I once read an article that said that Retail arbitrage is not a scalable business model for several reasons but failed to list those reasons. While it’s a very low risk venture when you are just starting out, it does have a certain amount of risk when you start to sell more and scale up.
So while Retail Arbitrage may sound like a regular form of retailing, it’s not in any way shape or form. The key difference is that unlike regular retailing, a seller who is conducting Retail Arbitrage does not purchase their products and stock from wholesale suppliers or manufacturers, but rather, buys the products from other retailers or sellers. Take for instance, in my area ” Publix supermarkets is a big retail grocery chain That runs weekly ads offering special prices and discounts on select merchandise.
One of those brands they run monthly specials on is “Keebler Cookies”. They usually run a buy one get one free special for a week at a time. There are a total of 21 “publix” super markets in my area that I can drive too in less than an hour. I could go from one store to the next and purchase all the “Keebler’ cookies on the shelf, that are on sale at buy one get one. Ending up with two or three hundred packages of “Keebler Cookies”, I only paid 1/2 price for. Take those cookies home and package those cookies in either 2, 4. or 6 count packages, Labeling them according to Amazon standards, and send them into an Amazon distribution point and resell them at the regular retail price on AMazon making a good profit for my one days work. I was able to sell over $20,000 a month on Amazon. Not bad for me and my Prius
If you are selling retail arbitrage or wholesale, the Buy Box as well as the “have one to sell box”is going to be of upmost importance to you. The Buy Box is the box on the right hand side of a listing page with the price, seller and shipping information as well as the “add to cart” button. If there are multiple sellers on a listing, they will be listed below the seller who has “won” the Buy Box. Since the majority of buyers purchase from the seller who has “won” the Buy Box, winning is critical to increasing sales. Although there are several factors considered to “win” the Buy Box, fulfillment method is a crucial component and possible another whole article on the subject.
Starting up a private label company is definitely more expensive than starting a retail arbitrage business. First of all, to even get started , you’ll need to buy a product – and in bulk too. If you’ve sourced this product overseas, then you’ll have to factor in the cost of shipping and Duty and Tax which oftentimes is more than the cost of the product. From there, you’ll need to purchase your packaging as well the branding for your product and, if you don’t have the space at home, Don’t ask my wife about product storage, she still has not forgiven me for filling up our garage. In addition to all this, you’ll probably need to spend some cash investing in marketing efforts too
Retail Arbitrage is not nearly as expensive as private label because you are only buying what is available at the time not for the longer term . You could be buying cookies today and tomorrow buying extension ladders. This is a process of finding discounted products wherever you can find them. In retail stores (such as Walmart, Target or Kohls) and reselling them on Amazon. To make it profitable, the items need to be bought at a significant discount and sold at a higher price on Amazon. You can sell other branded products using this method and it is often a lower risk option, since you can check before purchasing the items if you will be able to make a profit or not. You can also search liquidation stores or online sites for pallets of returned items that can be resold You could also find a legitimate wholesale source , that will ship to your customer within 12 hours of getting your order.
Another great source of merchandise is to find products on EBay that sell for more than the same product sell for on Amazon. List the product on EBay and when sold buy the product on Amazon and have Amazon ship the product to your Ebay customer. No your EBay customer won’t mind getting there product in an Amazon shipping box.
Throughout this guide we’ve covered almost everything you need to know about Retail Arbitrage. If you’re only looking to make some extra cash on the side, then this may be a great way to start a side hustle, however, if you’re looking to build a business from scratch and are considering taking up Retail Arbitrage, it could be something that you just experiment with early on to gain some experience and then move on. Retail Arbitrage isn’t a scalable business model that can make you a successful business owner even in the long term, it’s tailored more to suit bootstrapped business owners who want to keep their business small.