Saturday, February 04, 2006

How to make a killing with PS3 + eBay...

Okay, okay. I know that Squirrel recently reposted his guidelines on how he made $3,600 off his Xbox 360s on eBay last Xmas season and I have received a lot of email regarding how I made $16,000. However, many of the comments basically boiled down to two things: First of all, how do you get your hands on the consoles and secondly, will this happen with the upcoming PS3 launch?

(If you want to skip to the 3 step HOW-TO, go here)

Well, the answer to both questions are simple and since Squirrel basically is on vacation right now, I am going to handle it.

First, some background. Unless you are late to the game, you know that XBOX 360s were extremely scarce and thus induced a crazed 'aftermarket' for the gaming consoles. Many XBOX 360 consoles sold for over $1,000 just days after its release, mostly due to the fact that nobody could get one and it didn't look like it was getting any better any time soon.

And it hasn't gotten much better. To this day, more than 2 months after launch, you STILL CANNOT simply walk into a Target or GameStop and buy an XBOX 360.

For those lucky people who were able to get an XBOX 360, they made a killing. Doubling your money on ANYTHING is good. So it is no surprise that many people are gearing up for the upcoming PlayStation 3 launch with hopes of repeating these past feats. Squirrel made a cool $3,600 and I sold 33 XBOX 360s on eBay at an average profit of $510. That is $16,830 profit. And I am sure others made more.

So, back to the questions. How did Squirrel (and myself) get our hands on the XBOX 360s in the first place. Well, Squirrel had some inside information. Basically, he had an inside contact who got him a *large* quantity of XBOXs at retail price. If you don't have an inside contact, you're not out of luck. Me, having to be a bit more resourceful, had to rely on online stores. I feel this was actually *easier* than running around all day to B&M stores. I signed up for an online tracking service (for $49) and my email box was constantly getting alerts when the XBOX 360 was in stock at Amazon, Walmart, etc... I would simply buy them online and get them shipped to my home. I would even post these on eBay as soon as I confirmed that they shipped.

Flipping these on eBay was easy--the demand was unlike anything I've seen. You just have to watch out for deadbeat bidders and non-payers. However, PayPal and eBay make it easy and safe to deal with this and overall, even if you have a dead auction, I was able to just start another. All of my auctions were 3-day auctions, low reserve--don't worry. They will sell. Depending on which 'bundle' I auctioned, I made anywhere between 1.5 to 3 times my cost. Not bad for a day's work.

So, on to question 2... will the PS3 launch be the same? Undoubtedly, yes. Sony has learned a lot of lessons from Microsoft with this previous launch, such as how to spin "low inventory levels" into a media PR event. In short, Microsoft gained worldwide publicity from this craziness. Perhaps Microsoft could have met demand and let's assume they did. If everybody was able to walk into a WalMart and buy the XBOX on launch day with no problem, we would not be talking about it now. In fact, nobody besides gamers would even hear about it outside of that first week. However, there was all this news about people camping out, XBOX 360s on eBay for more than $1,000, scam artists selling 'XBOX 360 boxes', etc. that virtually every man, woman and child knew how 'hot' the XBOX 360s were. Do you think your non-gaming neighbor heard about it? You bet they did. And they might even buy one if they saw one on a shelf today.

Sony is in tight competition with Microsoft on the gaming front so they are thirsty for this kind of publicity too. They would love the PS3 to enjoy such high demand. So they just *MIGHT* make things a bit scarce early on and this WILL create the same crazy aftermarket. This means that PS3s will be selling for thousands of dollars on eBay, etc. So, you can bet I am getting ready to snap up AS MANY PS3s AS I CAN. Now, many will criticize this move, saying it ruins it for the average gamer making prices so high. However, I am a true gamer and I will be keeping one for myself (and any other friends that want one). However, I won't be a victim of the aftermarket. It WILL happen. PS3s will be priced sky-high and I don't want to pay $1,500 for a PS3 or campout overnight. I'd rather be on the other side of this deal. I originally bought multiple XBOX 360s just so I could make a small profit and pay for my own XBOX 360. In actuality, I was able to pay for my own and all the games plus some cash leftover. It's easy if you know how to.

