Is this shady ethics?

**awilkie84** · #1 12-03-2012, 04:00 PM

For the last few months I've been seeing gear that was up on our local classifieds for about a week or 2 appear on a local guitar shop's Facebook page with higher prices. The most recent was a Mesa head, Bag End 1x15 and an Eden 2x10. They were listed together on craigslist & curiously are now all separately priced in the shop after only a week. I have seen other items do this, as well, but can't recall any specifics. The shop does allow consignment, but I doubt this is the case as they usually do not list their consigned items on their site (preferring to showcase items that they solely own and would generate more profit on).

What are your thoughts on this method of stock procurement? I, personally, think it's unethical and has the potential to ruin the prices on our used market by having a business with more expendable income than the average classified browser buying up the good deals.

nickrs540 · #2 12-03-2012, 04:02 PM

Maybe the seller couldn't get the items sold on his own so he sold them to the store. Guitar Center does it, why couldn't another smaller store.

**awilkie84** · #3 12-03-2012, 04:08 PM

Quote:

Originally Posted by nickrs540

Maybe the seller couldn't get the items sold on his own so he sold them to the store. Guitar Center does it, why couldn't another smaller store.

This thought had crossed my mind the first couple times I saw it, but after the 5th or 6th time it starts to become questionable.

hdracer · #4 12-03-2012, 04:08 PM

It is called the Free Market.
I do it all the time.
I buy gear off of CL and flip it.
It isn't my fault that some collage kid needs money fast and wants to sell the Les Paul that his daddy gave him for $600. I'll flip it for $1000 and buy some bass gear.
Shops have to stay in business and need to buy gear cheap and make a profit off of it.

If you don't like it, YOU buy the gear before they do.

**mjac28** · #5 12-03-2012, 04:10 PM

It's called Free Enterprise and buying cheap and selling higher to make a profit seems fine to me I think we all have done it at some time or another you just have to be quicker on the draw.

**mjac28** · #6 12-03-2012, 04:11 PM

Quote:

Originally Posted by hdracer

It is called the Free Market.
I do it all the time.
I buy gear off of CL and flip it.
It isn't my fault that some collage kid needs money fast and wants to sell the Les Paul that his daddy gave him for $600. I'll flip it for $1000 and buy some bass gear.
Shops have to stay in business and need to buy gear cheap and make a profit off of it.

If you don't like it, YOU buy the gear before they do.

+1000 and if you see some cheap gear let the rest of us know so we can snatch it up.

HolmeBass · #7 12-03-2012, 04:16 PM

I think as long as the store is *actually buying* the gear and then re-listing and selling, that's ok, fair enough. If the store isn't actually buying, but instead just listing, and then buying once they sell through their website, that's a bit fishy. Not cool to list an item they don't really have in stock, unless they are prepared to order it full price and provide it someone who buys it from them.

OP do you think the store is doing the former or the latter?

KPJ · #8 12-03-2012, 04:17 PM

Music shops have been scouring classifieds to buy gear and then sell it for a profit for years. Standard operating procedure. If you want the gear, buy it from the ad. If not, let it be.

lowfreqgeek · #9 12-03-2012, 04:19 PM

I run into gear at Music-Go-Round all the time that the week or 2 before was listed on CL for cheap (i.e. below fair market value). It's always marked up to what I consider a fair market value. I've also had GC contact me about gear I had listed on CL.

Nothing shady about it. Just business.

Pilgrim · #10 12-03-2012, 04:30 PM

It's 100% ethical and done all the time.

Four words tell you all you need to know: Buy low, sell high.

There's absolutely nothing wrong with buying something available at the right price and re-selling for a profit.

**awilkie84** · #11 12-03-2012, 04:42 PM

I understand the business mechanics behind it, but at what point does it become market controlling? A business with MUCH more expendable income could potentially buy every piece of gear that's below market value & relist it, thus keeping the market values above what would be reasonably acceptable had the market been given time to adjust without the interference. I'm convinced that tactics like this are why the greater area around me is selling items like a Spector Rebop for $900 when GC and the like have them for $500. The market hasn't adjusted due to the lack of comparable prices lasting for more than a few days.

I don't know if I'm making my point in a fully understood way, but there's my 2 cents.

Joe Nerve · #12 12-03-2012, 04:43 PM

The person buying is also always running the risk that he/she may not be able to resell with any reasonable profit. And has to go through the process of buyin, and selling it. There is risk and work involved. The money is earned. Nothing unethical about it at all.

