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Regarding scalpers

Discussion in 'Classic Menswear' started by matadorpoeta, Dec 4, 2003.

  1. matadorpoeta

    matadorpoeta Well-Known Member

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    here is a question for anyone who wishes to answer. there may not be a right or wrong answer, but i'd like to know people's thoughts on the matter. hopefully you will see how the basic principle applies to ebay scalping.

    let's say you own a men's clothing store in your city. a man walks into your store, shakes your hand, and says, "good afternoon sir." you look him in the eye and say, "good afternoon." he proceeds to inquire about a sportcoat and you show him something close to what he describes. he tries it on, loves it, and says "it's exactly what i'm looking for. i'll take it."

    now, you know that across the street, at barneys, the exact same coat is on sale for 50% off retail. The price tag in your store is the full retail price. as the store owner, you have three options:

    a) send the man to barneys
    b) discount your jacket by 50% (you will still make a profit)
    c) charge the man full retail

    what do you do?
     
  2. banksmiranda

    banksmiranda Well-Known Member

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    If the man points out that Barneys has it discounted 50% then I would definitely give him the discount if it would mean that he would be buying from me rather than Barneys. This is assuming that I'm not one to browse competing stores. If I were one to browse competitors' stores I would like to say that I would do the same(mark it down as soon as I saw it at Barneys for less) even if he didn't point it out, as he might later be browsing at Barneys and see it for much less and not only want to return the item but never return to my store.
     
  3. mrprlover

    mrprlover Well-Known Member

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    As store owner I would've dropped the price immediately upon hearing of Barneys. The last thing I would want is for him to see it cheaper and return it unhappy.

    If I didn't know about Barneys and he informed me...I would apologize, give him the 50% off and maybe even something else on a future purchase.

    I always keep this in mind: A happy customer comes back; An unhappy customer tells 10.
     
  4. PeterMetro

    PeterMetro Well-Known Member

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    While you all have a refreshing streak of altruism, the answer is pretty simple - you charge the guy what he will pay. Â In this case it means full retail. Consider every mom-and-pop store out there. Â Virtually everything they sell can be found cheaper elsewhere, probably at a Walmart. Â But just because someone sells it cheaper, doesn't mean you should, or can afford to, sell it at that same price. Now, if he saw it at Barney's for 50% off and still comes to you to buy it and inquires about a discount, that's another story. Â The guy clearly has a reason for coming to you (customer service, etc.) instead of simply buying it at Barney's. Â In that case--again, if you can afford it--you can give him a discount. Â But be warned that you may have to extend the same discount time and time again whenever Barney's has a sale. Â Slippery slope if you ask me. The guy won't be mad at you if he buys it and finds it cheaper elsewhere. Â He might shop Barney's first, but you're under no obligation to beat anyone's price. Â Caveat emptor. Â Interestingly enough, Randy Cohen tackled this very subject in the Times this past sunday. Â See below.
     
  5. LA Guy

    LA Guy Opposite Santa Staff Member

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    I'd have no problem selling the coat for full price.

    This is *not* the same as Ebay scalping though. A better analogy would be that the owner of the shop saw the new collection of Dior Homme or Balenciaga, or whatever was hot at that moment, at Barneys just across the street, bought out the inventory before anyone else had fair access, and then marked it up 100%. Now that, that is scalping. Note that the "fair access" is the crucial point - retailers who mark up their goods from wholesalers are not scalpers (duh) nor are Ebay sellers who buy closeout or excess inventory. I (the consumer) don't have access to these sources, and they are providing a service by bringing these goods to market. The guys scalper Lakers tickets at 1000% list price are just pissing me off.
     
  6. banksmiranda

    banksmiranda Well-Known Member

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    PeterMetro - good point.  Sometimes people want to support the little guy, the Mom and Pop stores, even if it means that they have to pay more than they would have to elsewhere.  Great examples - special pricing with presentation of advertisement, and different pricing for the same products/services at hotels, airlines & car rentals - the big boys often do it.
    I suppose that the smaller establishments would have to be extra-careful, though, since their regular customers may be small in number as opposed to the big stores(like Barneys) which have many customers and do not usually risk losing much.
    LAGuy, good point as well about fair access.
     
  7. matadorpoeta

    matadorpoeta Well-Known Member

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    i said maybe there was not a right or wrong answer, but i wish people would understand that if you feel compelled to justify an action, you must do so on principle, not by saying, "others do it, so that makes it okay." have you considered that the big boys could be unscrupulous as well?

    personally, i can't shake a man's hand then treat him like a stranger. that's why i'm not a salesman.
     
  8. vero_group

    vero_group Well-Known Member

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    There's that word "fair" again. Who gets to decide what "fair" means so that the practice becomes savvy entrepreneurship instead of "scalping"?

