It's a funny situation to be sure, but remember that somebody was trying to sell that book, and their software screwed up in a way that just shouldn't happen, preventing them from making that sale.
The company I worked for did this, if not before anybody else did, than at least very nearly so:
> Then came the "phantom listers" - agencies with software that spiders through the listings of legitimate on line book dealers looking for titles with few (or no) copies listed in Amazon. They then list them at inflated prices.
With any luck, your former employer patented the general concept and then sold the IP to Nathan Myhrvold, who will now sue everybody in the business for eleventy billion dollars.
Algorithmic pricing is the main reason I rarely buy anything on Amazon anymore. On the realistic end, I've had too many situations that I was thinking of buying something, finally decide to pull the trigger only to find the price had gone significantly up. Not just a 3rd party running out of inventory and the lowest price moving to the next cheapest seller but items sold by Amazon. Once I realized I had to use a site like camelcamelcamel.com to track the price, Amazon was no longer the easy, trusted low price retailer. Make me think about a purchase, I will. On the high end, most products you look at have an insane high price, even on price fixed items that I can walk to a store and buy anytime for MSRP. This article has an extreme example but most items I look at have at least one offer that is 10 - 100x everyone else. That this is not monitored and dealt with from amazon gives the whole site an aurora of sleaze...
My friend and I built a proof of concept to post books for sale that were not available on Amazon.com but were available on Half.com for a markup. When someone orders on Amazon.com, place an order on Half.com and change the shipping address.
can you explain more about how the arbitrage works ? I am confused how it is possible. for instance, I buy a lot of used books from amazon.com (well, third party sellers). when i one-buy click, the purchase goes through immediately, and the sellar already has the book listed, so i am confused how it would even be done.
This is very easy and actually quite common between Amazon and Ebay. You would list the title as Merchant Fulfilled on Amazon and when someone orders it you would place the order yourself on Half.com using their shipping address and pocketing the difference.
Doing it manually is one way but not scalable. You can aggregate data either using available APIs or by scraping websites. You can list books on Amazon that are available on Half.com and give you a decent profit margin. It doesn't matter if books are already listed on Amazon. Just make sure your offer price is a little bit cheaper than the cheapest available copy.
The other day we wanted a copy of the children's book 'Vincent the Vain', a short picture book about a gorilla. 'Daily Deal' are selling a copy for £999.11. http://www.amazon.co.uk/gp/offer-listing/0747584990
But they're the only people selling a new copy, so its not a feedback loop as in OP. So whats going on there?
It might be a case of the seller using that price as a placeholder until they get the book back in stock. Amazon prefers that vendors keep items in stock, so this is one way to do that, even if you're currently sold out.
I used to work for a company making software for Amazon vendors and don't think Amazon cares that much, but lots of vendors believe it is true.
Sometimes I have fun searching for generic stuff (like 'book') in Amazon and then ordering by descending price.
Right know for example you can get "Educational Research: Competencies for Analysis and Applications (with MyEducationLab) Value Package (includes SPSS 16.0 Student Version for Windows)" [1] for a mere $11,259,120.28.
Please notice that it is the value package :-).
Ah, I wish i could edit the link, and point to the google cache instead, but seems that it's too late.. Feeling sorry now, must feel like a DDoS attack for the person who wrote this, and I believe it won't stop until the article goes away from the frontpage :/
Technically, yes. Source: Working with IT engineers working on credit card systems, it is fine but like all cards has to be worked through compliance modules.
Technically, not really: Source: Working in Banking Ops where red flags that should but don't exist in a system get raised by it. A single @23 million transaction is unlikely to bankrupt any bank but if approved by the CC system will probably be approved (a huge credit limit, or more commonly, internally approved balance/one-off credit) has to be there) then denied internally causing all sorts of trouble.
Transactions of $Xbns are commonplace in banking (non credit card, bank transfer) and credit card systems are certainly built for transactions of $100mns, though, as stated above, it would be immediately alerted probably to the bank's head of operations.
