Retail “arbitrage” is the process of purchasing goods for a certain price from one source, and reselling them (usually at another platform) at a higher price, and pocketing the difference.
Market price fluctuations and discrepancies provide legitimate opportunities to make with money with retail arbitrage.
Here are four key steps to help you earn genuine income from this side hustle and make money selling online.
Invest time in researching the right products
Before you take the plunge and buy inventory with the intent to resell, carry out a thorough online market research to identify which products sell fast, have dynamic pricing, and offer the potential for successful retail arbitrage.
Explore resources such as Amazon’s list of top-selling products in various product categories.
Pay attention to their price variations over time, customer reviews, product ratings, seasonality, and expiration dates before putting your money into the first batch of goods.
You should also consider whether the product is light or bulky (if you need to store it), and how durable it is. Breakage during shipping to a customer would mean total loss for you.
Identify the best buying sources for your products
Once your target product range has been finalized, it is time to look for the cheapest and most reliable sources from where you can source the inventory.
Stock clearance sales and low everyday prices are good places for beginners looking for products that are ripe for retail arbitrage.
You may even consider bargain hunting from thrift stores, local stores, and garage sales if they are good enough to be sold online as used products.
Resellers also use popular online wholesalers such as AliExpress and Alibaba because they frequently offer lower unit prices when you buy in bulk.
Resell your inventory for a profit online
Programs such as Fulfillment by Amazon (FBA) are popular among entrepreneurs who want to make money with retail arbitrage.
When you become an FBA seller, you simply send your inventory to Amazon’s warehouses. When you receive an order from a customer, Amazon will handle its fulfillment.
This powers your sales without you having to get involved with the responsibility of logistics and shipping. You can direct all your time and energy on strong sourcing and profitable selling by effectively managing your online listings rather than get entangled with endless shipments.
Other online platforms in addition to Amazon that you may consider include eBay, Craigslist, and Facebook Marketplace.
Reinvest your profits and optimize operations
For long-term business continuity and growth in retail arbitrage, it is vital to set aside a part of your profits for buying new inventory.
The more your online listings remain stocked and replenished with new products, the more sales you will generate. Keep a close eye on which specific listing is witnessing more demand and showing up in search engine results on Amazon, and reinvest your profits to increase the stocks of that listing.
As you get better at identifying cheap and attractive products, your sourcing time will reduce and you can utilize it to expand your sourcing and refine your listings.
Packaging and shipping are potential areas for saving costs and increasing profits. Keep optimizing your retail arbitrage operations as your learning curve improves to make more money.
