In the latest edition of The Margins newsletter, Ranjan Roy tells the story of his friend who owns a pizzeria. He charges $24 for a deluxe pizza but, for one reason or another, Doordash lists the pizza for $16. As an experiment, he ordered 10 pizzas from his own pizzeria and had them delivered to a friend's house. Sure enough, a Doordash driver came to his pizzeria and paid $240 for the pizzas.

Trade 1

We went over the actual costs. Each pizza cost him approximately $7 ($6.50 in ingredients, $0.50 for the box). So if he paid $160 out of pocket plus $70 in expenses to net $240 from Doordash, he just made $10 in pure arbitrage profit. For all that trouble, it wasn't really worth it, but that first experiment did work.

My mind, as a combination trader and startup person, instantly had the thought - just run this arbitrage over and over. You could massively even grow your top-line revenue while netting riskless profit, and maybe even get acquired at an inflated valuation :) He told me to chill out. Maybe this is why he runs an "actual business" while I trade options while doing brand consulting and writing newsletters.

But we did realize, if you removed the food costs this could get more interesting.

Trade 2

The order was put in for another 10 pizzas. But this time, he just put in the dough with no toppings (he indicated at the time dough was essentially costless at that scale, though pandemic baking may have changed things).

Across America, semi-homeless "nomads" drive from big-box store to big-box store, hunting for items on clearance that Amazon customers are paying a premium for; when they find them, they snap them up and add them to the bins at Fulfillment by Amazon warehouses, whence they are shipped on to consumers. Read the rest

When your return your unwanted Amazon purchases, they end up with discounters who sell them by the palletload at pennies on the dollar, and millions of "reverse supply chain" specialists bid on these pallets of miscellania, sort the usable from the useless, repackage it, and make it available for sale again. Read the rest

Monopoly for Millennials, an edition of the game noted for its surprisingly contemptuous mockery of younger generations, was perfectly-designed to go viral. It's $55 at Amazon, but WalMart had it for just $20 (sold out, I'm afraid). The Bearded Picker went from store to store buying every box and selling them online. All he had to do was iterate the "available" count on his third-party seller listing at Amazon, raking in $2500 for a single (admittedly long and arduous) day's work.

Other sellers report that Amazon prevents them selling these as "New". One explanation is that they're may be setting the price too high, tipping the algorithm off that they're gouging customers. But The Bearded Picker also points out that he's an approved seller of the brand at Amazon:

Certain brands require approval before you can sell them. It helps AZ fight counterfeits or the brand has requested it by entering the brand registry.

Amazon-approved arbitrage! Read the rest

Alice Maz was part of a small group of players who came to have near-total mastery over the internal economy of a popular Minecraft; Maz describes how her early fascination with the mechanics of complex multiplayer games carried over into an interest in economics and games, and that let her become a virtuoso player, and brilliant thinker, about games and economics. Read the rest

The Paradise Papers continue to expose the economically useless activity that late-stage capitalism rewards with titanic sums of money: today, it's the story of Julien Lavallée, a botmaster ticket-scalper who has harvested the lion's share of concert tickets from all over the world, laundering them for millions through a secret "top seller" program that Stubhub offers to anyone who can move more than $50,000 worth of tickets per year. Read the rest

A "death put" on a certificate of deposit means that the bond matures immediately upon the bearer's death, rather than when its term runs out: they're used as a form of life-insurance, cushioning the blow to loved ones from unexpected death, and they can be held jointly, so that the bearer's heirs and a third party get a payoff on death. Read the rest