But, I've seen technology/operations mistakes that have had $100mns impact before. Usually a bit more obscure than buying something on Amazon.
The article says "credit card", but I didn't think credit cards could have fees for negative balances - of course your credit card has a negative balance, that's the whole point. I think this must have been a debit card, or maybe one of those combo credit/debit cards. They also show an ATM withdrawal which suggests it's a debit card anyway.
That was obviously a fluke, and very unlikely that the transaction was actually cleared through the credit card network, it was probably an error at the bank's end of things.
A payment that (if the rumour is true) actually cleared through:
> Rumor has it that tech millionaire Victor Shvetsky purchased a business jet for $52 million on this card [American Express Centurion]
You know the old saying. If you owe the bank a hundred dollars, that's your problem; if you owe the bank twenty-three quadrillion dollars, that's the bank's problem.
By John Taylor Kesler on April 25, 2011, Format: Paperback
I was fortunate enough to buy this at the bargain price of $19,087,354 there must have been a sale because the next day it was listed at $23M. I was very pleased to find upon arrival that the book contained very useful information, however to be honest I was expecting a few more pictures for the price paid. I highly recommend this to all my associates, I have many acquaintances with children in only the best private schools who will be buying several copies. If the price has you worried, ask yourself the American question: "can you really put a price on good education?""
I have a system, where I read the most negative reviews of the book. If the reviews are eloquent and make a solid point, I don't buy the book.
If the negative reviews are mostly whiny,emotional rants without any valid solid arguments, then the book is most definitely worth it. A case in point:
I'll second that method. Positive reviews are uninteresting; 1-star reviews reveal whether there really is a problem/deficiency, as usually the complaint is unrelated ("product arrived damaged"), misguided (expectations were bafflingly far from what product is, "this washcloth is a lousy database manager"), or a fluke (50,000 5-star reviews and one "one page was folded, replacement was fast & free").
I directly read 2 star reviews. 1 star reviews are often super biased and pissed. Much like in yelp, it contains things like "The shoes didnt fit" , "The delivery guy was mean" and stuff like that.
(Off-topic) The top rated review of this book is from Peter Norvig. He states "For most books, the review is a bell-shaped curve of star ratings". However, as a habitual window-shopper of books in Amazon, I have rarely come across rating distributions which look like normal. In my experience, 2 and 3 ratings are much less common than 5, 4 or 1.
Somewhat surprisingly, the median review score is 5, and if you look at median scores for products, the skew is very much left. So, the data pretty much backs up your observation!
Huh didn't realize others do the same thing. I thought up this same method 7-8 years ago and I don't think it has ever steered me wrong. I may not always appreciate the book, but I can tell it is simply something that doesn't work FOR ME, which is always hard to gauge before you actually read something.
It started off as a cautionary thing for me, when I had to buy (optional) text books and didn't want to blow my money on something bad, so I started paying way more attention to the negative reviews.
I do that, but as a source of entertainment. The one star reviews for works (books, comics, movies) that I think are masterpieces generally come from a perspective that I have difficulty wrapping my head around.
Personally, I find the Amazon rating and review system very helpful and use it frequently. I only encounter Joke comments on things like 23 million dollar books or 10 thousand dollar A/V cables. I appreciate how verbose Amazon allows you to be in your comments as well as the ability to include images. I find rooting through the junk (jokes, paid comments, that guy who just received the product in the mail and either hasn't even used it or just begun using it and shouldn't really be commenting yet) is fairly easy too.
I really wish Amazon reviews are restricted to those who actually purchased the product - Amazon does add verified purchase tag, but why allow me to review an item if I haven't purchased it? I can understand if they were a small e-commerce platform but at their scale, restricting the number of reviews would be beneficial. It is better to have 10 good reviews than 100 reviews with jokes and rants etc.
