May 2, 2007
A Flipping Bargain
By Bernice Hurst, Managing Director, Fine Food Network
In addition to being a euphemism for several expletives and a rapid-fire way of turning pancakes and burgers from one side to the other on a grill, flipping now has a new meaning.
According to London’s Guardian journalist Amy Oliver, flipping means purchasing the latest must-have item with the sole aim of immediately selling it for a fat profit via the internet and is the latest trend sparked by eBay. While shoppers used to have to wait in long lines for a chance at buying one of the limited editions from a hot designer’s new collection, the worldwide web has made exclusivity accessible to all – albeit at an inflated price.
Ms. Oliver points to an oversized trench coat from Stella McCartney sold over the counter for £79.99 and then “upwards of £200” in cyberspace. But flipping can be applied to a wide number of consumer items.
“Any new item can end up reselling for more than its usual retail price, whether it is a George Foreman grill, sample-sale handbag or a charity wristband, particularly when feverish demand outstrips hyped short supply,” Ms. Oliver writes.
Skin care has proven to be a particularly good “buy to sell on eBay” product.
For instance, Boots No 7 Protect and Perfect anti-aging serum got a huge boost
after Professor Lesley Regan proved on BBC2’s Horizon program last month that
it worked. Just 24 hours after the program, the only place you could get a
bottle was eBay – with an inflated price tag of up to four times its £16.75
retail price. In the U.S., limited-edition Nike Air Jordans and hot concert
tickets are frequently flipped on eBay.
Some retailers are trying to take precautions against excessive flipping. In advance of Kate Moss’s Topshop launch on May 1, the store is handing out wristbands and restricting both the number of customers allowed indoors at any time and the amount of time they are allowed to stay. Furthermore, no one is allowed to buy duplicates, especially in different sizes.
Are flipping sellers taking advantage of buyers by creating artificial shortages and prices that do not reflect real value?
Some think so. Ms. Oliver points to some anti-flipping vigilantes roaming around on eBay. Apparently two sellers of Banksy prints complained that their first buyers refused to pay after winning the auctions. One claims that a buyer deregistered (from eBay) after having success, “suggesting they objected to the capitalism of the eBay world and scuppered the listing on purpose.”
On the plus side, though, Ms. Oliver applauds the ease with which people nowhere near a bricks and mortar store can now become the proud owner of a collector’s item. Despite the inflated prices, she observes that “for the true collector, or the truly impatient, expense is no object.”
Discussion Questions: Is flipping good or bad for retail? If you can’t get to a store to buy something yourself and you can afford to pay top dollar, whose business is it anyway? Or is this capitalism gone mad?
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First of all, if it’s happening, retailers can’t control it, so let’s take it as a given and ask how a retailer might take advantage of this. Presumably, this practice succeeds when a line or item becomes “hot” and is in limited distribution (if everyone interested in the item could buy it at the lower price at s store near them, they would.) Hence, that means that some retailers took a chance on a line that most other retailers took a pass on it. Monitoring prices online for lines that someone passed on is a way of assessing demand. This either allows a retailer who first passed on the line to go back to the manufacturer and see if they have inventory/production capacity so that retailer can start selling it, or at least, to provide feedback on the buyer’s “hunch” track record.
Anything that stimulates retail demand is good for retailers. Flipping should be encouraged by retailers who don’t accept returns. Isn’t traditional ticket scalping the same as flipping?
“Flipping” is not a new term. I recall antique dealer associates of mine using this expression in the 1970s-1990s when they “scored” something valuable at a flea market or low-end auction and then immediately sold it, at great profit, to someone higher up in the food chain who appreciated its worth and was ready to pay for it. That’s the willing seller-willing buyer (free market) formula that makes eBay an excellent resource for realistic appraisals. Whether it was antique Shaker furniture in the 1990s, or designer couture today, a working awareness of current trends, retail anthropology, and psychology of acquisition can put you ahead of the pack.
