Flipping is a process of finding an item or items which are selling at a discount to what they can be sold in a market. Flipping at the most basic level is finding discrepancies in pricing and then buying, or bartering, so you can realize the amount between the two prices.
History of Flipping
There is no known date when first flip would have occurred. This would be because flipping occurs as a concept to humans when they perceive someone has something of value they would like and are willing to exchange something in return. This is done by children at a very young age when they make their first trade. Think back to a time you had a toy one of your friend’s had and you wanted it, but your friend wanted something in return. You had made a flip you felt brought you more value. You already understand how to flip at a basic level. Everyone enters into these types of transactions on a daily basis whether you are consciously going through it in your mind or not at the moment.
History of Money over Time
As society has progressed, we have used different forms of value for items to make exchanges of value easier. Shells, stones, gold, fiat currency, and digital currency are all evolutions of ways to make exchanges smoother and allow value to be shown in a much easier way. Without a form of value given to something then the ability to exchange items and services freely in a society is a more difficult process.
Importance of a Currency in Society
The need for there to be a currency which a large portion of the population uses and believes has a value is an important factor in our current economic systems. As well, with an establishment of a currency many goods in a society might not have a mechanism to be provided, like common goods, such as roads, and parks. When you participate in transactions on a normal basis you help to provide a mechanism which keeps the value of a currency stable and moving forward for everyone involved. While the overarching interplay of all of these transactions might not seem like it plays into flipping, it does. With people entering into transactions with the goal of profit it makes it so more money is created which can allow others the ability to pay for portions of what they need to live their lives.
Why Flipping is an Important Part of the Economy?
When people flip items to others for profit, they are helping to create the secondary markets for items which others find value in. This helps in a variety of ways by reselling those items. The first is this creates a value for a previously manufactured items which would otherwise end up in a landfill or destroyed in some way. This is a multiplier effect of goods and money in our society when resell happens. This means value can be had multiple times with items, instead of one user for it then the destruction of it. Second, when an item is resold, it creates profit for an individual that resold it hopefully. This profit can be used to buy other goods and services the individual desires. This is a secondary multiplier effect. Third, the person or business who decided to get rid of the item could have donated it, thrown it away, or sold it too. This party may or may not have made a profit when they liquidated the items, but they previously would have purchased the item new or on the secondary market. When they did, they added to the economy with their purchase. When all three of these portions work together a good has created a situation where the buying and selling of it helps the overall economy and each individual with the value they received by their purchase. This doesn’t take into account how the individual would have earned the money initially to be able to purchase the good.
Here is an example. Say Sherry has $5 she earned and would like to go buy an item or items she can flip and make a profit on, because she is industrious and likes to take small amounts of money she has and invest them into something she can build up into a larger inventory over time. She goes for a walk to her local thrift store to see what they have for sale for $5 and under. While she is there, she sees a nice flower vase for $2, a book for $1, and another book for $2. She takes the time to find out how much similar items are selling for. She purchases the items with her $5 and lists the items for sale. The items sale after a little while. One book makes her $2 in profit, the other book makes $3 in profit, and the vase makes her $3 in profit. Let’s assume the original buyers of the items paid the following: the vase $20, book one $10, book two $10. The following table shows the amount of the original purchase price, amount to the donation store, profit made by the reseller, and the total effect as a percentage the reselling added to the economy.
| Item | Original Sales Price | Profit | ||
| Original Buyer | ||||
| Vase | $20 | 0 | ||
| Book One | $10 | 0 | ||
| Book Two | $10 | |||
| Donation Location | Cost | Profit | ||
| Vase | 0 | $2 | ||
| Book One | 0 | $1 | ||
| Book Two | 0 | $2 | ||
| Reseller | Cost | Profit | ||
| Vase | $2 | $3 | ||
| Book One | $1 | $2 | ||
| Book Two | $2 | $3 | ||
| Total Amount in economy | Original Sales Price | Total in Secondary Market | Total Amount | Secondary Market Effect |
| Vase | $20 | $5 | $25 | 25% |
| Book One | $10 | $3 | $13 | 30% |
| Book Two | $10 | $5 | $15 | 50% |
There are also other factors in here which could be added to the secondary market effect on the economy by reselling like the wages earned by the original manufacturer’s employees of the item, wages at the donation location, fees earned by the online marketplace, and many more. The example above is a simple explanation of the potential power of secondary reselling on the economy.