Retail Arbitrage – How to Make Money
Retail arbitrage, otherwise known as retail arbitrage, is the act of purchasing an item in one marketplace and selling it on a different marketplace at a higher cost. The item to be sold is usually purchased in bulk, usually from the same supplier, and then resold for a markup to a different retailer. The reseller will still earn a profit, even without shipping. However, he has to expend resources to obtain the items and then transport and store them while selling them.
Amazon is one of the popular venues for retail arbitrage. Online sellers use Amazon’s website and its marketplace to sell products. Amazon allows sellers to create a personal account so that they can manage their inventories. From their account, sellers can search products according to category or keyword searching. They can also select the products that are available for purchase and list them for sale.
With retail arbitrage, a seller can add products to an existing Amazon seller account. He can then create a customized selling page using the Amazon External Review System, which displays a preview of each product’s information, including price, description, photo, and availability. To complete a sale, the seller must submit a purchase order. The Amazon storefront handles all customer service requests and returns. The company provides free delivery for eligible purchases made in the United States.
Amazon’s other side hustle is its clearance deals. It sells closeout, overstocked, and backlist items. These are goods that were previously sold by other companies, at full price, but for one reason or another, have been discontinued, lost stock, or returned by customers. A successful seller can capitalize on these clearance sales and turn a profit.
A big-box retailer like Walmart, for example, offers fulfillment by Amazon. Walmart’s e-commerce website does not require inventory purchases, since it sells goods online, where it can handle sales, shipping, and checkout from any location. An Amazon fulfillment center, located in another country, would be needed to handle the logistics of shipping and deliveries. In most cases, retail arbitrage businesses sell items directly to Walmart, providing a great opportunity to make more money.
A second example is buying wholesale and selling via an online auction website, such as eBay. eBay has become a very popular place for people to buy and sell merchandise. However, buying and selling via eBay requires special knowledge about the wholesale market, especially when it comes to locating trustworthy, reputable wholesalers. Some wholesalers, according to eBay, “are known as gateways to fraud and poor quality merchandise.” Knowing which wholesalers are reliable and reputable can be the difference between making money selling via eBay, and losing your investment.
Amazon, like eBay, is a popular site for consumers to purchase goods. Because of its unparalleled popularity, many sellers choose to take advantage of this popularity by setting up an Amazon seller account. With an Amazon seller account, a person has access to a myriad of tools including research, shopping cart options, order processing, payment options, and customer service. The advantage of using Amazon as a platform for retail arbitrage is that the company offers its second-hand and out-of-season inventory at deeply discounted prices and offers hundreds of thousands of products from around the world. This means that almost every product on the market is available at lower prices than new, which greatly increases the profitability of reselling. However, because almost all products sold via Amazon have a price tag, making money with this strategy requires a deep understanding of supply and demand economics, which many sellers do not possess.
On the other hand, many retail arbitrage sellers use a different kind of channel to sell their items. Most often these sellers either list their items on eBay or privately for personal profit. In most cases, the people who list their items on eBay will list their items at a lower price than the actual retail price, but some sellers go as high as offering as much as ninety-five percent off the retail price. Selling this way requires an understanding of supply and demand in that the higher the percentage off the retail price, the more units will be purchased, which increases the profit. While eBay is a popular channel for retail arbitrage, it is only one of the effective ways that individuals make money with retail arbitrage.