How to Start a Business in Retail Arbitrage

What is Retail Arbitrage?

One of the easiest ways to make money online is to do retail arbitrage. Today, there are many resources that you can use to get set-up and quickly start a business in retail arbitrage. But before we get into the details let’s answer the question of what is retail arbitrage?

Retail arbitrage is purchasing low priced products from some source, whether it be online or at a retail store, and taking these sourced products to be resold at a profit at a different store like Amazon.com or Ebay.com. One of the biggest difficulties of online retail arbitrage is finding and sourcing products that have a low enough price to sell high on online retail websites for a profit. But, it can be done. We will talk about how this can be done.

You can source products from online and retail stores. Here is a list of common stores that people visit to source products:

Walmart
Target
Marshall’s
Ross
Home Depot
TJ Maxx
Staples
Gamestop
Craigslist
Big Lots
Outlet Stores
Local Boutique Shops

4 Steps to retail arbitrage success

My Retail Arbitrage Experience

I have a successful retail arbitrage business that I consistently work on. I have other businesses that I tend to but retail arbitrage is fairly easy to the point where I can combine my own grocery and personal shopping with business shopping.

To be successful at retail arbitrage, I have read almost every book, blog post, and watched a ton of Youtube videos on the subject. After successfully selling multiple products I would have to say that the business is easy as long as you do a complete job. Your main objective is to prevent yourself from having a loss on buying products that do not sell. I will give you the information necessary on how to prevent losses.

To be successful at retail arbitrage you should have a plan in place. I put together the following list so that you can gain a great understanding of how to be a retail arbitrage pro.

1.Know what you want to sell and become an expert on.
2.Find a source for the products that you want to sell.

1. Purchase the sourced products with the intention to sell the products at a comfortable margin.
2. Maintain inventory or ship inventory to Amazon FBA.
3. Analyze the results.

Knowing What to Sell

Retail arbitrage requires focus. You should focus your efforts on one or two sections of the store and hit it hard with your amazon seller app. In retail arbitrage, you can resell two types of items:

Books
Non-Book Consumer Discretionary Items (Electronics, Toys, Games, Beauty, Personal Care)

You can do both book and non-book selling if you would like to. However, as you will find out below, book selling usually entails a longer time to sell your inventory than non-book items.

Books

You can find books to sell in many places besides a regular bookstore. There are many places where you can find books for cheap where you can turn them into a profit by selling them on Amazon.com. Here are several places and methods you can use to find profitable book opportunities.

Thrift shops usually have books for sale in them. (i.e. Dollar store)
Clearance section at major bookstore chains. (i.e. Barnes and Noble)
Goodwill
Library Book sales
Booksalefinder.com
Garage Sales
Advertise at Colleges and Universities for Book Buybacks
Set up a website that buys books from the public.
Craigslist

As you can see there a multitude of ways in which you can get books for cheap and turn them around for a profit. A great aspect of looking for books to sell is the peripheral items that are sold next to them. A lot of times thrift shops will sell things like brainteasers, puzzles, and pictures that can be bought at a low price. These items can be sold on Amazon or Ebay for a profit too.

However, there is a problem with buying and selling books. First, you must assess the condition of the book. Second, you must compare the condition of the book to what the other sellers are offering. The lower the condition of the book the lower the profit. You can read more about how to assess the condition of a book by going to Amazon’s seller central. You should also download the Amazon Seller application so that you can easily scan the barcode of a book and quickly see stats on whether or not you should buy and sell a book.

In my opinion, books and the peripheral items that are near them are usually higher than a 100,000 sales rank on Amazon. This means that these items will be harder to sell. You could buy books and stuff at the bookstore. But you will find out that they do not sell quickly. They could be on the shelf collecting dust for over a month.

Non-Books

Books are profitable but buying highly desirable items are even better. This is where I focus a majority of my retail arbitrage time.

First you should know what section of the online and retail store that you want to focus on. I know that the top two sections when it comes to sales are:

1. Consumer Electronics
2. Toys and Games

There are other sections that you can look at. If you would like to explore more sections in detail, I recommend that you go to Amazon.com and click in the upper left-hand corner where it says “All”. There you will find all of the sections that you can look at.

Focusing on one or two sections is better than trying to be a master of everything. You can easily go to a store and spend time in two sections. Spending a couple of hours in the whole store with your Amazon Sellers App will take almost the whole day. So spend your time wisely.

When you become an expert in two sections of the store you will eventually become knowledgeable of what sells and what does not. You will gain an “eye” for items that will sell on Amazon or Ebay. You will know where to go and check out items that you have successfully sold in the past. Stick to two or three at most to be successful.

However, there are drawbacks to selling on a website like Amazon.com. In fact, Amazon.com has restrictions on what you can and can not sell as an individual or an Amazon FBA seller. You should read the restrictions in the categories section of the Amazon seller central website. There you will know what you can and can not sell. Also, when you are scanning products online or at the stores with your Amazon Seller app the app will have a section that will tell you whether or not you can sell the item online.

