Why Don't You Buy That Used?

May 1st, 2013 by 
PK
If you want this Mustang you'll need to buy used... sorry!

This Ford Mustang? Buy used - you can't get it new, anyway.

Maybe it's a psychological thing - but us Americans (I can't speak for our Canadian friends, but I imagine they are similar) have a love/hate relationships with the things we buy.  Specifically, we love new things and we hate used things - especially in certain categories.  I hope I can fight that attitude a little: it's great to buy used, and buying used is superior in a lot of situations.  Let's dive in.

The Age of Used Abundance!

We're in sort of a golden age of used goods, thanks to the ever-present internet.

Yes - three sites on the internet share the crown for the best place to buy used things - Amazon, Craigslist, and eBay.  Without me typing any more on the subject - you know exactly what I'm talking about.

Think about it - swap meets, yard sales, auctions, pawn shops, consignment stores, and specialized used product stores (not an exhaustive list) used to have the upper hand on pricing information, if they chose to price items.  Today that is nullified by a casual browser with a smart phone - if you think that a piece of ruby encrusted jewelry is overpriced, 2 minutes with the eBay App can let you know if you're right or wrong.  On top of that, 2 out of 3 of those sites have buyer protection mechanisms - a huge benefit in the used market.

On the sell side, there are new services as well for you to sell used.  Sure, you can use one of the aforementioned sites to list and sell an item yourself, but a market for trade-ins is now available.  Just like you can skip the hassle of listing and selling a car by trading it into a dealer, you can skip the hassle of selling your used goods (especially electronics and video games) by trading it into a place like Gazelle, Amazon, and a ton of other sites and brick and mortar stores.

It's an industry in its infancy, however - so watch that space as competition hopefully drives companies to offer even greater trade in amounts on your goods!

What Goods to Target When You Buy Used

Without a doubt, consumer electronics and fashion are the two categories where you'll get the most bang for your buck.  Both industries continually roll out new "models", and both have a wash mechanism - a reset/total wipe on the electronic side and a literal wash or trip to the dry cleaner for fashion.  Fashion accessories - think sunglasses and watches, are also reasonable places to look. The downside?  Exponential performance gains on the electronics side, and changing tastes on the fashion side.  Caveat emptor.

Jewelry?  Not as much - minor differences in quality make huge differences in value.  I'm not saying it's impossible to find a deal on used jewelry - it's just that there is still a ton of information asymmetry in the business, and the only way to be safe would be to learn to appraise pieces yourself and walk around with a jeweler's loupe.  Furniture is also an iffy one - 'hard' items with no upholstery shouldn't be an issue, but I would avoid anything with a mattress or permanent upholstery.  (I don't want you blaming me for a bedbug outbreak.)

Get Those Bargains!

Should you buy everything used?  I doubt it - I'm sure you could, but I won't hold you up to a standard higher than I hold myself.  When I buy used it's generally for a 6-18 month old electronic good, although other times I'll get something refurbished or new.  The truth is, especially with electronics, the marginal cost of performance is huge - you can often get much better performance per dollar with a lower end model or even a model in the last refresh.  That goes for all electronics - cell phones, computers, digital cameras (although on SLRs, optics advance at a slower pace the bodies follow the same curve)...

Remember: just because you have enough money to buy new doesn't mean used is a bad idea.  Go get some deals!

What's the best used deal you've ever found?  Have you purchased used on eBay?  Amazon?  Craigslist?  Have you ever used a trade-in service?  Do you try to convince your friends to buy used?

      

PK

PK started DQYDJ in 2009 to research and discuss finance and investing and help answer financial questions. He's expanded DQYDJ to build visualizations, calculators, and interactive tools.

PK is in his mid-30s and works and lives in the Bay Area with his wife, two kids, and dog.

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