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Added Value Or Added Price?

I once wrote an article where I posited that retail was scalping.  I rarely see anyone else make that claim, but I’ve seen people from both sides of the debate compare flipping with scalping.  Obviously, which side they were on influenced how they felt about flipping.

Now, I could just call these people wrong and close the debate, but that would make me no better than them.  Instead, I’m going to explain the difference.  Scalping is when you buy something and then sell it at a mark-up without actually adding any value.  Most of the time, this works because the buyer can’t actually get it from the seller.  You’re not raising the price by adding value.  You’re raising the price by choking supply.  Flipping is when you buy something and then add value to it before selling it at a mark-up.  Generally, people do it to houses, so they’re spending a lot of money and putting a lot of work into flipping some shack into a house people want.  I fail to see how charging extra money for the added value of the home and your labour is comparable to buying every ticket to an event and then charging a “processing fee” when you sell it to someone else.

But, failed analogies are just one of many straws people grasp at when they’re starting to realise they may be wrong.  What I don’t understand is how the flipping analogy caught on in mainstream debate but the retail analogy did not?  Because, as we all know, retail actually is scalping.  What?  You don’t think so?  You think it’s about the convenience of all your items in the same place?  Okay.  Buy the same thing wholesale.  What?  You can’t?  That’s because the scalpers have choked the supply.  Consumers aren’t allowed to buy directly from the seller.  That would put retail out of business.

But, you know that house that lady flipped?  You like what she’s done with the place, but you don’t want to buy it from a flipper?  Find a house of comparable value then and buy that.  What?  It’s actually more expensive?  You mean the cost of  a flipper improving a house is less than people of affluence maintaining it and hiring a realtor to sell it?  Who knew?  Oh, right.  I did.  But, you never listen to me.

On a side note, what good is a realtor anyway?  Some of the best deals you can get aren’t sold by realtors.  Must be those cuts they take for selling something that isn’t even theirs.  I guess realty is really what’s comparable to scalping, but I digress.

I realise that’s a mighty long tangent and I really should just get to my points without straying too much on tangents.  I’m likely to never return to the topic again when I do that.  So, focusing on the main point is important and I should just do that.  Oh, shit.  There I go again.  Digressing about digressions.  Damn.

I guess it’s a round-a-bout way of saying it, but the point I’m making is those who compare scalping to flipping are just wrong.  Case closed.

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