Another thing that is really annoying is people buying wrong product and leaving angry reviews. Whose mistake is it if I buy a product thinking it is water proof, when the description of the product says in bold letters that it isn't waterproof? I feel sorry for the sellers who get idiotic/unfair reviews and they can do nothing about it
sure that happens - on Amazon's scale, does it matter? As a consumer, I like a few honest reviews vs thousands of reviews that contain useless/dumb/rant type reviews. I'd have to weed through those reviews to find honest ones which takes time and energy, and ultimately I'd just give up - which defeats the purpose of reviews in the first place.
But if you still want to address this problem, just allow the buyer to say it is for someone else and allow them to put the recipient's email. If I buy something for you, I put your email, and Amazon could allow you to review the item instead of me reviewing it.
Once you take a turn off the mainstream there are thousands of products on Amazon without any reviews. People therefore appreciate any information whether it was bought from Amazon or outwith.
Slashdot-style moderation works well for this IMO: give ratings for usefulness, humour, etc., use meta-moderation to moderate the moderators (maintain a moderation profile so that you can reverse moderations from poor actors).
Steam does something similar in having the humour moderation so that things don't get moderated as useful just because they're funny.
I wish the non-obvious joke ones could be trusted. Some product categories are effected higher than others but in a few cases I've seen something like ~80% positive reviews are fake.
Trouble is, without strict moderation the stuff that floats to the top will be the memes / jokes / lowest common denominator echo chamber opinions, not to mention the people trying to game the system. Look at most of the default subreddits, for example.
Not sure whether you comment above is directed at Youtube only, but Amazon does have "Was this review helpful to you?". I believe voting on Yes makes it more prominent. As usual, this kind of system is subject to fan-boy treatment. I once left a 1 star review of a game which I genuinely disliked and gave my reasons (involved tinkering around graphics settings in XML files); there were a lot of clicks on the "No" button to the above question, presumably because the fan-boys could not tolerate someone criticizing their favourite game.
The best? Amazon takes a 30% cut and then the government (here in the US) takes another 28% for income tax, 12.4% for SSN, and 2.9% for Medicare. You get less than half your cash into clean money. Plus, there's a huge paper trail of buyers and the million dollar book would likely set off flags on every sale.
To go from money you can't use to money you can use, that's not a bad deal, actually. But selling a million dollar book is probably too conspicuous. It's better to do this with something that's actually worth that much.
That doesn't seem like a terribly good way of laundering money. It leaves an extensive trail and I would have thought that transactions like that would set of several klaxons at Amazon HQ
One could also buy amazon.com giftcards with cash in shops in US (no questions asked) then sell them on localbitcoins.com (go check it out > https://localbitcoins.com/buy-bitcoins-online/usd/amazon-gif...) for bitcoins losing about 20-30% in fees to get bitcoin.
I'm a bit confused ... the article claims this is a symptom of unexpected algorithmic behavior, but you are saying what actually happened was due to money laundering?
I like this. You would have to use gift cards in store to dispose of the cash, and even at $100 gift cards, you'd be looking at 236,987 cards to purchase before you can buy the book.
I used to have Play.com vouchers through my credit card and wanted to buy a new camera, only the listings were from dodgy sellers and £100 more than Amazon. I did think about listing an item, then buying it myself to convert it to cash.
Well 23 million is a bit of an overkill and I am sure Amazon would raise flags at some stage!
but if you look on amazon for products in the 500-1000 range such as electronics (where amazon only takes 6-8% commission) there are plenty of examples of 3rd parties SOMEHOW selling new electronics below amazon itself!
These guys are willing to lose 6-8% on lets say a hard drive and another few % to undercut Amazon from whom they would buy in first place
If someone is paying less than Amazon, they can easily undercut. Additionally, what if they'd been selling the product and then Amazon comes along and wins the buy box. A 3p seller might be willing to take a loss to just sell out remaining product to reinvest in a new item that Amazon isn't selling yet. There are a few other situations I can think of too where someone would undercut Amazon, even if it meant losing money.
