The dealer economy

Psst! I know a guy for that.

People who know how straight-laced I am will be surprised to hear me say this: I know a guy.

Actually, I know a couple of guys, depending on what you're into. All local, all good guys. I vouch for them. They won't rip you off. They only sell the good stuff... on Facebook.

Knives, board games, knife-making equipment, axes and hatchets — if any of this is your drug, I know a guy for it here in the Austin area who's dealing it in a local private group. If you're in a local group, you get to learn the dealers’ names, as happy customers vouch for them in their “look what I just scored!” posts. You see a steady stream of their inventory show up in your feed, and maybe you have a chat with them now and then to ask questions or try to talk the price down.

Indeed, most of the hobby stuff I buy now, I buy from such small-time Facebook dealers. They don't call themselves "dealers," and they probably don't even think of themselves this way, but dealers is exactly what they are. They're just like dealers in rare books, art, or antiques, but instead, they're dealing in everything from anvils (shockingly expensive) to ZARA clothing (cheaper than retail).

My network is almost as into this activity as I am, lately. It seems that Facebook's private groups have created a kind of dealer economy, where the barriers to entry are just a bit of extra time (which the pandemic has given many of us in spades), a certain level of geekery in whatever you'll be dealing, and the willingness to hold some inventory and take a bit of risk.

If the dealer is into board games, then she backs all the hot new Kickstarter so that she can move them in the local board game group. Sometimes there's a small markup, but if she has cracked shrink-wrap and tried it out to see if she wanted to keep it, then you can actually score the game for cheaper than if you had backed it, especially with shipping factored in.

If the dealer's into specific custom knife brands, he scores them in drops* or at trade shows, and flips them on Facebook either for cash or for trade.

*Note: If you're not a gear nerd, you may not know what a "drop" is. When a maker creates a batch of some item, they'll "drop" the entire batch on their online store at a certain time. They'll often announce that time beforehand, so that all the people who are into that maker's work can then hit the website at the appointed time and try to be one of the lucky few to actually get that item into their cart and through checkout.

I've even seen this Facebook dealer approach taken with prepared meals, where someone who's known to be a good cook in the community posts a menu and takes orders, then you drop by for pickup.

Apart from the fact that these dealers operate informally on Facebook, the other main thing that makes them different from old-school dealers is the side-hustle factor. If any of the dealers I've encountered are doing this as a living, I'd be surprised. Mostly it seems they do it in order to participate in their hobby in a way that's subsidized. In exchange for taking the aforementioned inventory risk, they get to handle a steady stream of stuff they love, keeping the items they really can't live without for themselves, and flipping the rest.

This will get a lot bigger, & will at some point involve guns

The larger dynamic I've described here is as follows, and it's one that can be translated into many different realms:

  • An OEM with a reputation for quality and a large enough social media following creates high-quality products in small batches. (Some of these batches are crowdfunded, others are not.)

  • These batches are released for sale in drops.

  • Dealers and some number of individual buyers score in the drops, and the dealers hold the inventory.

  • Dealers flip their inventory online to local buyers — buyers who know their reputation for reliability within the local network — for some side money.

As 3D printers, CNC machines, and other small-batch fabrication tools get cheaper and better, I really don't think there's a clear limit to the growth of the dealer economy. I could absolutely see buying, say, a new washing machine this way, if there's a particular small-batch maker whose machines are known to run for decades with zero maintenance.

In fact, I sometimes wonder if my kids will ever think it weird that we once bought appliances and other durable goods at a giant store, instead of from this guy my friend vouches for who’s really good for this sort of thing and just scored my favorite micro-brand in a drop.

One obvious place that I think will get sucked up into this dealer economy sooner rather than later is firearms. Right now, there are regulatory and platform policy hurdles that are preventing that from happening. But the same forces I've described so far are at work in the gun market in a big way, down to the democratization of 3D printing and CNC machining.

Once the (probably crypto-based) payments and shopping infrastructure catch up, I think small-time arms dealing will become A Thing. And it will be perfectly legal, even if there's a national background check passed. (You'd just need to transfer through an FFL, which would add hassle, but gun buyers are used to it.)