Why the Law of One Price doesn’t exist for mile and point resellers





@Aegt shared an interesting NPR podcast via twitter, Buy Low, Sell Prime.

The podcast talks about what I write about weekly, and do every single day. Retail Arbitrage. Retail Arbitrage is the idea that you can buy at a brick and mortar store (or as I do it, via their online store), then sell it online for more than you paid, thus earning a profit.

Now, they also talk about “The law of one price.” This is the part that I really narrowed in.

Law of One Price

Pure Retail Arbitrage

I┬ádon’t do a whole lot of brick and mortar buying… I go to stores to buy gift cards, or load my bluebird or redbird, and if I see something, or have a little time to kill, I’ll do some looking, but I don’t generally go to a store with the single intent of finding products to resell. I think that there is a lot of potential in that, but I don’t have the time. Like other posts about mainstream media articles about reselling, the NPR podcast talks about people that have multi-million dollar businesses doing this, going from store to store, so I’m sure there is value.

My version of Retail Arbitrage

Like I said, I don’t do the brick and mortar stores a whole lot. Rather I’ll check out deals from the comfort of my own home. This is where the Power of Shopping Portals really comes into play. A few weeks ago, there was a 16% cash back promotion from Ebates. You see, shopping portals make a big deal for us in the miles and points game, because it allows us to get a bunch of miles with our purchases.

Why the Law of one price doesn’t exist

As long as shopping portals, brick and mortar stores, and online stores exist, I make the argument that the law of one price can’t exist. As anyone in business knows, you encounter so many variable costs, leasing, labor, advertising, shipping, and location differentials to name a few, not even including cross border variables such as currency fluctuations. I think the biggest benefit for mile and point resellers, is (1) we don’t have leasing costs, and (2) we know how to stack store loyalty programs, with shopping portals, further bolstered by retailer’s discounts and incentives (like Kohl’s regular 30% off for Kohl’s card holders). And heck, maybe one day Plenti will be worth it.

Wrapping up

I’m not sure if I’m just seeing more reselling related stories because I’m doing it myself, and thus more sensitive to it, or if this really is getting bigger nowadays. Normally, that would concern me, except that not a single word was mentioned on the NPR podcast about shopping portals, or even considering purchases made online.

 

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