    There is nothing illegal or "unfair" about buying up inventory at a retail shop at full price and then turning around and trying to sell it for a 100% markup at your own store down the street. It would be a highly risky (and potentially stupid) thing to do from an financial standpoint since your likelihood of earning a profit is extremely low, but it's not illegal or "unfair". You, the buyer, saw the items first and bought them, "fair and square" from the retailer -- just like after-Thanksgiving Day shoppers do at 6:00 AM when they rush the aisles for the $29.95 DVD players at Wal-Mart. Arrived too late and found all the DVD players sold out? You snooze, you lose.

    Now, you own all the inventory and mark it up 100% and put it in your store. Other buyers can buy from you at your store at the 100% markup price, buy from other retailers in the same city, buy from other retailers in other cities, buy from a catalog or website, and/or decide that it's lame to follow "hot" fashion fads and do something better with their money anyway. It's likely most will avoid your 100% mark-up and buy from the alternative sources. As a result, you lose big time on your highly risky purchase of the retailer's inventory. Those who do pay your 100% markup price likely are willing to pay your price for the "right here, right now" convenience you provide. The point is, the buyers are willing participants to the transaction. No one is putting a gun to their heads saying they must pay your 100% markup price or suffer the consequences. The freedom to walk away from your store, do some independent research, and buy elsewhere at a lower price is always there.
     
  9. A Harris

    A Harris Well-Known Member

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    I'm with Vero on this one. I find nothing unethical about buying up merchandise on Bluefly, or Yoox, or anywhere else for that matter, and putting it on ebay. I do however think that these sellers are stupid. From a business perspective, buying at that high of a price and trying to sell it for more is a losing proposition.

    Now if they are taking advantage of Yoox's return policy by buying items and returning them if they can't sell them on ebay - that would be very unethical. Same goes if they are claiming an inflated retail price - which it seems to me that they are on those boots.
     
  10. matadorpoeta

    matadorpoeta Well-Known Member

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    i agree with mr. harris and verogroup that there is nothing illegal or unfair about scalping. i just think it's sleazy, even if one wasn't abusing yoox return policy. when my kid gets old enough to ask me what i do for a living, i wouldn't want to say, "i buy merchandise from one website, then i sell to these poor suckers on another website who don't know where i got it from, and that's how daddy makes money." like verogroup said, it's basically taking advantage of others' ignorance, and the fact that it may be legal or fair, won't make me feel good about it.

    i can see that on the surface my question doesn't directly relate to ebay scalping. i realize that now. but i do think that in the end, the situation is similar in that although it may not be considered unethical to charge the man full retail, it's sleazy to treat a man like you've never met him after you've shaken his hand. you're treating him like a number, not a person.

    btw, you guys (mr. harris and verogroup) didn't answer the original question.
     
  11. vero_group

    vero_group Well-Known Member

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    Charge the man full retail -- he said "I'll take it", so the price is not a problem for him.
     
  12. A Harris

    A Harris Well-Known Member

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    This is ridiculous. Should a retailer put me directly in touch with their supplier so I can get a cheaper price? Is Neiman Marcus "sleazy" for selling Mantellassi shoes for $750 when you can get them a couple of hundred dollars cheaper on the Mantellassi website? Is Tanino Crisci "sleazy" for selling shoes for $700 at their New York store when you can get the same pair on their website for $400??

    The answer is no on all counts. This is business, not altruism. In each case there is additional work involved to sell the merchandise in a different market and the businesses cited are entitled to payment for that work, not to mention the risk they have taken. If an ebay seller takes a risk by buying an item on Yoox or Bluefly, and then spends considerable time posting it on ebay, then he is entitled to payment for his work and risk. And he is still providing a service. It goes without saying that those who buy from him on ebay are not aware of Yoox. He is making the merchandise available to those people at a price that is still well below retail. What would you have him do - take an ad out in the classifieds letting people know that there are great deals on Yoox - just so he can sleep at night without feeling "sleazy"??
     
  13. jcusey

    jcusey Well-Known Member

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    If I see a stock that I think is underpriced and I buy it hoping that I'll be able to get its "true" price later, is that sleazy? Everybody has an equal opportunity to buy items on Yoox. If someone thinks that some items on Yoox are imporperly priced, that he will be able to get more for them elsewhere, and is willing to put up the money to back his opinion up, then more power to him.

    Essentially, what you're saying is that every importer, wholesaler, and other kind of middleman is by virtue of his job sleazy. That's ridiculous.

    To my mind, you're splitting semantic hairs if you try to differentiate between unethical actions from sleazy ones (or at least sleazy actions in a business context). In any event, assuming that your scenario could occur in anything other than a hypothetical, it's neither sleazy nor unethical to sell the item to the customer for full price. Barney's doesn't set the pricing structure or the sale schedule: the business owner does. He's provided service to the customer, and there's nothing wrong with charging the customer the marked price.
     
