A couple of years ago I started noticing the name Zoverstocks as a re-seller on Amazon UK. I began buying CDs and DVDs from them, lured by their keen prices and rapidly escalating tally of positive transactions. These days they are almost always the lowest priced re-seller in a saturated market. Oh, and their positive transactions tally is close to four million - yes, four million.
In seemingly no time at all Zoverstocks has cornered the UK market in secondhand CD sales, with a typical selling price of just one penny. How the heck do they do this? Well, a few years ago Music Magpie started offering a simple "buy your old CD collection" service and they still do. Using your webcam you scan the bar code from a CD case and get an instant non-negotiable offer. Not a high offer but enough to steer many from donating discs to charity shops.
Yes, Zoverstocks is the sales arm of Music Magpie and it piggy-backs on the biggest online music retailer in the world, Amazon.
The way reselling works, and I did this myself quite a bit in the UK, is you list an item for sale on Amazon and when a buyer nibbles the bait, Amazon sends you the purchase money (minus a modest commission) plus a generous contribution to your postage and packing costs. In fact this contribution is so generous it completely covers your costs and adds to your profit. Now you see how Zoverstocks does it. Imagine the economies of scale when you can buy padded envelopes by the million!
But this is good isn't it? The free market (with the help of Amazon) is redistributing music to the ears of those who want to hear it, and at a great price. Well it's not entirely good... what about the Artist who used to enjoy royalties on consistent sales of his back catalogue? This new recycling system seems to benefit The Royal Mail, Amazon (by way of commissions) and Music Magpie/Zoverstocks more than anyone. What about the little man who tries to sell online? He can't compete.
The scheme is a clever manipulation of the system. Seller A gets something for his unwanted CD, Buyer B gets it for one penny plus postage. In between the two, MM/ZO are creaming off Amazon commissions and the over-valued postage contributions. And what if MM/ZO get hold of rarities? They apply digital scripts to permanently undercut the lowest Amazon reseller price by one penny. As to their costs, research reveals MM/ZO are staffed with cheap Eastern European labour and they 'up' the condition of their discs with a mechanical buff. Various Forums lament the lack of customer care when you get a wrong/damaged disc from them.
Are they living on borrowed time? Digital media is gradually taking over. Soon the likes of MM/ZO will have forced the little seller out and will be the only ones left recycling a diminishing stock of discs to a shrinking audience of committed downloaders. I suppose you can't blame them for making hay while the sun shines.