Sourcing products from online websites and retail stores for a low price. Flip them to Amazon and Ebay for a profit.

Finding a Source of Products

Sourcing products to sell on Amazon or Ebay will be where the majority of your time will be spent. You can source products from a website or at a store in your neighborhood. Most retail arbitrage professionals will visit the actual store to scan products with their Amazon Seller app.

Store Sourcing

Sourcing products at Walmart, Target, Marshall’s, or Big Lots is a good thing to do. You should go to the area that you are an expert at and scan using your Amazon Seller app for resale deals. You should check the sales rank on your app along with whether or not you can sell the item on Amazon. You should also check the competition:

If the product is sold by Amazon. Do not compete with Amazon.
Whether or not they include free shipping.
How much competition you have.
Some products are sold directly from Amazon’s warehouse so you would be competing with Amazon. This is not Amazon FBA. This is simply Amazon selling a product that they have in their warehouse. Do not compete with Amazon.com.

You should also consider shipping as a part of your overall profit calculation. If the competition offers free shipping you should too. Estimate how much shipping would be and include it in your profit and loss calculation.

When selling products on Amazon you should check the level or competition you have. Too much competition means that you will not sell your product fast. Too much competition along with a very large sales rank could lead to a product that does not sell in a timely manner. You may have to walk away from a deal every now and then because of these two factors.

Online Store Sourcing

Online store sourcing is much easier than driving and going through mountains of inventory at local stores. However, online store sourcing comes at a price. There are many websites out there that you can check to find good deals then turn around and flip them. But, in reality, you can spend hours and days looking through websites.

Instead, you can buy a membership to a retail arbitrage site or service that will allow you to get access to deals. Here are a few applications that you should consider.

Brickseek.com
TacticalArbitrage.com
Fiverr.com
Youtube/Patreon
Brickseek.com

Brickseek.com offers a membership where you can find deals online and deals at your local store. The online deals provide you will ideas about which products out there are at a deep discount. However, the application will provide you with amazing local in-store deals that are usually not at the store. I recommend that you heavily utilize the online deals and review the in-store deals with a skeptical eye.

TacticalArbitrage.com

This website membership is very expensive but could get you a lot of sourcing deals. I recommend that you take advantage of the one week trial while they still have it. One drawback about the application is that the application will give you a lot of sourcing leads but a few of them do not match Amazon. So be careful. Make sure the products match before you buy them.

Fiverr.com

On Fiverr.com, you can pay someone to provide you with online sourcing leads. I paid $15 for 10 online product leads in one week and was satisfied with the list that I have received. You should consider this option if you are not comfortable purchasing expensive membership applications from a place like tacticalarbitrage.com.

Youtube/Patreon

Some Retail Arbitrage Youtubers have a Patreon where they will give you a sourcing list every month for a small fee. I suggest you take advantage of this if the tacticalarbitrage.com monthly fee is too much for you.

Purchase Products with Profit

Retail arbitrage is a game in which you have to know the numbers. Before you get to this point you should have non-book products with a sales rank of less than 100,001. You should also have considered whether or not you are going to include free shipping. You should have analyzed the competition.

Now what you should do is check out the price history of the item by having the Keepa chrome extension for Amazon.com. You should review the price history of the Amazon product before you buy the product online. Trying to review Keepa in the store is difficult to do. But if you can do it you should. This will help you in your overall decision to purchase the product.

In addition to checking on whether or not you can sell the product on Amazon, you should do the numbers with the Amazon calculator chrome extension. You can check the profitability of the products by visiting Amazon’s Seller Central Profitability calculator.

However, this is difficult to do in the stores. So I recommend, whether you are an individual seller or FBA seller, that you fully understand the fees involved with selling on Amazon so that you can understand the profitability. You can also use the Amazon Seller app to give you an estimate on FBA fees.

Maintain Inventory or Ship FBA

Amazon FBA

We have mentioned a lot about Amazon FBA. Amazon FBA stands for Fulfilled by Amazon. You can have Amazon FBA fulfill all of your shipments by simply sending them your purchased products and they will automatically ship them to your customers when they sell. The drawback with Amazon FBA is there is a monthly fee ($39.99 as of December 2018) and there is a fee per shipment. The fees are explained, listed, and provided at Amazon Seller Central.

Individual Sellers

You also have the option of selling as an individual seller. This option is good for those who do not need a lot of room to ship their inventory. But keep in mind, that if you become really good at retail arbitrage you may notice that you could have inventory all over the house causing storage issues. You may have to dedicate your garage to your inventory if you prefer not to pay the costly Amazon FBA fees.

Analyze the Results

One of the biggest mistakes new persons make at the business of retail arbitrage is analyzing the results. You should ask the following questions:

Which products did I take a loss in?
Which products sold the fastest?
Which products sold the slowest?
Can I resource the products that sold the fastest?
Any returns from customers?
What was my expected profit?
What was my actual profit?

You should look at why you did or did not meet your expectations. Set goals and try to achieve them from month to month. Remember that knowledge is power. The more you know how to make money at retail arbitrage the better you will be.