  14. matadorpoeta

    matadorpoeta Well-Known Member

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    good business is providing a high quality service and/or product at a price that is fair to both the business and the client.

    yes - assuming they are the exact same shoes. if i owned a retail store, i would not want to carry anything that was available directly from the manufacturer for less money. they are basing their business on the bet that their customers are, and will remain, uninformed.

    the company can justify the price because it costs them more to sell something at a brick and mortar store than it does online. but if i were a shoe salesman, I'd have a hard time taking someone's money without telling them about the site. like i said, i'm not a salesman.

    let's not insult one another's intelligence. you know as well as i do that importers, exporters, wholesalers, and distributors are necessary chains in the link between maker and consumer. scalper's are not necessary to our economy. furthermore, there is no secret as to who the wholesalers/distributors are. you could call just about any maker right now and say, "i own a chic boutique in l.a. and i want to buy 200 pairs of your shoes." they would refer you to their distributor. on the other hand, if you were to email an ebay scalper and ask him where he got his merchandise, i really doubt he'd refer you to yoox.com

    i'll concede that. what i meant was that even though i consider it unethical, even those who don't might still feel uncomfortable about it.

    on a related note, i found both yoox and bluefly a couple of years ago when i was very new to the internet. all i did was search a designer i liked and added the word 'discount' or something like that. i really doubt there are a privileged few who know about them. if one can find ebay, they can find yoox.
     
  15. vero_group

    vero_group Well-Known Member

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    "the company can justify the price because it costs them more to sell something at a brick and mortar store than it does online"

    Honestly -- the company needs to justify nothing to anyone. If someone walks into the store or clicks on the website and pays a $700 asking price, then that is how much the item is worth to that person. A company will ask a price until the merchandise starts moving. If it doesn't move at one price, they try another. Sometimes, increasing prices makes items move faster.

    "but if i were a shoe salesman, I'd have a hard time taking someone's money without telling them about the site. like i said, i'm not a salesman."

    All the more reason you should try sales sometime in your life. It's hard as hell. I have a lot of respect for really good salespeople. And believe me, if putting food on your family's table is dependent on your earning sales commissions, you wouldn't tell a single soul about the site or a bargain price elsewhere. You would happily take someone's money because you would want to ensure you can pay your mortgage and your daughter's orthodontics bill. Altruism in a commercial setting doesn't work when you have others depending on you to feed, clothe and shelter them. Our innate self-consciousness and selfishness takes over our concern that the buyer could buy it for less elsewhere if we would just clue them in on the secret. What would be our incentive for doing so anyway? Customers are fickle. They won't likely reward you later for telling them about the bargain price elsewhere today. They'll likely continue to patronize the store with the bargain price that you introduced them to. I would.
     
  16. jcusey

    jcusey Well-Known Member

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    But you're making your entire argument from price, and you're casting aspersions on anyone who doesn't sell for the lowest of the low prices. That's absurd.
    Is Neiman Marcus "sleazy" for selling Mantellassi shoes for $750 when you can get them a couple of hundred dollars cheaper on the Mantellassi website?
    yes - assuming they are the exact same shoes. if i owned a retail store, i would not want to carry anything that was available directly from the manufacturer for less money. they are basing their business on the bet that their customers are, and will remain, uninformed.
    No, it's not sleazy at all. Neiman Marcus is being perfectly upfront with you. You can choose to buy from them or not at your discretion. You might not find value in the things that separate Neiman Marcus from the Mantellassi website (convenience, shopping experience, etc.); but that doesn't make Neiman Marcus sleazy for offering them, and it doesn't make anyone who buys from Neiman Marcus uninformed.
    Is Tanino Crisci "sleazy" for selling shoes for $700 at their New York store when you can get the same pair on their website for $400??
    the company can justify the price because it costs them more to sell something at a brick and mortar store than it does online. but if i were a shoe salesman, I'd have a hard time taking someone's money without telling them about the site. like i said, i'm not a salesman.
    The company doesn't have to justify anything. They can set their prices at any level that they think makes sense. There is no supreme arbiter of what luxury goods ought to cost. As for the shoe salesman, he's providing you with a service, and it's reasonable for him (and the company who employs him) to want to be compensated for it. If his service isn't of use to you or isn't worth the cost, then don't use it.
    Essentially, what you're saying is that every importer, wholesaler, and other kind of middleman is by virtue of his job sleazy. That's ridiculous.
    let's not insult one another's intelligence. you know as well as i do that importers, exporters, wholesalers, and distributors are necessary chains in the link between maker and consumer. scalper's are not necessary to our economy.
    In the first place, you're making a distinction without difference. As far as I can tell, you think that the necessary (and morally acceptable) middlemen are those who don't compete directly with you whereas the scalpers are the ones who do compete with you. In the second place, have you considered that arbitrage is as necessary to a properly functioning economy as anything else that a middleman might do?
    So what? GJ Cleverley won't tell me who makes their ready-to-wear shoes. Does that make them disreputable?
    To my mind, you're splitting semantic hairs if you try to differentiate between unethical actions from sleazy ones (or at least sleazy actions in a business context).
    i'll concede that. what i meant was that even though i consider it unethical, even those who don't might still feel uncomfortable about it.
    There's absolutely nothing wrong with attempting to exploit pricing inefficiencies with luxury items, just like there's absolutely nothing wrong with Andrew trying to sell Vass shoes in the United States for twice they would bring in Budapest. If you want the the best prices on the Web for a particular shirt, spend the time and search for it. If you don't, go to eBay and bid for it. If you want the best prices on Vass shoes, go to Budapest. If you'd rather not do the legwork, contact Andrew.
     