So what you've all been waiting for...

HOW TO MAKE A KILLING WITH PS3 + EBAY:



#1) Sign up for an inventory tracking service. There is no way around this. Amazon.com, WalMart.com, Target Online, etc. all sell out within minutes whenever they get stock. An online tracking service will notify you immediately when the PS3 is in stock online. I used XTnTracker for my XBOX 360s and will use them again to get my PS3s... go to
www.ps3stocktracker.com
and sign up.
I believe the introductory special of $19.95 is still going on. THIS IS PEANUTS COMPARED TO HOW MUCH YOU CAN MAKE OFF YOUR FIRST eBay SALE. I sold my first XBOX 360 for a $450 profit.

#2) When you get an alert, go and buy as many as possible as QUICKLY AS POSSIBLE. Have your account created, your credit card handy, etc. These units sell out in minutes, literally. Don't worry if they are 'bundles'--a game console with games, or extra controllers, etc. You can get rid of these very easily, either by auctioning them off individually or as a bundle. Or, you can even try to return these to local stores for credit/cash.

#3) Repeat steps 1 and 2. With 40,000 XBOX 360s going through eBay, there is a lot of room for anybody willing to put some effort into it. I just kept getting email stock alerts and just kept buying as many as I could...

Thanks, Squirrel for the info and thanks to everybody who sent me emails. Hopefully this clears up some of your questions. This is not really any big secret and with 40,000 units on eBay (possibly more for the PS3) things simply will not change with a few more sellers. There are only a defined number of PS3s available--you just need to be smart about how to get your piece of the pie and capitalize on it.

++++++++++++++++++++

Some links regarding consoles, eBay and the XBOX 360:
PS3 Stock Tracker
Formula for Easy Money: Xbox + eBay.
40,000 Xbox 360s Sold on eBay

39 Comments:

Anonymous Jeff said...

well, all this information (including that from Squirrel's original post) leads me to believe you guys are nothing but XBOX gray market traders! Just kidding... in reality, I don't see any real problem with this kind of eBay/aftermarket action. yes, sony, msft, etc should really just work on upping production and keeping their customers happy, but inevitably, this kind of situation helps them more in the long run than simply flooding the market. Hence we are stuck with this and I agree, the PS3 launch will work the same way...

11:37 PM

 
Anonymous shel29100@yahoo.com said...

I agree with everyone, as well, the way that these consoles are being released leave a lot ot be desired. However, I see the eBay auctions, the camping out, etc. all a very democratic way of balancing the supply and demand. HOW ELSE ARE THINGS GOING TO WORK? Unfortunately, only those that have money will have one NOW, but eventually, you will be able to walk in to a store and buy one (might be 2007, but still... lol).

With a $300-$400 price tag, this ain't appealing to price-conscious consumers anyway... at least you can actually get one (eBay) if you got the cash... If there were no eBay, people would still line up and if you didn't want to brave 25 degree cold (where I am) then, well, you'd be sh!t out of luck.

11:41 PM

 
Anonymous Anonymous said...

DON'T MATTER WHAT YOU SAY, THERE WILL ALWAYS BE A PRICE WHERE YOU CAN GET WHAT YOU WANT. where that equilibrium sits is really up to us (collectively).

11:41 PM

 
Anonymous Mark C. said...

Is 40,000 the correct number for the # of xboxes sold on ebay? Wouldn't that be like 10% of the total release qty??? hard to believe.

11:43 PM

 
Anonymous mark c. said...

... and another thing (other people please answer). is it really possible to make $11,000 off selling xbox 360s and ps3s?

11:44 PM

 
Anonymous Shay said...

mark, it is definitely possible to make $11,000 off XBOX 360s. and the 40,000 unit figure is correct. CEO of ebay mentioned it. Think about this, 40,000 * $250 markup (conservative) means $10,000,000... a lot of clams. So, it is not impossible to make $11,000. I made even more than that--I followed much the same model, but I pretty much went 24/7 for two full weeks trying to track down units for resale. I finally ended up reselling 79 360s for $21,000 (some bundles).
-Shay

1:33 AM

 
Anonymous Anonymous said...

shel29100, saying that this is the best way to release the console is like saying just charge whatever or let prices go sky high and let the market take care of itself. to some degree, that's okay, but for good customer relations, they should take care of true end users (gamers) rather than let ebay jack the prices up. Not sure what kind of system, but having a larger supply would definitely work. also limiting buys, preventing employees from stockpiling, etc...

