At first, Retail Arbitrage may seem confusing and make no sense to the regular user of the internet. It’s actually a lot more simple that you may expect. Retail Arbitrage is a method used by a lot of sellers on Amazon and other online marketplaces, in which someone would buy a product and resell it at a higher price to make a profit. You may be thinking “Wait… Isn’t that scalping?” No! Scalping is a completely different method used by a majority of people trying to make money out of bad situations.
Retail Arbitrage – What is it?
Retail arbitrage is buying products from your local brick-and-mortar stores and reselling them in an online marketplace such as Amazon or eBay. The main goal of Retail Arbitrage is finding products that are discounted, on sale or on clearance then selling it for more than you paid for it.
There are other similar methods to this such as flipping and online arbitrage but the main focus of this post is retail arbitrage.
How Does Retail Arbitrage Work?
The great thing about Retail Arbitrage is that anyone that has a little bit of extra time in their life is able to do this! With Retail Arbitrage you’re required to search through multiple different stores looking for the discounted products and scanning them with the Amazon Seller App in order to sell them for a higher price to make profit. The Amazon Seller App allows you to scan the bar code of a product in a store and will allow you to put in the cost of the product in the store, and will feed out the fee and your profit amount based on the numbers you enter.
Amazon have a system in place called Amazon FBA, this is where you send in all the products you found while out sourcing and sending them in to the Amazon warehouses. They will then store, manage, ship out the product and deal with the returns and customer service each time you make a sale. All you need to do as a seller using Amazon FBA is source the products via Retail Arbitrage, label the items, box them up and ship it off to Amazon.
The reason Retail Arbitrage works so well is because a lot of stores carry different products depending on what part of the country you live in. If someone is unable to find a certain product, they’ll naturally head towards Amazon or other marketplace such as eBay to find it, which is where you make your sale for profit!
Pros and Cons of Retail Arbitrage
As with any subject, there are pros and cons. I highly suggest you look into them heavily before making a decision on starting Retail Arbitrage as a business model as it’s not for everyone! Just because everyone can do it and has access to it, doesn’t mean you should!
- Easy side hustle if you have that extra time in your week.
- In the long run you’re able to work for yourself, allowing you more time to be with friend and family.
- You don’t need a lot of cash to start.
- Risky! As with many things, risks are made. It’s possible that you purchase an item to sell, only for the price to drop! It’s possible to lose money when this happens.
- Competition is HUGE! A lot of people are in the same boat as you, they’re looking to grow their business using the Retail Arbitrage model.
- At first it’s quick and easy, the more you invest into it, the more time it can take.
- Not everything sells. Sometimes you will be stuck with products for months on end.
- It takes a few months before you see the money coming in.
If you’re still interested in starting Retail Arbitrage, check out our other blog posts linked below for more information!