These days, most everyone is looking for ways to save money. But many people are also looking to make money. When the economy shrinks, what’s known as the informal economy swells. Legions of scrappy entrepreneurs make their way in an industry that operates beyond the four walls of conventional commerce. It's a little known world where people buy and resell used goods. And when times get tough, their business starts booming.
These resellers buy their merchandise at any number of places. But one of the best sources is auctions. Storage facilities auction off the contents of individual units when people don't pay their storage bills. Banks auction off abandoned property in foreclosed homes. Businesses auction off furniture and supplies when they go out of business. And because foreclosures and liquidations are on the rise and people are having trouble paying their bills, there's a lot more auctions taking place.
That's good news for Dan Dotson and his company, American Auctioneers. He's a third generation California auctioneer with 34 years experience. His business is up 20-25% over the last year. And he's working hard six or seven days a week to run as many as five auctions a day across Southern California.
While the number of auctions has increased, so has the number of people coming to buy. Dotson is seeing more and more buyers trying to enter this resale economy as a way to make extra money. But the pro resellers who've been doing this for awhile say even this unconventional system is impacted by the bad economy. And they've had to change the way they do business in order to survive. Consumers are more careful with their money, so most resellers are focusing now on cheaper and more basic merchandise.
Because that's the kind of stuff selling these days, times are good for thrift stores. The Los Angeles based thrift store chain Out of the Closet has seen an increase of 9% over the last year. Consumers are realizing one of the best ways to save money: stop shopping retail and start shopping resale.