Bought It From Amazon? You Can Sell It There Too

Laura Pegoraro was really looking forward to reading “The Corrections,” Jonathan Franzen’s award-winning novel about an ultra-dysfunctional family, when she bought it from Amazon.com Inc. in October 2001. Oprah Winfrey had selected it for her book club, and a month later it won the National Book Award. But Pegoraro hated it.

“I couldn’t wait to get rid of it,” she said.

Amazon was only too happy to help. The Internet retailer urged her to sell it. It even had a place to do so. On its own Web site.

The company wasn’t acting out of any sense of charity. When a used item is sold on Amazon, the company gets a commission.

“It’s very clever,” said Ken Cassar, an analyst at Jupiter Research. “Amazon makes a profit on the item when they sell it to you the first time. Then they pick up a fee when you sell it used.”

That second sale is particularly sweet for Amazon because the company only provides the electronic platform for the transaction to take place. The deal is strictly between seller and buyer. Amazon incurs neither storage nor shipping costs but collects a 15% commission.

Sound familiar?

“Looks a lot like EBay to me,” said Carrie Johnson, a retail analyst with Forrester Research.

EBay Inc. became enormously successful by providing an online platform for auctions between private parties -- mostly for used goods -- and making money through commissions.

Amazon officials insist that in planning its Sell Your Past Purchases program, EBay’s name never came up. But EBay Chief Executive Meg Whitman believes that her company was at least an inspiration.

“I think it is certainly a reflection of how well we have done,” she said.

Conversely, EBay has followed in Amazon’s footsteps to broaden its appeal. In 2000, EBay introduced the Buy It Now option that allows customers to bypass the auction process by paying a fixed amount. EBay also has encouraged its sellers to put new goods up for sale.

“The line between Amazon and EBay is blurring,” Cassar said.

Certainly, EBay’s low-overhead approach has paid off. In 2002, the company collected $1.2 billion, almost all of it in fees. Out of that came a profit of $250 million.

On Amazon, most sales are of new items, much of which the company warehouses and ships itself. Sales in 2002 totaled $3.9 billion, but the company lost $149 million. Officials hope that offering used goods at low overhead will boost the bottom line.

“We know that some people buying a book might want the hardback, brand new,” said Greg Hart, who oversees the selection and pricing of Amazon’s book, CD and video merchandise. “Others don’t mind getting a used paperback. Our goal was that no matter what they end up buying, they buy it on Amazon.”

He would not discuss the company’s profit on new or used items, but industry analysts have speculated that the margins are similar.

The Sell Your Past Purchases program, which was launched quietly last year, hasn’t been promoted much by the company. Registered Amazon users find their way into it through a message at the bottom of their welcome pages that estimates how much money they could make by selling items they bought on the site.

Pegoraro’s currently reads: “LAURA PEGORARO, make $331.41. Sell your past purchases at Amazon.com today!”

Clicking through presents the user with a list of items from his or her last 25 Amazon orders. There is a suggested price for each and a button that beckons, “Sell yours here.”

Pegoraro, 33, who works at a Chicago company that manufactures shrimp peeling machines, started on the program by selling a CD by the rock band the Strokes. The CD sold in less than a day, netting her $9.35 after commissions were deducted.

Paul Levinson, who works as a fund-raiser for a Boston public radio station, took to heart the invitation to sell his past purchases. He loved many of the books he had bought on Amazon, but couldn’t justify keeping so many of them.

“We’re moving, so we’re unloading,” said Levinson, 45, who has made $650 through the program in the last couple of months. “When they move you by weight, those book crates can end up costing you a lot.”

Levinson said he likes the idea of giving books a second life by keeping them in circulation.

It also helps that Amazon already has a description and picture of the item on its site and takes care of other logistics, including collecting the payment from the buyer and depositing it -- minus commissions -- into the seller’s preregistered account. If Levinson were to sell his books on EBay, he would have to make all those arrangements himself.

“It couldn’t be simpler,” he said. “Just a click. Once you get going, it’s almost hard to stop.”

The strategy makes sense to analysts, who say Amazon can profit by reaching out to the large segment of online shoppers who are intimidated by the heated auctions on EBay. Johnson, of Forrester Research, noted that of all the people who have made a purchase online, only 20% have ever made a bid on EBay.

For her part, Pegoraro still is waiting for someone to buy her copy of “The Corrections,” for which she paid $15.60. She first listed the book three months ago at $12.50 and has since dropped the price twice. It’s now at $10, but there are 113 other used hardback copies of it for sale on Amazon, some at cheaper prices.

“I get a feeling I was not the only one who didn’t like the book,” Pegoraro said.