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The Art of the Arbitrage (or, selling stuff for more than you paid for it)

February 5, 2011 in Featured, Gaming

One month before the Playstation 3 was released, I was lying on a blanket, camped out in front of a Toys ‘R Us. Excluding bathroom breaks, I’d be in the same spot for the next eighteen hours. But those eighteen hours would also net me more than 1500 dollars in profit. It was the start of my six-month stint as a full-time game console arbitrageur.

Arbitrageur. It has a nice ring to it, yet it sounds far more impressive and mysterious than it really is.

Simply put, arbitrage means buying something in one market and reselling it elsewhere for a profit. The something could be an iPhone, a PS3, a TMX Tickle Me Elmo. An arbitrageur is someone who engages in said activity. An arbitrageur is also someone commonly called a scalper, ebayer, or opportunist.

My first attempt at arbitrage ended a miserable failure. That was when the Xbox 360 came out, the first of the next-gen game consoles. It all started when I stopped at a Sears after work to pick up some tools. There were two kids sitting there – they couldn’t have been older than 16 – and I asked them what they were waiting for. The Xbox 360, dude, came the reply. But you’re too late, ’cause they only got two and we got ‘em.

I drove home and fired up eBay. Sure enough, people were paying several hundred dollars MORE than retail for these things. I couldn’t believe it.

I started calling. I called every Best Buy, Circuit City, Sears, and GameStop in my area, and was told the same thing: sorry, there’s already X people waiting outside. And we’re only getting (X/2) Xboxes. (replace X with your favorite number between 1 and 20)

That night I went to sleep slightly annoyed with myself.

At 8 am, my cell phone beeped. Two of my coworkers were at a Costco (Costco? Game consoles? Huh?) and there was only four people lined up for “a bunch of” consoles. I did the math. The math sounded good. But it would take me about half an hour to get there.

I got to the Costco at 8:28 am, and by then there were fifteen people on line. I watched as the workers escorted each person inside, and I watched my coworkers go in and come out with their new Xboxes. I left when the person four spots ahead of me went in and the workers announced, “sorry, no more Xboxes!” After twelve Xboxes, there was nothing left but a bunch of disappointed faces and some grumbling. Humanity can be really sad sometimes. Myself included.


The daily life of an arbitrageur is not glamorous. It involves a lot of lost sleep, countless hours spent scouring online deal sites for opportunities, driving around in unfamiliar areas, and conducting transactions with sometimes questionable individuals.

It is not, as most people assume, easy money. Nor is it big money. A fairly successful arbitrageur can make around an entry-level programmer’s salary: roughly $50k a year. Excluding tax, insurance, gas, and eBay fees, it’s a lot less. (but technically you can deduct things like gas and depreciation from your income tax)

On one hand, you learn to manage all the facets of a small business: inventory, logistics, sales, marketing – maybe even personnel, if you get to that level. On the other hand, you probably wouldn’t want to put it on your resume.

The few arbitrageurs that I’ve spoken to do what they do so they don’t have to get a “real” job. Irony notwithstanding, there’s more to it than that: the lure of the money, and the thrill of the chase draws you in, and then you keep at it because you’ve got something to prove: that you too can be successful selling Nintendo Wiis for a living. Self-employment at its finest.


At 12 am, my cell phone beeps. Time to move. It’s me and a fellow arbitrageur friend of mine, and we arrive at Target and take our places. We’ve got the timing down to a fine art now – the trick is getting there as late as possible while staying comfortably within the bounds of getting a Wii.

Around 6 am, a large black SUV pulls up and an entire Korean family tree clambers out. There’s two parents, a grandmother that must be at least ninety years old, what looks like an aunt and an uncle, and a couple of kids. They set up camp at the end of the line. Both of us smirk. Are you serious?

Several hours later, we walk out with a Wii apiece. “Hey,” says my friend, “Toys R Us is getting a shipment at nine, wanna check it out? We can still make it.” Don’t you have work? He shrugs. I shrug. The equation is simple. More Wiis = more profit. Wiis are going for close to five hundred dollars now, more if bundled with a Zelda game and a couple of controllers. And the Toys R Us is only five minutes away…

We head to the Toys R Us down the road, and get back in line.


Waiting lines are amazingly civil, considering that there are rarely, if ever, any sort of police presence. Lists of names are passed around, usually detailing the first twenty or so positions in line. God help you if you try to cut in.

I’ve learned that people can’t count. Either that, or they’re way too optimistic. There are always more people waiting on the line than the total number of actual products. Even when the manager comes out and announces, folks, we only have ten consoles, there will be at least fifteen people waiting, clinging to that last thread of hope.

The unsurprising truth is that no one likes arbitrageurs. (especially the ones that deal in Zhu Zhu Pets, Tickle Me Elmos and Furbies.) Of course, no one knows what an arbitrageur is, to them they’re just “eBayers”. EBayers should be ashamed of themselves. What those eBayers are doing is illegal. The eBayers are ruining the spirit of Christmas. You hear the same complaints over and over again. So I smile, nod, and agree with them, yes, they should be ashamed of themselves, because it’s more beneficial to agree than to have people hate you.


The clerk is a young (maybe twenty), heavyset, goateed guy who looks like your stereotypical sysadmin. His brow is slightly wrinkled.

“You want five DSes,” he repeats. “For what?”

Christmas gifts, I patiently respond. My friends all chipped in and got me a laptop for my birthday. I’m returning the favor.

Slight pause. The Sysadmin processes this information. I don’t think he’s ever dealt with someone who wanted to buy five DS Lites at once.

The moment passes. He gives me a grin. “Man, you got some awesome friends. So what do you do for a living?” I flash my game-winning smile back. Oh, I own a web development firm. (mostly true, although said firm has no employees except me)

“Oh wow. Yeah, my dad got me a Unix book awhile ago. I should take a look at it…”

Yeah, you should.


It’s only October, yet tonight is unseasonably cold: by 2am, it’s hitting the high 30s. I’m not prepared for this, even with a tent and a blanket. Is it worth it, I ask myself several times. I’m reminded of a line from Star Wars: “No reward is worth this!”


Six months after I put my career as a freelance web developer on hold to buy and sell game consoles, I’m done. I’ve had enough. My life as a professional arbitrageur is over – not with a bang, but with a whimper, a sputtering of the flame. And life goes on:

The PS3 market collapses. Wiis manage to sell well into 2010, at which point Nintendo drops the price in an attempt to sell more consoles to an already oversaturated market. Arbitrageurs rise up in full force for the iPhone, the iPad, and Zhu Zhu Pets. An analyst predicts the next console cycle will begin in 2013.

Meanwhile, I silently vow to never wait on line for a game console again.


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