Retail arbitrage is a relatively simple concept: A retail store is selling a product. You purchase that product and sell it to someone else for a higher price, while pocketing the profit.
Like you, I am a curious person.
When I hear about someone starting a business that requires little investment and minimal risk, I’m all ears.
Why wouldn’t I try it out for myself?
Before I started working at StartupBros, I came across multiple videos and articles they had posted online that explained how to sell on Amazon using retail arbitrage.
Here they are, in case you’d like to check them out:
What exactly is retail arbitrage?
This is the definition Google coughed up:
“The practice of taking advantage of a price difference between two or more markets, striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the market prices.”
In Layman’s terms, this means that retail arbitrage is in effect whenever you purchase a retail product at an awesome discount, and then resell it for a profit.
Using the information I obtained from StartupBros, I went out to Walmart, Big Lots, and Target to try and sniff out some great deals.
Unfortunately, I had no luck at Big Lots. Some cheap bracelets at Walmart admittedly stood out to me, but most of what I purchased came from Target: Those red sticker clearance items are nothing to scoff at.
The time it took for me to shop and scan items was about 2 hours.
At certain moments, I was paranoid that store employees were surveilling me with their eagle eyes. The nervousness was all in my head, though – nobody from the store interrogated me, or even approached me at all.
I ended up walking away with 6 unique products, but 13 items in total when you factor in multiple purchases of the same product.
I just couldn’t help my urge to double and triple up on some of the better deals.
Of course I could have bought more, but I didn’t want to waste any money. This was an experiment, so there was no need to go crazy. I set a $150 budget and stuck to it.
When I got home, I quickly opened a free Amazon Seller account. (Since I was selling less than 40 items a month, I chose the “free” option. That was a no-brainer.)
Scanning my items into my Amazon Seller account was absolutely painless. I just used the iPhone app and created a shipment to an Amazon fulfillment center. Piece of cake!
I even let Amazon label my items for me. They did charge me a little for this, but I was fine with it. They know what they’re doing, after all.
Now, I live in Florida, and Amazon instructed me to ship all of my items to an Amazon warehouse in Joliet, IL, which is just outside of Chicago.
I thought that was strange, since there are several warehouses much closer to me, but I just went with the flow.
The cost for sending this entire shipment, thanks to Amazon’s discount, was only $5.03.
I dropped the package off at the UPS store and never looked back.
Easy as pie.
A few days later, my items were delivered to Amazon, checked into their system, and placed within the Amazon US Marketplace.
Amazon notified me of every step throughout this entire process, so I was always in the loop.
To my surprise, I had a sale the very next day.
And then another.
People were actually buying these items, and I was making a decent profit!
After about a month and a half, every last one of my items had sold.
(Well, actually one item took a little longer.)
The Peanuts blanket didn’t sell until I dropped the price multiple times.
Regardless, the profit from the other 12 items more than made up for it.
After it was all said and done, I made around $100 from selling 13 products using Amazon FBA.
It took around 2.5 hours of my time, which equates to an impressive $40 an hour.
Not too bad for just getting started!
Obviously, there is more to retail arbitrage than just watching a YouTube video or reading an article.
I get that.
The reason I wrote this article is to motivate you to stop waiting around for the right conditions, opportunity, weather, [insert excuse here]… Just DO IT already.
You could research things until you pass out.
You can obsess over all of the “what-if’s” until your brain oozes out of your ears.
Or you can just, you know, START.
Take action, learn, and change direction if you need to.
You will never know everything there is to know. You will constantly learn new and improved ways to grow your business.
And that’s just fine.
Experimenting with retail arbitrage taught me how to:
• Create an Amazon Seller account
• Use Amazon Seller Central
• Ship products to Amazon fulfillment centers
• Label products to sell on Amazon
• Set up my bank account to accept payments from Amazon
• See how other sellers react when I add my products to Amazon
• Understand the importance of Amazon Prime
And, naturally, there were boatloads of other tiny lessons learned along the way.
The real-world hands-on education I received just by taking a very small financial risk and leaping into action was worth thousands of dollars in itself.
This took less than 3 hours of my time, and about $150 in startup costs in order to pay for the products up front.
Personally, I look at the $100 I made in profit as a BONUS.
Have you ever been curious about selling products on Amazon?
Retail arbitrage is a great way to get started with very little risk.
Go ahead, give it a shot!
If you end up enjoying the process, and you’d like to grow as an Amazon seller, the next logical step would be to private-label a product.
If you hate it, you can move on to the next business opportunity. No sweat.
Don’t forget that if you have questions about retail arbitrage, selling on Amazon, or private-labeling a product, we have a live Q&A session weekly. Ask away, and we’ll be more than happy to lend you a helping hand.
So, what are you waiting for?
If I can get started selling on Amazon, so can you.