store for $1000 and prices it in Outlet for $2000, which will be reduced by 25% every seven days it stays on the rack, with a max of 75% off. So, the price points at Outlet will be: $2000, $1500, $1000, and $500. Obviously $500 between increments is HUGE. Assume nobody would be willing to buy the Kiton for $1000. But assume plenty of people would be willing to buy for $750, but not $1000. Problem is, there is no $750 price increment. This is where the Ebay flipper comes in. He waits until it goes to $500, then flips on Ebay for $750. Now, assume that there is at least one person who would have been willing to buy for $1000 (but that the Ebay flipper would not be able to profit if he bought for $1000 -- he still has to wait for it to go to $500). If there were no Ebay flippers, this person WILLING to buy for $1000 might be willing to risk letting the item sit on the rack until it goes to $500, at which time he could come to the store on his lunch break or after work and buy it. But, knowing that there is an Ebay flipper that will grab that sucker off of the rack the MINUTE the store opens, this buyer refuses to "risk" waiting for the 75% markdown and so buys at $1000. Outlet obviously directly benefits in the form of $500 more of profit, a profit that it can thank the THREAT of the Ebay flipper for. Down the line, Outlet's increased profits will allow it to buy from Retail for a higher price. Retail knows this fact and thus will have a higher BATNA price when it is negotiating with Outlet when it liquidates to Outlet.