  17. vero_group

    vero_group Well-Known Member

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    " like verogroup said, it's basically taking advantage of others' ignorance"

    I never said that.

    But, I certainly do not go through life naively believing that all Americans are of equal intelligence. "All men are created equal" from a rights perspective, but we are certainly not created equal from an intelligence perspective. You wouldn't be taking advantage of someone else's ignorance, you'd just be dealing with it as you try to make a sale. Their ignorance is not your problem. It is their responsibility to rise above their own ignorance, educate themselves about alternatives, and make choices accordingly. They certainly have the freedom to choose to do this and make it happen. Many simply choose not to do so because it's easier not to do so. So, they pay higher prices and money slips through their hands faster.
     
  18. A Harris

    A Harris Well-Known Member

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    I'm sorry, but you are wrong on both counts.

    Neiman Marcus had to buy the shoes which means taking a risk, pay to ship them from Italy, pay import duties, pay their rent so they can have a place to sell the shoes, pay a salesman to sell the shoes, pay a cashier to take your money for the shoes, absorb the costs when people return them, pay to operate a Last Call store for the sole purpose of selling excess merchandise at a loss, the list goes on... Plus - they are providing a service by stocking the shoes in your local store where you can try them on and avoid the potential risk of buying shoes that do not fit. They are taking a risk and rendering a service, and they deserve to be paid for it. If anyone is in the wrong it is the Mantellassi website. Same goes for Tanino Crisci.

    An ebay seller has to do even more work per item and take more risk. Most of us do not have special relationships with suppliers who just send us merchandise when we order it. We hunt down each item, piece by piece. In my case, I spend between 70 and 90 hours EACH MONTH just to find the items I sell (that includes driving time.) Considering I buy about 50 items each month, that's almost two hours for EACH ITEM. It may not take as long to buy from Yoox but it still takes time.  Then you have to inspect each item multiple times, get it cleaned or repaired if necessary, measure it, photograph it (often multiple times so the pictures come out right,) edit the photographs, write a detailed auction, politely answer a million dumb questions (most of which are already addressed in the auction) and a few good ones, then you can finally ship the item and close the transaction. Despite all the time and money invested up front, items often do not sell for six months or more and even worse, bidders often do not pay and you have to "sell" the same item over and over. Together, ebay and paypal take 8-15% of the sale value of the item, which means they are getting a percentage of the money you invested in buying and processing the item, not just a percentage of the profit. In 2002 the combined amount of my ebay/paypal fees was equal to 50% of my business income, after expenses were deducted.. Let me tell you, ebay is great way to LOSE money. Actually making money, at least in the clothing category, is very difficult, and for some, impossible.

    So please, do not judge or categorize business practices of which you know nothing. I reiterate my point - if an ebay seller wants to buy Yoox or Bluefly merchandise, investing all that money and labor into reselling it on ebay, there is nothing wrong with it. He is expending time and money and providing a service, for which he is entitled to a chance at compensation. Of course, exploiting return policies, stealing pictures off websites and inflating original retail prices (as in the case of LA Guy's example) is unethical. Merely buying from Yoox and selling on ebay is not.
     
  19. A Harris

    A Harris Well-Known Member

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    Thanks for that jcusey. I can tell you that, even at twice the price, I haven't made a dime yet. I probably won't break even on the time and money invested for at least another year, and that's if the shoes catch on. Believe me guys - it is easy to assume that you are getting ripped of just because an item is expensive. That may be the case in some circumstances, but probably not in most. It costs a lot of money and time to find and bring to market rare luxury items from halfway around the world, and then to get people to notice and buy them locally. Obviously then, the item is going to be more expensive than if you bought it straight from the maker. And rightly so.
     
  20. vero_group

    vero_group Well-Known Member

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    Yeah, what he said. [​IMG]
     

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