1:36 AM

 
Anonymous Strawberry said...

everyone's just preachin to the choir here... Sony is not going to do anything different-that's my opinion. but it shouldn't be a problem for any savvy person. Like the post said, there are many ways to get one IF YOU REALLY WANT one besides just paying 2x, 3x MSRP. The same service the post mentions, www.ps3stocktracker.com
is the same one I used (their xbox 360 service). NOT to sell a bunch on ebay but just to get one for myself. yes, i know many used that service to get 20 xboxes too, but hey, I got mine at retail so I'm happy. I already signed up for the PS3 tracker and will get a ps3 WITHOUT camping out or going thru ebay... if ur smart, should be no problem getting things like these...

1:41 AM

 
Anonymous Anonymous said...

I think my next paper will be the Moral and Ethical Aspects of Selling XBOX 360s!

1:44 AM

 
Anonymous Shirley Conner said...

We actually talked a lot about this in econ class (surprise!--this is why I stumbled upon this) and it is interesting to note that although the xbox and perhaps the ps3 situation is an extreme, there is a real, legitimate type of commerce in this structure and with the advent of realtime marketplaces (i.e., eBay) dynamic pricing models become a reality. In the future, you might see prices for all types of goods and services fluctuate daily. You simply pay the going price, whether it be for eggs or a car. This happens to some extent today, but in the future, prices will change each hour or minute, not daily/weekly... still back to your post, $16,000 on video game consoles is not pocket change! I may have to get into the 'gaming market'... ;)

1:00 AM

 
Anonymous Rick Moretti said...

while I don't agree with the overall release/launch (mostly I feel this is Microsoft's and, if it happens with the PS3, Sony's fault), I don't blame people for reselling a hot product. However, the fact that that little kid in Hoboken who has wanted an XBOX ever since Nov 2005 and can't afford to pay $600 is lost upon us. Not that I can suggest a better way. What I hope I never see is some big company doing a product launch with a bidding system. If that happens, then game over for all of us.

1:42 PM

 
Anonymous GLADIATORx said...

YOU FOOLS!!! NO HATE the playa, hate the game. I already am geared up for the PS3 launch and will do it again. LIke the author, I have some inside scoop on the game units. I got connections. Don't be hatin on me cause I got it. I had an XBOX the first night, and no, I didnt have to wait out in the freezing cold. I picked up a pallet, yes a pallet, two weeks later when everyone said no more shipments until Janurary. whatever you guys say about it being unfair, etc. things are fair. Everybody has a chance to get one, you just have to change your ways. You can't just walk into target and expect to pick one up a day after launch like you used to be able to. But things like ps3stocktracker, Xtracker, etc. (which I don't myself use, but I know plenty who have and scored their own units) all are tools you can use. If you don't use them, then it's really your fault if you'r screaming about dam ebay high prices or Walmart having none in stock every day you walk in... peace out.

1:46 PM

 
Anonymous fer_sure_1982@yahoo.com said...

you guys are pathetic--you make $16,000 of off poor souls who just want to play a video game... Wait, you made $16,000? How do I sign up?

1:49 PM

 
Anonymous Jerry said...

I agree with the fact that you just need to be smart these days. and any gamer, or online shopper for that matter, should know better. When the Xbox came out, I sold a couple one ebay along with a few hard-to-find hard drives, etc. but it was hard to run around all day checking stores. I eventually did the same thing, just bought bundles from Toys R Us online and either broke them apart or sold them as is. It was a done deal basically. If I had just wanted one console, it was a LOT easier than the media reported it to be. I got my first console during launch week when ALL the NEWS kept talking about how hard it was to find any anywhere, blah blah blah. BTW, I recommend that tracker, too. www.ps3stocktracker.com their xbox tracker definitely helped me out a bit.