The term flipping, as it is used now, is not new–it may be new in mainstream America, but the African-American community has been using the terms, flip or flipping for years.
Flipping is the sport of the 21st century.
In Florida, flipping real estate was a popular pastime that is just winding down (with some buyers left holding a very expensive bag).
Another popular pastime: buy a car at wholesale auction and then re-sell online. In fact, I bought a used car on eBay that was flipped by a wholesaler. In my case, the flipper only made a few hundred bucks but I was happy with the purchase.
So, I guess flipping is the American way now. The flipper gambles that he can sell what he buys for more than he paid for it. As with the current situation in real estate, sometimes he loses. Sometimes he wins.
Flipping is probably a net negative for retailers but a net positive for the manufacturers. The retail negative flows from the inevitable disruption of the supply chain, which leads to more out-of-stocks and customer dissatisfaction, as well as the undermining of the retailer’s role as the primary “go-to” organization for the consumer. Welcome to the Brave New World of virtual marketplace visibility!
I agree that allowing resellers to buy excessive duplicates of a single SKU can cause customer satisfaction issues. I recall that Tiffany & Co. had a problem for years with its Elsa Peretti collection, where resellers would buy large quantities with the intention of reselling them in Japan at much higher prices. This created a tension between selling the goods and grabbing the intended margin, and what was best for the brand. Tiffany solved this problem by limiting quantities on certain items, not unlike the approach TopShop is taking, and it seemed to mitigate the issue. The good part about the eBay phenomenon is that higher “spot” prices for goods trading on eBay are indicative of value associated with the brand and the product. The lesson here is that we need to start thinking about how to deal with trends such as this, and others enabled by the Internet such as collective buying. May be a case of why fight it, as long as the margin return reflects the risk.
Retailers need to be aware of secondary markets for their hottest products. An emerging best practice is to scan eBay and other auction sites to gain understanding of supply/demand in the retailer’s primary categories. Pricing data should be captured and included with all of their other pricing intelligence.
When the retailer prices too low, it is serving as a wholesaler for eBay merchants. Much better to price it right and channel the demand through your portals, either brick and mortar, catalog or on-line. Another great practice is to limit the supply of items that might have huge world-wide demand. In extreme cases of high demand for limited supply, retailers should consider holding their own auctions. It would generate traffic and excitement.
Retailers have always been brilliant at copying and integrating the best ideas in the market. Is it time for online auctions to become an integral part of retailing? How about auctioning off markdown goods rather than the progressive markdown policies prevailing today?
Flipping is real, so why aren’t retailers taking advantage of the phenomenon? Hey, get your alloted inventory of PlayStation 2s and go straight to the net. Is that difficult? Do you think Sony cares? They are the ones creating the shortage to begin with. The hard fact is that the manufacturers (brand owners) cause this problem by restricting supply. Any second year business student knows how to calculate consumer demand. The fact is that demand is being calculated to +/-5% and then marketing restricts distribution to 30% of demand. This keeps prices high and garners free press. Don’t look for things to change any time soon. How much are you willing to pay for an iPhone?
Scarcity paired with demand can be a powerful recipe when it comes to accelerating sales. Flipping is the by-product of an intelligent hunch, and can work out marvelously in the free market for the seller.
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First of all, if it’s happening, retailers can’t control it, so let’s take it as a given and ask how a retailer might take advantage of this. Presumably, this practice succeeds when a line or item becomes “hot” and is in limited distribution (if everyone interested in the item could buy it at the lower price at s store near them, they would.) Hence, that means that some retailers took a chance on a line that most other retailers took a pass on it. Monitoring prices online for lines that someone passed on is a way of assessing demand. This either allows a retailer who first passed on the line to go back to the manufacturer and see if they have inventory/production capacity so that retailer can start selling it, or at least, to provide feedback on the buyer’s “hunch” track record.
