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Loss leaders and the secondhand marketplace Wed, Jun 21, 2017
I was in the market for some exercise equipment recently, and I figured I'd buy some of it secondhand from eBay or Craigslist since lots of people make fitness goals and quickly abandon them.  I assumed there'd be a pretty big market of lightly-used low-priced exercise equipment.  I was wrong, but for a different reason.  It turns out there's a modest market for used equipment, but the better market is for brand-new equipment from giant companies with small margins or loss leaders.  A loss leader is a product sold at a loss with the intention of attracting additional business.  Amazon and Walmart can sell a product for little to no profit because they know you'll buy a bunch of other stuff from them.  That works out great for customers who want to pay low prices, which is pretty much all customers.  It doesn't work out great for the secondhand marketplace.  With the advent of free shipping, the secondhand marketplace is essentially obsolete.  I was able to order a piece of equipment, brand new, from a big reputable company, shipped for free in three days, for less than I could've bought the same piece of equipment, used, either shipped across the country (at a significant cost), or picked up from someone that lives near me.  Loss leaders have killed the secondhand marketplace. #business


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