Is Arbitrage (Reselling Tickets, etc.) Fair, What Skills Are Involved & Is It Right for You?

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Arbitrage Skills and Fairness

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Arbitrage Skills and Fairness

Over the years the mission of this site has evolved somewhat. It started as a pure travel blog, morphed into miles and points and now covers many topics including personal finance, how to save money and still of course travel along with miles/points. The truth is our team here really loves earning a lot of points and saving money and thus we share how to do that.

One of the most effective ways to do this is through arbitrage. Arbitrage involves buying something somewhere for a low price and then selling it elsewhere at a higher price. (Official definition.) It’s a pretty basic economic principle and one that if learned can generate a ton of rewards and even some cash. What do we sell? Pretty much everything, but let’s take a step back for a minute.

The Two Sides of Arbitrage

There really are two sides to arbitrage and each can benefit your life tremendously even if you aren’t buying and selling at the same time.

Buying

On the buying side, arbitrage involves finding a good deal. Yes, the better you are at finding deals the more money you can make, but these skills don’t have to be used for that purpose. For example, you could just save your family money by finding items at half off what you would pay for them in a store. When I want something for myself or for my family I often find it at a deep discount over what others would pay. In other words I get the cool stuff and pay a lot less for it! 🙂

Beyond just benefiting ourselves through profit or cheap deals, learning how to get a great deal can benefit others as well. A few years ago a local Sears store had a blowout clearance where all clearance clothes items were only $1. My wife and I bought up over 100 items and donated them. We have done similar things in the past as well, especially with toys.

Selling

The other skillset involved with successful arbitrage is the ability to sell. While on the surface this can seem simple (just list on Amazon or eBay stupid) it isn’t as easy as it seems. As someone who has spent years learning about this, I can say the better you are at selling, the more successful you will be at arbitrage.

There are so many avenues by which you can sell “stuff”. Learning the best ones for your situation, merchandise and personality will help you find success. From selling locally via Craigslist, apps like Offer Up or even the Swap Meet, to getting more advanced with eBay, Amazon and other marketplaces, so many opportunities exist.

Learning how to sell stuff can be good for your situation as well. Being able to get top dollar for your iPhone or other used items is a skill worth having. Companies like Gazelle offer you half of the value of your phone and then just sell it. You could be selling it at that same price. You could also help your family, church, etc. maximize their selling opportunities. #Skillz

Is Arbitrage Fair?

No not that kind of fair!

Many people argue against arbitrage because they see it as being “not fair”. You especially see this argument for example with ticket reselling. I get it, believe me I do, but the honest the truth is that supply and demand factors into the world every day and you aren’t going to be able to stop it. If 100 people want Hamilton tickets and only 10 are available, either you are going to make some money or someone else will.

Yes I know there are people using bots and other unfair advantages and I agree with stopping those, but if I want to buy tickets and then sell them I have done nothing wrong as long as I didn’t cheat to get them. This goes the same for gift cards, merchandise and anything else.

I think at this point hopefully you will begin to see why I think arbitrage is fair. It’s fair because it isn’t easy. You have to learn how/where/when to buy at good prices and how/where/when to sell to maximize your profits. The better your skills the more money you can make. It’s work and you also take on a lot of risk. And it doesn’t always end well.

Is Arbitrage For You

Whether it be gift card arbitrage, retail arbitrage or ticket reselling, it takes time and effort to really become good at it. It also takes a somewhat large risk tolerance and a willingness to learn. In the end if you can do those things, you can earn a lot of miles/points, make some money and perhaps even enrich your families lives and the community as well. Of course I’m just a guy who buys and sells stuff for a profit so don’t take my word for it. 😉

I have sprinkled links to other posts about arbitrage throughout this one and highly suggest clicking through to learn more from posts we have written in the past on this topic. Is arbitrage fair? Is it right for you? Share your thoughts in the comments!


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15 COMMENTS

  1. I agree that reselling is “fair”. It takes effort and knowledge to be able to do it…maybe some luck at times. If there is an item out there a person really wants they can put in the time and effort to find it. There is no hidden secret here. If you don’t have the time or want to put in the effort than you will end up paying a premium.

    If you buy something at the store for 50% off and the person behind you is paying full price. Are you a monster because you didn’t stop them and walk them through how to save on the purchase? How is reselling any different?

    Knowledge is power and it should be rewarded like it is in any other business.