Anything that stimulates retail demand is good for retailers. Flipping should be encouraged by retailers who don’t accept returns. Isn’t traditional ticket scalping the same as flipping?
“Flipping” is not a new term. I recall antique dealer associates of mine using this expression in the 1970s-1990s when they “scored” something valuable at a flea market or low-end auction and then immediately sold it, at great profit, to someone higher up in the food chain who appreciated its worth and was ready to pay for it. That’s the willing seller-willing buyer (free market) formula that makes eBay an excellent resource for realistic appraisals. Whether it was antique Shaker furniture in the 1990s, or designer couture today, a working awareness of current trends, retail anthropology, and psychology of acquisition can put you ahead of the pack.
The term flipping, as it is used now, is not new–it may be new in mainstream America, but the African-American community has been using the terms, flip or flipping for years.
Flipping is the sport of the 21st century.
In Florida, flipping real estate was a popular pastime that is just winding down (with some buyers left holding a very expensive bag).
Another popular pastime: buy a car at wholesale auction and then re-sell online. In fact, I bought a used car on eBay that was flipped by a wholesaler. In my case, the flipper only made a few hundred bucks but I was happy with the purchase.
So, I guess flipping is the American way now. The flipper gambles that he can sell what he buys for more than he paid for it. As with the current situation in real estate, sometimes he loses. Sometimes he wins.
Flipping is probably a net negative for retailers but a net positive for the manufacturers. The retail negative flows from the inevitable disruption of the supply chain, which leads to more out-of-stocks and customer dissatisfaction, as well as the undermining of the retailer’s role as the primary “go-to” organization for the consumer. Welcome to the Brave New World of virtual marketplace visibility!
I agree that allowing resellers to buy excessive duplicates of a single SKU can cause customer satisfaction issues. I recall that Tiffany & Co. had a problem for years with its Elsa Peretti collection, where resellers would buy large quantities with the intention of reselling them in Japan at much higher prices. This created a tension between selling the goods and grabbing the intended margin, and what was best for the brand. Tiffany solved this problem by limiting quantities on certain items, not unlike the approach TopShop is taking, and it seemed to mitigate the issue. The good part about the eBay phenomenon is that higher “spot” prices for goods trading on eBay are indicative of value associated with the brand and the product. The lesson here is that we need to start thinking about how to deal with trends such as this, and others enabled by the Internet such as collective buying. May be a case of why fight it, as long as the margin return reflects the risk.
Retailers need to be aware of secondary markets for their hottest products. An emerging best practice is to scan eBay and other auction sites to gain understanding of supply/demand in the retailer’s primary categories. Pricing data should be captured and included with all of their other pricing intelligence.
When the retailer prices too low, it is serving as a wholesaler for eBay merchants. Much better to price it right and channel the demand through your portals, either brick and mortar, catalog or on-line. Another great practice is to limit the supply of items that might have huge world-wide demand. In extreme cases of high demand for limited supply, retailers should consider holding their own auctions. It would generate traffic and excitement.
Retailers have always been brilliant at copying and integrating the best ideas in the market. Is it time for online auctions to become an integral part of retailing? How about auctioning off markdown goods rather than the progressive markdown policies prevailing today?
Flipping is real, so why aren’t retailers taking advantage of the phenomenon? Hey, get your alloted inventory of PlayStation 2s and go straight to the net. Is that difficult? Do you think Sony cares? They are the ones creating the shortage to begin with. The hard fact is that the manufacturers (brand owners) cause this problem by restricting supply. Any second year business student knows how to calculate consumer demand. The fact is that demand is being calculated to +/-5% and then marketing restricts distribution to 30% of demand. This keeps prices high and garners free press. Don’t look for things to change any time soon. How much are you willing to pay for an iPhone?
Scarcity paired with demand can be a powerful recipe when it comes to accelerating sales. Flipping is the by-product of an intelligent hunch, and can work out marvelously in the free market for the seller.