**DougD** · #13 12-03-2012, 05:08 PM

Why is it that musicians have a hang up about making money?
It is not unethical to make money.
Profit is not a bad word.
Business is not a evil enterprise.

fdeck · #14 12-03-2012, 05:17 PM

Chances are, the store monitors CL and makes lowball offers on speculation. I doubt that a store would want to flip used gear for anything less than a 2x mark-up.

To me, it seems like the store is doing something akin to an arbitrage, where a good has different prices in different markets. Here, the markets are CL and the storefront. People are willing to pay more for the convenience and security of buying from a dealer.

Munjibunga · #15 12-03-2012, 05:22 PM

Quote:

Originally Posted by awilkie84

This thought had crossed my mind the first couple times I saw it, but after the 5th or 6th time it starts to become questionable.

If it doesn't sell on CL and it goes on consignment at a store, the price has to be higher so the store can get some profit on it. There's nothing mysterious or unethical about it at all.

Munjibunga · #16 12-03-2012, 05:26 PM

Quote:

Originally Posted by awilkie84

I understand the business mechanics behind it, but at what point does it become market controlling? A business with MUCH more expendable income could potentially buy every piece of gear that's below market value & relist it, thus keeping the market values above what would be reasonably acceptable had the market been given time to adjust without the interference. I'm convinced that tactics like this are why the greater area around me is selling items like a Spector Rebop for $900 when GC and the like have them for $500. The market hasn't adjusted due to the lack of comparable prices lasting for more than a few days.

I don't know if I'm making my point in a fully understood way, but there's my 2 cents.

Sounds like a good business plan to me, except for listing something at 80 percent more than you could buy it somewhere else. They can ask whatever they want for the merchandise. They don't owe it to you or anyone else to price things lower. Simple solution: don't buy from them.

**mjac28** · #17 12-03-2012, 05:33 PM

This is a buyers market people are able to look up comparable prices and if a store is charging ridiculous prices they will be run out of business.

Auguste · #18 12-03-2012, 06:00 PM

Quote:

Originally Posted by HolmeBass

I think as long as the store is *actually buying* the gear and then re-listing and selling, that's ok, fair enough. If the store isn't actually buying, but instead just listing, and then buying once they sell through their website, that's a bit fishy.

OP do you think the store is doing the former or the latter?

This also happens a lot with boats and motorcycles

hrodbert696 · #19 12-03-2012, 07:13 PM

If I may be allowed the digression, I'm reminded of a story about St. Gerald of Aurillac, the first knight to get made a saint. Supposedly he bought some cloth on a trip to Italy and then returned to France. When he got there a merchant complimented him on the good deal he had gotten because the cloth would have cost twice as much in France. Stricken in his conscience, the saintly knight sent a messenger back to Italy with enough money to make up the difference in price...

two fingers · #20 12-03-2012, 07:25 PM

Quote:

Originally Posted by hrodbert696

If I may be allowed the digression, I'm reminded of a story about St. Gerald of Aurillac, the first knight to get made a saint. Supposedly he bought some cloth on a trip to Italy and then returned to France. When he got there a merchant complimented him on the good deal he had gotten because the cloth would have cost twice as much in France. Stricken in his conscience, the saintly knight sent a messenger back to Italy with enough money to make up the difference in price...

Nice story. So what? I don't see the problem. Guy on CL sells the gear. I'm sure the shop owner didn't put a gun to his head. CL guy gets some money, which he obviously needs because he's selling gear. Shop owner gets to sell it for a profit. Again, I'm sure the shop owner isn't putting a gun to anyone's head to force them to buy. Customer gets some gear at a price he agreed to. CL guy is happy. Shop owner is happy. Customer is happy. And OP wasn't going to buy the crap anyway or he WOULD HAVE. ANYONE in his market COULD have bought it at the lower price on CL. NO ONE got dragged into a deal. Money was made, gear was acquired. Nobody got cheated. They ALL agreed to whatever part of the bargain was their's.

The CONSUMER in your market is to blame if prices go up. If there are people in your area not smart enough to shop CL, and they end up buying at the store for a higher price, it is THEY who you should blame for higher prices. THEY took the control out of the "little guy's" hands. I only WISH I owned a shop with the power to control and entire market's pricing. I wouldn't be sitting here. I would be counting my money.

Short version. There's not a single ethical problem OP. Not one.