There's really no way to understand someone's business model by only looking at their price.
I worked for years on AML systems for banks. This isn't money laundering. Indeed, I don't believe I've ever seen a "this is money laundering!" comment on a social news site that wasn't entirely and completely off the mark of real money laundering, but just seems to be a go-to for things that people don't understand.
How does real money laundering work? Do you think that the other comments about electronics being sold for money laundering are also off mark? Also how realistic was breaking bad, where they brought a carwash and put it in some fake receipts.
Not a criminal, but someone interested in this kind of thing. From what I've read and heard, cash-based businesses are best because its really hard to prove otherwise. The IRS is going to see a car wash doing $1m a year in sales and that'll be it. It can't access any other records to prove otherwise because you're a mostly, if not all, cash business. You become your own customer and funnel your money into the company. You would easily survive an audit here.
So any cash-based business is good. Restaurants, car washes, pawn shops, bars/clubs, etc. These types of businesses can make thousands per day gross and are relatively easy to run with low capital down. That's going to be far superior than shipping hundreds of overpriced hard drives per week via e-commerce and hoping to god no one traces back all these credit cards back to you or your pals.
With something like a bar can't the IRS demand to see receipts for the drinks you've bought, and realise you've sold $100,000 worth of whiskey, but only actually bought a few bottles?
Probably. If you want to be audit proof you can keep your inventory sane. The nice part about these businesses is that they're all high margin. Your wholesaler cost for whiskey may have only been $1,000 that month and arguably you could have made $50,000 in whiskey sales considering the cost per shot at a upscale or even non-dive club.
You can learn the basics of accounting and laundering over a weekend if you had to and learn just enough to avoid being flagged by the IRS. Hell, some accountants specialize in these kinds of things.
I also think that you need to accept some level of risk here and that you'll be dealing with audits periodically. Auditing isn't some scary process, more than likely you'll be dinged for more taxes and not be put in jail. You'll come out ahead, especially when you consider outsourcing laundering is very expensive, something like 50-70% and depending on how it comes back to you, that money is also taxable, so another 25% lost on what's left. Running your own business means you only lose that 25% and some overhead.
The other comment about electronics is completely off the mark as well -- people often see financial transactions that don't seem to make logical sense (whether pricing bots that recursively keep pricing off of each other, as in the linked story, or prices that seem too good to be true, which more likely are gray market or arbitrage) and immediately explain it as money laundering. But consider the electronics sales, where the premise is that people are selling electronics that they apparently bought from Amazon using gift cards under the market just to launder cash.
There is an enormous financial black hole that is just as vulnerable to inspection as simply depositing $1,000,000 in cash in your account. The whole point of money laundering is not only to legitimize the output, it's to make the sources untraceable and arguably viable as well.
The components of a transaction, particularly for the sales of goods, cannot simply appear out of nowhere, or they've done absolutely nothing in the way of money laundering. The people who will ever care about this (the ones who money laundering is constructed to fool) aren't so naive, and if you're selling 100,000 hard drives to justify your income, they're going to ask where you got the hard drives, and demand a financial trail.
Cash businesses that have little variable costs outside of manpower (such as carwashes, laundrymats, even some small restaurants, or selling small crafts on Etsy) are absolutely lucrative tools for money laundering, and can only really get caught if put under heavy scrutiny (e.g. car wash with 10 cars over the week claims revenue of $100,000). As are casinos, and Vegas was built on money laundering -- there are few checks on how much you spend, so whether you spent $1,000,000 in unexplained cash to leave with $950,000 in legitimate winnings, or $10 in legitimate cash to leave with $950,000 in legitimate winnings, it's almost impossible to prove.
There are many, many financial vehicles that are used for money laundering, including life insurance. Selling hard drives on Amazon is not one of them.
