Stand between the vendor and the cabinet. It's next to your home if you bought the Breezehome (not a requirement but for pack rats like me its a short distance to walk while encumbered if you want to sell all your old junk) and there is a large cabinet next to the vendor. Warmaiden's in Whiterun is perfect for this trick.

When you go to a vendor you also need a storage container near the vendor. First you must have the Investor perk in the speech branch of the skill tree and at least 500 gold can do this trick. This trick is similar to the get a free house trick.