A day in the life of Ebay toy pimp

On occasions, it occurs to me that my life is likely very different that most other people’s. Last Thursday I woke up shortly after 7AM, about 4 hours earlier than I have been getting up most days for the last few months. I dressed promptly and went out the door, picking up 3 of the four daily papers I currently subscribe to (yet another unusual aspect of my life).

What would get me up this early? A job interview? An early morning doctors appointment? Nothing so pedestrian, gentle reader. Last Thursday was the US launch date for Sony’s new handheld gaming device, the PSP (PlayStation Portable). Given the success I had with Nintendo DS’s last Christmas, I wasn’t going to miss out on the possible Ebay arbitrage opportunities the PSP launch might create.

I had seen the PSP at last fall’s Tokyo Game Show and I was very impressed. Sony has been having supply problems for a fair number of their products as of late (PlayStations are now only becoming regularly available in most US retailers, a mere three months after Christmas) and there have been expectations that PSP would quickly sell out.

So I hopped into my car and promptly drove off to my nearby Target arriving around 7:45. I read a little of the WSJ for a few minutes and then I walked to the door. At the door, there were approximately 9 other people waiting, like me, for the store to open. 7 of the group were men and 2 were women. After the store opened, we all walked in an orderly fashion, although it turned out the 2 women were there for something other than a PSP as they didn’t fallow the men to the electronics section. After waiting for the registers to boot up and sorting out who wanted which game, the clerks started selling the units. After 10 minutes of entering the store, I had my 1st PSP. I was second to last in the group and I just got in line again and bought another one. They had advertised that it was available to one to a customer but the clerks were interpreting that as one PSP per transaction. By 8:15, I had 2 PSPs and was on my way to another near by Target in mall more know for shootings/murders than it’s shopping ambience. As I walked into the electronics section, the department manager asked “I bet you’re here for the new system, right?” I guess I have video game player written on my head, or they don’t get very many middle aged white nerds at this Target, before 9AM…probably both. Anyway, by 9AM, I had 3 PSPs. I stopped to have breakfast and then went back to the first target and bought another PSP. I returned home, cognizant that I had approximately $1000 of inventory in my car already. I checked my real world mail and then checked what was happening on Ebay…By 11:30, approximately 1600 PSP systems were listed (although some of these may have been Japanese systems). Around noon, I went back out, hit the murder mall Target for another PSP, then drove to a nearby Toys R Us, where I bought another PSP along with 4 “barrels” of Lego Bionicle parts (it’s an exclusive Toys R Us promotion package that they only offer for a limited time and limited basis (most stores get 8-12 barrels, each barrel containing 400 Bionicle parts. This is an unusual package and contains some special pieces,…I expect that I can flip this on ebay for net margins of 100%). I had cleaned out this store of barrels the previous week, so the four barrel I got today must be their remaining stock. (a few days later, I made another Bionicle barrel hunt at various Toys R us, and drove home with 12,000 Bionicle pieces in the back of my car -30 barrels worth). I asked the TRU clerk how the sales were going and she said they only had a few customers so far, although this TRU is in an fairly economically depressed area filled mostly with recent immigrants…probably not the best store to assess the market for a $250 hand held game machine.

From there, I drive north to a Best Buy, where I purchase my “personal” PSP along with 3 games (Metal Gear Acid, Lumines, and Wipeout Pure). After waiting about 15 minutes to buy the PSP (Best Buy was only selling PSPs and PSP games from the customer service section of the store), I remarked to the clerk that it looked like they were about to run out of PSPs. He said while it looked like that, they actually still had another pallet of them inventory racks above the store floor.

It was now around 2 PM and I went Target, where they easily had 50 PSPs still in stock. I asked if I could buy two, and the clerk remarked that originally they were only supposed to sell one per customer but since they had plenty and sales were “slow”, they were told that they could sell two at a time. While I was there, I notice that they had PS2 Hard Drive/Final Fantasy X1 combo packs (to play the game, you need to have the optional PS2 hard drive, so they sell the two units in one package since it’s the only game (so far and likely ever) to use the PS2 hard drive attachment) had been marked down 75% (from $100 to $25 each). I promptly bought all four units, which should sell on Ebay for somewhere between $45-70. I then headed back towards home, but I stopped off again at the Target where I started the day and bought one final PSP, giving me a total selling number of 10 PSPs purchased at a total cost of approximately $2400. I had driven approximately 90 miles in my various travels in pursuit of PSPs.

Around 5 PM, I checked Ebay and now approximately 2800 PSP systems for sale. I checked again at 9 PM and there were approximately 3800 PSP systems listed. Most were selling above the $300 mark…some at $400 some at $200. One of the more interesting developments was that UK auctions for PSP games were doing quite well price wise…$40 US games were selling in the UK for 30 pounds or more ($57+), which was interesting since the PSP hasn’t been even been released in Europe…most likely UK early adopters who imported Japanese versions PSPs were looking for games with English text in them.

Over the last few days, it has become apparent that PSP launch has not become an immediate sellout, unlike the PS2 launch or the recent launch of the Nintendo DS. It is quite possible that Sony didn’t want to be short and actually produced what they said they would (1 million units available during the first month of the launch) and that the market wasn’t going to go insane over a $250 device launched three days before Easter. Supplies seem plentiful for the most part. I suspect that I should obtain net margins on my PSPs of about 10% for my Ebay sales. Supplies seem to be some what constrained in some areas of the US and many online retailers are requiring customers to buy “bundles” (PSPs with games and accessories sold at one price, usually starting at $350), and these online sellers can’t guarantee fast shipping. So there is still a narrow niche for Ebay sellers to sell to those who rather pay $40 over list to get it in two day for sure rather than to waste time driving around trying to find in a local store. So it is definite let down from my 60-80% net margins from my Nintendo DS sales last Christmas, but $25-30 net profit per item is OK by me….assuming I get them sold prior to the arrival of the credit card bills with the PSP purchases on them.

The market may soften as time progresses (or could tighten up if Sony doesn’t ship any more for the next few weeks), but the beauty of my approach is that I could technically return all the PSPs (except my personal one, which I already opened the packaging) under the stores standard return policies. Because of this, on paper, I actually have no inventory risk if the market completely tanks. All I would be out of would be the time and gas invested in the original purchases (and returns if necessary).

While this day was far from “average”, I did find myself thinking “This is tad unusual way to live your life” as My Bloody Valentine blared on my car’s stereo and I caluclated the most efficient routes between the various stores I planned to hit.