3:06 PM

 
Anonymous JD said...

I thought I was doing good when I sold 3 xbox 360s I bought from target. and you guys are talking 20, 30 units. looks like I need to do some work this time around. I sold 3 all on ebay and the trick is basically to set the reserve low and have a short 3-day listing. you might think 7day and 10days would be the way to go, but it is just too long, especially when people want it now, instead of waiting. You're basically going for those people who want to play it now and couldnt get one at launch (like 99% of the people)... I used no reserve--don't worry and just have faith. They all sold for 2x even three, four weeks after launch. I know at least 5 other people who sold at least one unit on ebay. Most of the time, they just did it so they could get their own for free.

5:08 PM

 
Anonymous MyBaby'sGirl said...

i hate videogames period...but still, it sounds nice to make a fortune of fraud

7:13 AM

 
Anonymous Anonymous said...

i love ps3s!!!! wooooooooooooooooooooooooooooooooooooooooooooooooooooo wee!

7:14 AM

 
Blogger nixcraft said...

Hmm...

All I can say nice idea :)

7:19 AM

 
Anonymous Anonymous said...

Or, you could become a wholesaler :) I came across a site that had over 50 units and they would sell them to you by certain sizes, where, if you order the larger size, you get the best discount.. and I found this around 3 weeks after xbox360 came out.. but in my state (and I'm sure many others if not all) reauires you to have a reseller license, which I do not have!

7:32 AM

 
Anonymous Anonymous said...

With all the reports about defective Xbox 360's out there I am surprised people would buy them from ebay as you get no warranty on them. It gets the red ring of light and your out 2 to 3 times your money.

7:36 AM

 
Anonymous Anonymous said...

Scalping 360's or Super Bowl tickets is easy if you have the cash up front to get the job done with. Not really a big deal, but I agree with previous posts that the 360 is overpriced and even if there were enough to feed the demand they would still pale in comparison to the userbase of Playstation's there are around the world. It's just another PC in sheeps clothing. I hope you're paying taxes on that $16,000 you made. It's around 38% the last time I checked in the USA :)

7:41 AM

 
Anonymous Zak said...

I wanted to get a box for myself so I ended up buying 3 bundles from Amazon / Toys'r'us.

I made $800 profit on two of the boxes by selling them on ebay days before Xmas, but I still had 30 games to unload from these bundles.

Even though the games go for $60 in the store, they were only selling on ebay for around $40. Losing $20 per game on 30 games really cut my profits down.

I guess in hind-sight, I should have bundled some of the games into my auction on ebay, but I still think I wouldn't have gotten the full price for them.

If you can figure out how to beat these stores at their game of bundling all the crap w/ the system, you can really make some money.

7:42 AM

 
Anonymous Jim said...

Nothing wrong with this... it just means Microsoft priced the boxes too low. People were willing to pay much more.

They should have released with limited regular packages but plenty of overpriced collector's edition 360 packages available. That way they'd profit from the early adopters.

Theis could REALLY help them to offset some of the losses they take on each unit sold.

7:44 AM

 
Anonymous Anonymous said...

This is basicaly what I did with World of Warcraft release and I plan on doing with the expansion. I happen to work across the street from a retail store that would stock the shelves around 11am every day. Well 11:30 would be lunch and I would walk over and buy 10 to 20 copies at a time (they usually only had 10 to 20 copies). I would then put them up on ebay for 2x what I just paid for them.

Even better, 90% of the buyers only wanted the CD key not the disks / manuals so out goes an email and I'm done.

I made about $1200 in a week doing this; so yes, it is easy and possible. BUT you have to put out a large amount of money to get started. Yes you can buy 10 XBOX's on credit and have payment before the bill is recieved but if just ONE doesn't sell, you've lost almost all of your profit.

Possible, yes, you just need to be willing to risk some cash. But for hot items, the risk is quite small.

(BTW : I wouldn't be surprised if these guys are associated or get a kickback from the tracking services that is touted.)

