Anyone who has ever set foot in a store that sells discount apparel, footwear or any other item of clothing will be familiar with the concept of retail arbitrage. Retail arbitrage is buying an item at a cheap price, then selling it at a higher price on the same day. Most retail outlets are able to do this because they have contracts with manufacturers or distributors who agree to sell at discounted rates so that they do not lose money on the sale.
It is also commonly known as shelf flipping or rapid prototyping. Many retail outlets have developed their own proprietary systems for retail arbitrage. This is why some stores have a dedicated team of salespeople who can buy an item at a certain price and sell it within a few days for a profit. Others are more technologically savvy and use a larger and more sophisticated system. The most popular type of retail arbitrage system is the digital system, which allow the shopper to browse through hundreds of different stock items and choose one, usually from a pre-selected group of items, and then purchase that item at the regular market price.
An additional advantage of shopping via the Internet is the ability to browse at any time of the day or night. Many people find this convenient when they are running out of stock on a particular item or having to replace a favorite item due to poor sales. Online retail shopping also enables the shopper to look at items that may be on clearance or liquidation deals. Liquidations are those outlet store sales that occur after a product has reached its standard retail price for that item.
There are two common types of retail arbitrage systems in use today. The first involves the regular price and mark-up arrangement, which are often used for mass-sale items. The other involves private label rights, or PLR, pricing methods, and inventory-trading. The main advantage of PLR is that the products are priced competitively and the buyer is in charge of deciding what their markup will be. If an item sells for more than the buyer paid for it, they can take back the difference as their profit.
The concept of retail arbitrage was created by the late Sam Walton, who is one of the founding members of the Benton sewing machine company. Mr. Walton realized the potential profit potential of reselling sewing machines and decided to create his own business in order to make it possible. His plan was to start a store that offered the very best prices available to consumers and then offer them discounts for each of their purchases. Mr. Walton realized that the only way to increase business would be to make the prices more competitive. In order to do so, he needed to buy cheap products from suppliers, sell them for higher prices, and then put mark-up charges on the items. This, thus, would attract more customers to the stores and allow him to realize a profit.
The retail arbitrage strategy has worked incredibly well for many retailers across the country. In fact, many of these stores have gone on to become national retailers. Another advantage of using retail arbitrage techniques is the fact that you can save a lot of money if you know how to do it properly. However, there are a few things you should always keep in mind. The following are some of the most important tips that every retailer should follow:
o Most people who are looking to purchase items that are in good condition and at extremely low prices, and are in need of replacing them, are likely to choose a brand-name product. One of the most effective ways of selling these items is to use retail arbitrage techniques. By purchasing a product that is known by the public, you will most likely find that the price of the product will drop quite a bit. In order to keep your prices down as low as possible, you should ensure that you are buying only from a reputable manufacturer. Many manufacturers only sell their products through a retail store and therefore do not have to worry about the customer buying directly from the manufacturer and therefore will pass on the savings to the customer.
o If you have a brick and mortar store, you are going to have to be able to take your inventory and have it delivered to you. In order to reduce your costs even more, consider hiring a pickup truck driver to bring your product directly to your store. This is a very effective technique when you are trying to drop shipping your merchandise. Many companies will provide you with a drop shipper at no extra cost, but you may have to pay for the drivers expenses. Either way, there are many ways to save money when you have a store location.