There’s a couple of ways they are sourced but basically:
- Buy Apple gift cards for 70-80% of face value from let’s just say dubious sources and then use that to buy phones
- Fedex or warehouse employees stealing to supplement their salaries
- Authorized retailers who break their agreement
- Buyback websites or stores where people bring phones and get paid like 60% of retail or less if it’s locked. Some of this is just people wanting to return a gift they got without asking the giver for the receipt but most of the phones bought at these kind of stores are obtained through “credit mulling” where they gather up a bunch of homeless people and pay them $20 to go into an AT&T store and get a phone on credit.
- Currency arbitrage: if the Euro drops and companies don’t update their prices and you are able to get VAT refunds then you could be able to get a phone for less than it’s American retail value. This (big drop in yen) combined with the camera shutter is why Japanese spec iPhones can be a lot cheaper.
https://www.hanggroup.com/price/ is a company with 9 figure revenue that purchases these no questions asked. You can see the most they pay for a phone is $1050 for the 14 pro max which is $50 below retail.
Also I should add carrier auctions, store bankruptcies/liquidations, gaming credit card points but these are much less common than the methods listed above.
The Nigerian or Indian scammer will usually get 40-50 cents on the dollar in their local currency or crypto from a Chinese "gift card trader" who then sells it on Paxful or in Wechat/Whatsapp groups for 10-20% more than that. The groups doing it on a large scale have "shoppers" who spend all day buying electronics with the cards for a % of the amount.
They don't have to get it at wholesale price. They could have gotten one as a prize, but not want it. They could have gotten a great deal on one from AT&T or Verizon or T-Mobile, but just want to turn the deal into more cash by keeping their old phone and selling the new one. They might have gotten cash back by buying it on a credit card and be willing to sell it for slightly under MSRP to arbitrage the difference. All of these could lead to lower than MSRP prices.
> They might have gotten cash back by buying it on a credit card and be willing to sell it for slightly under MSRP to arbitrage the difference.
Has anyone made this work? I tried to make it work. Even at 10% (Discover IT category + end of year match), you can’t buy something, have it shipped to you, sell it, ship it, and make money. Any online marketplace eats your profit very quickly with assorted fees.
A better example is Chase's promotion with Apple this year, which involves Chase credit card holders being able to redeem Ultimate Rewards points at a higher rate of up to 1.5 cents/point on Apple products compared to the standard rate of 1 cent/point for a limited time:
Many of Chase's credit card sign up offers provide enough points for a cardholder to obtain an iPhone through this promotion. If the cardholder does not want the iPhone, they could resell it on a marketplace. Amazon Marketplace used to be one of these marketplaces until it started restricting listings for certain brands such as Apple.
If you contacts overseas and enough volume you can often move various electronics for a decent margin. It's pretty involved though.
One of the routes I'm aware of involves buying gift cards from Kroger with a high cash back credit card during their frequent events where they offer extra fuel points on purchases. They don't charge activation fees on gift cards, and you can sell the fuel points accounts somewhat under the table on eBay, and then pocket the cash back from your credit card. Then you wait til black Friday or other sales, use the gift cards to buy electronics at discounted prices, and then ship them overseas to sell for a decent markup. It involves floating tens of thousands of dollars for several months though so not quite for your average individual just trying to make some quick cash.
And the Discover bonus is limited to $75 in cash back per quarter at the 5% rate (at least on the card I have), which means you could probably do it once or twice before you’re back to earning 1%. And if you’re in the first year you’d need to wait until the card’s first birthday to get the other half, so you’d lose money until then.
Many people sell unwanted gifts and purchases that are not eligible for free return on marketplaces such as Amazon and eBay unopened. It's easy to sign up as an Amazon Marketplace seller, since there is an Individual plan with no monthly fees:
In the past decade, Amazon started adding brand restrictions to prevent marketplace sellers from offering items on certain listings unless they met requirements set by the brand owner. This collapsed Amazon's marketplace for used goods of restricted brands and also hindered individuals selling new goods of restricted brands on Amazon. This lawsuit focuses on new goods of one of these restricted brands.
We are talking about Amazon not eBay. None of these examples make much sense. The real issue is iPhones aren’t country locked and Apple works with a ton of retailers globally. It would just end up a cat and mouse game of Apple trying to figure out which desperate retailer is dumping inventory on Amazon in violation of Apple’s agreement with the retailer.
Prior to Amazon's brand restrictions, Amazon Marketplace was a popular place for individuals to sell unwanted new and used goods. Selling on Amazon was even easier than selling on eBay, since there was no need to make a new product listing with photos and descriptions. Most of the new goods sold by Individual sellers were not raffle prizes, but unwanted goods such as gifts, items obtained at a discount, and items that were not eligible for free return to the original retailer.
I can sell on Amazon. Or I used to be able to. Most recently I tried to use my account to sell some iPad/tablet/phone stands for a school. They were brand new, never opened. Amazon wouldn't let me list them unless I could prove I got them from the manufacturer or something.
It sucks.
I'm sure the reason is because of fraudulent items, which also sucks.
Pretty bad catch-22.
Anyway, I got this seller account to sell a couple of books. Used it a couple of times a decade. If I won an iPhone in a raffle, I'd absolutely be trying to sell it on Amazon.