7:49 AM

 
Anonymous Zak said...

There are also free services. Ben's bargains 360 tracker worked for me: http://xbox360tracker.com/

Another pay for notification service: http://www.notifywire.com/index.aspx

7:54 AM

 
Anonymous James AkaXakA said...

Sony has learned a lot of lessons from Microsoft with this previous launch, such as how to spin "low inventory levels" into a media PR event.

Well, seeing as how the PS2 had the same low inventory spin, it's actually MS that learnt from Sony.

However, the aftermarket (as you call it) has been extremely long with the 360, as there probably really are distribution problems. In the PS3's case however, I expect Sony to have a better grip on the situation, so the aftermarket for PS3's might be quite a lot shorter than the 360's.

So make sure you don't get stuck with them - make sure you have enough capacity to sell them quickly, and even then you'll need to rely on the assumption that everyone _knows_ about the shortage and care enough to get one on eBay. (Though it must be said, SOny's marketing department will help you more than enough with the last one.)

Oh, and one last thing: the 16.000 isn't profit, it's contribution margin. You still need to take off the extra cost (and time) you took to get the whole thing up and running.

8:01 AM

 
Anonymous Anonymous said...

Only problem with the PS3 is that it is rumored to cost somewhere in the $800 range. If that is true, then it will really kill profits from ebay and even demand for it.

8:09 AM

 
Anonymous Anonymous said...

People who do this kind of crap are jerks. I know a lot of people who choked big time after Christmas because they couldn't unload their Xbox 360's that they were trying to scalp. My heart pumped cold piss for them. Fact is, a lot of kids Christmas were ruined because of this kind of crap.

8:33 AM

 
Anonymous Anonymous said...

You did report this income on your taxes, right? I'm sure you will have to now.

8:35 AM

 
Anonymous Nick said...

Most (if not all) of the retailers that are tracked by this service limit hot items to 1 unit per order. Best bet is to go to each of these websites and PRE-order ps3's from each (2 or 3 from each site) before unit limits take effect (which was day 1 for xbox).

8:40 AM

 
Anonymous Anonymous said...

I wonder if this is possible when you do not have much capital to begin with. I guess one would just have to ramp up slowly. Sell a few, turn the profit, sell more, turn the profit. I guess the trick is knowing when to quit.

8:48 AM

 
Anonymous Anonymous said...

it seems silly to pay such high prices for a video game console, people should just wait until stores have plenty and then pay retail price. whats wrong with waiting.....

8:53 AM

 
Blogger Thomas Crymes said...

The notification sites do work. That's how I got my XBox360. The site I used was a "free" service. If you scored an XBox 360 through the site, they asked for a donation. Not a bad deal. gamermill.com

If Microsoft needed to launch where it could not meet the demand, there is a simple way it could eliminate the E-Bay Market as well as ingratiate itself with the public. If you have 400,000 units available at Launch, hold an auction. The top 400,000 bids get an XBox 360, and every dollar over retail goes to a charity. Buyers get a tax credit for giving to a Charity. The XBox after martket is pretty much gone.

After that, they either hold more auctions or don't release more units until they can meet demand.

9:03 AM

 
Anonymous Anonymous said...

if people are willing to pay these prices for the consoles then so be it.

if they aren't they'll just wait until Microsoft can keep up with demand.

Myself, I'm waiting till I can get one by walking into my local electronics retailer. That will be a reality soon enough with the Xbox 360...

9:30 AM

 
Anonymous Anonymous said...

you all suckas... I'm playin my PS4 already, rrrollin in benjamins!

4:33 PM

 
Anonymous Mayan said...

Hey i see you posted most of your currency profits in pounds, if your in the uk which sites actually ship internationally ? since ps3 stock tracker is mainly american sites

9:06 AM

 
Anonymous Anonymous said...

Shouldn't that be arse magma?

10:16 AM

 
Anonymous Anonymous said...

This comment has been removed by a blog administrator.

12:45 PM

 
Anonymous Sentric said...

GETTING ready for ebay season! If anybody wants to campout with me in PA, PM me on the board and lets get something started!!!

2:45 PM

 

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