    • And, when you do offer to show them how, they say “no thanks” about 30 seconds into your explanation! It has taken me years (and I’m still learning) to develop my skills finding merchandise at a deep discount. I don’t pay full price for much. Regarding tickets, I have invested a lot of time and effort in trying to resell, but I don’t like it (and I’m not very good at it). Event tickets are the one thing I will overpay for. If I want to see a concert, play, or sporting event I want very good seats. I am willing to pay StubHub prices for the first couple of rows. I value the experience very highly and will probably never go again. Of course, I can justify buying great seats to see Derek Jeter in his final season because I used points and miles for the plane and hotel. All I “paid” for were tickets to the games. And, my SO and I still talk about that trip!

      • I agree 100% – I am not a fan of ticket resell…too many ups and downs. And the people that complain about it never mention all the times that people get tickets at well below cost from scalpers either. About half of the sporting events I go to I can buy the ticket below face on stub hub.

  2. After reading a few of these posts I get that this is a hobby type business but you’ve reach the level of volume that you could just go into business as a distributor or retailer. You know actually go buy wholesale and resell it like any other physical or internet store. Seems like that would be easier and faster than finding the deals. You could still run it all through a mile card I would think.

    • Fair point. I do have a few wholesale relationships, but I get the vast majority of my products far below wholesale prices. I am also a registered retail business in my state and thus act in that way. With that said, I do want to find more of a balance between long term wholesale deals and shorter term arbitrage opportunities. The simple truth though is that for a lot of product categories finding these deals through big box and other large retailers is a better option than wholesale.

  3. Arbitrage is generally defined as transactions that generate risk free returns. I don’t think reselling anything can be classified as risk free. That’s why I don’t do it. Arbitrage is necessary as it acts to correct inefficiencies in the marketplace. Given that it is necessary, and that in your case it is not without risk, then it’s fair game.

    • That’s a fair observation. Arbitrage is definitely a term that means different things to different people. I agree that risk-free (or low-risk) tends to be implied. So reselling is tricky on that front. It depends on if you’re looking at any individual item, or the risk associated with reselling multiple items. There are some things we resell (such as gift cards), where we can turn around and “flip” them quickly at nearly certain riskless profit. There are other items where any individual purchase (for resale) isn’t a certain profit, but experience tells us that some very high percentage of the purchases are significantly profitable (at least, I’d argue, if a reseller knows what they are doing and treating it as a business). So is each item individually arbitrage? Maybe not by some definitions. But the overall activity is. Which is why, I believe, the reselling community has come to refer to it as “online arbitrage” (buying good online to resell) or “retail arbitrage” (buying in-store).

    • Arbitrage is also, or by definition instantaneous, ie: you buy/ sell simultaneously. It is therefore technically risk free.

      • I agree it used to be defined that way, but like so many things with the English language it has evolved. I would probably agree that ticket reselling with such volatile markets is not arbitrage, but the rest of it is based on modern definitions of the word.

  4. Don’t forget that it is illegal to resell airline tickets with your points. Many people’s programs have been shut down completely, and all their points were lost, and some lost their credit card accounts as well.
    The airlines, hotels and banks are getting smarter and tougher about this. With today’s electronic programs it is much easier to spot.

    • First off, no one is talking about selling points?!? Second, it isn’t illegal (as to my understanding), but a violation of program terms. That means they can certainly shut down your account and take your points, but as far as I understand it (and I’m no legal scholar) you can’t go to jail.

      But again, none of that was discussed in this post! I never sell my points. Just not worth the risk for me.

  5. Arbitrage is an interesting choice of words – you are reselling.
    I don’t think there is anything “fair” or “unfair” about it – everybody involved is free to sell or buy at the price they like. Making a profit from trading is as old as mankind…
    A different question is whether the participants are violating contracts, ie items prohibited from resales. While that is not violating criminal law, it is violating civil law and thus illegal. Or participants might be violating tax laws – this is a business, so anybody doing this has to pay taxes for it. And not paying taxes is illegal as well.
    I wonder how good a business reselling on this scale is after paying all applicable taxes, fees, etc…

    • So much wrong with this comment but I will say if you have read previous posts in this series then you know I will say this. First, this is a business. Second you have to pay taxes in my opinion. I do. Doesn’t take all that much effort to factor that into your buying decisions to ensure a profit.

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