If you’re like most of us, you’re looking for a good way to make some extra money on the side. Having a side hustle, or even self-employment opportunity in general is a great way to supplement your income.
With the rise in technology over the past decade or two, it’s become much easier to generate income through online work. No longer do you have to be out getting your hands dirty for some extra pay, now you can choose from many money-making options! With so many online buy-and-sell platforms, you can even make a living out of online work.
In 2021, it’s become increasingly popular for people to use Amazon as their primary source of income generation. On Amazon, you can find almost anything you need at any given moment! There are lots of opportunities for you to make some extra case through Amazon’s FBA program.
If you’re looking for a way to capitalize on the e-boom, have you heard of retail arbitrage?
What is Retail Arbitrage?
Retail arbitrage is a popular way for people like you to start a self-owned business. On online platforms, it can be a breeze, but this form of business has existed way before the age of technology. So, what exactly is retail arbitrage, and how can you make money from it?
Well, retail arbitrage is a fancy term for buying low, and selling high. This concept has been widely adopted as one of the quickest, most efficient ways to make money. Just look at stock brokerage firms!
Basically, what you do in retail arbitrage is find the best deals on items from a store. You’ll buy a bunch of items that are marked lower than normal, and then you can eventually sell them on Amazon once the sale is over. That way, you can make a quick profit proportional to the amount of capital you’ve invested.
At least, you can make a profit if you’re able to sell items! This is where a lot of factors come in that will help ensure your success in retail arbitrage. We’ll get into what these factors are and how to activate them later on.
More on the Amazon FBA Program
Earlier, we mentioned the Amazon FBA program. You might have been wondering what we meant by that, and in this section, we’ll tell you a little more about it and how to benefit from it.
Amazon’s FBA is an acronym for Fulfilled By Amazon. Basically, if you’re doing retail arbitrage, you have a couple choices for platforms to use. These can include sites like Craigslist, eBay, or other sites like such. A good choice is Amazon for a couple reasons: the interface is user-friendly, you can use effective marketing strategies, and easily establish a presence.
With Amazon FBA retail arbitrage, you can rest assured that your client will receive their package. Generally, Amazon’s fulfillment system is reliable and quick. Additionally, you don’t need to burden the responsibility for any problems with delivery. If you want to make money with Amazon FBA, it will be easier with delivery taken care of.
Is Retail Arbitrage A Viable Way to Make Money?
The answer to this question will vary a bit depending on a few things. The viability of retail arbitrage to make serious money is going to be influenced by how much you’re willing to put into it. For example, if you buy more products, you’ll make more profits. It’s up to you what you want your margins to be as well, so make sure you have a good sense of how much your investing capital will be.
If you don’t have much capital to start with, it’s going to be a bit longer until you’re making serious money. If inventory is limited, there is going to be less earning potential in number form. What matters here is if you’re looking to make a huge amount of money, or consider great margins great profit.
If you want to maximize the viability of retail arbitrage, there are a few factors to consider, which we’ll get to down below. In short, you should choose items that are popular, evolve your sales tactics, and do lots of research.
How to Start Doing Retail Arbitrage
Before you can worry about anything that comes later on in the article, we want you to know exactly what steps to take so you can start doing retail arbitrage. Below, we’ll detail the foundations that will help you get started as soon as possible.
Register to Start Selling on Amazon
Before you can start getting down to business doing retail arbitrage on Amazon FBA, you’ll need to make sure you’re registered to do so. Without an Amazon Seller account, you won’t be able to sell yet under the right terms and conditions.
If you go to Amazon Services on the Amazon site, you will be redirected to a form to fill out. Here, it will ask you information that it needs to know about you in order to let you sell products on their site. You will have to pay about $40 monthly to be a registered seller, so make sure that you are prepared to sell at least that much to make it worth it.
If the monthly fee seems a bit steep, there is one other thing you can do instead. When you sign up for an individual account, instead of the flat monthly fee, you will have to pay the standard rate of $1 per product sold.
So, it’s up to you how you want to go about this. To make the best decision, consider your projected sales volume and calculate which one yields you the most overall profit.
Download the App
Once you’ve decided what kind of Amazon seller account you want to make and use, you will have the ability to download an exclusive app just for sellers. It’s called the Amazon Seller app, and if you get this one it can help you do some valuable market research.
For example, you’ll have a bit more insight into what people are buying and selling, therefore lots of information and cues on what you should do to profit.
If we want to get specific, use your Amazon Seller app next time you’re out in a store. Scan the barcode of an item you’re considering using for your retail arbitrage business. Using the barcode information, the app will tell you what kinds of prices that item is selling for. So, if you see an item for $2 and it’s selling for $4 on Amazon, that’s an opportunity!
Learn How to Use the Seller App
We briefly mentioned above one of the most useful functionalities of the Amazon Seller app. Essentially, this app can become your secret weapon as a seller, as you get access to information the rest of the world might not be able to see so clearly.
If you practice and continue learning all the benefits of the Amazon seller app, you can become a force in the online market with a little bit of work. Having a competitive edge in this type of business is crucial, so make sure your market research is for a productive purpose!
Go to Retail Stores Around You
The next thing you should do before you really start doing business is scope out potential deals near you. Retail stores like Target, Walmart, Kohl’s, Rite Aid, and more are constantly putting great items on sale for their customers. So, go to these stores yourself, pop out your Amazon Seller app, and start scouting great opportunities for profit.
Before you go, you can save yourself time by looking up what the hottest sales are around you. Sometimes, you won’t even have to physically go to the stores when you get experience scouting online.
Check Which Products You Can Sell
Before you can start selling a product, you’ll have to make sure that you are eligible to sell a certain one. Luckily, that’s something else the Amazon Seller app can help you with. Something it will tell you as well is the item’s sales rank, with the lower numbers being more profitable.
If you scan an item and it tells you the sales rank is above 300,000, there is lower possibility that selling that item will turn you a profit. In general, stay in the range of 250,000 and under for a more safe investment. You’ll want to aim for a profit of at least $3 per item.
Start Purchasing Products
Once you have all of the above in mind, it’s time to start purchasing your first round of products to resell! This is a sort of momentous occasion, since it will mark the moment you finally decide you’re ready to make an investment. If you buy 100 of the same product, it may set you back a few hundred dollars. So, when you’re making the decision to start purchasing you should have all the pertinent research done.
After all, retail arbitrage wouldn’t be retail arbitrage without the reselling aspect! So, when you purchase, have a plan to make your items sell.
List New Items for Sale on Amazon
Now that you and your products are home safe, you can start beginning the listing process. This process can be exciting, but also one of the most challenging parts.
This is because when listing, all of your strategies will have to be employed: marketing, pricing, spec gathering, etc. You’ll need to list your items at a price that is not too high that people won’t buy, but one that makes you a solid profit per item. This is never easy at first, so you should brush up on your Amazon research.
To help you make the best listing choices, there are tons of YouTube videos and articles out there that can tell you exactly what has worked for others, and what might work for you.
So, don’t necessarily list the second you get home; for the maximum profit, make sure the listings are high-quality.
Once you post your listing for the products you’re selling, you’re ready to sit back! Hopefully, the orders will start coming in soon after you list. When a customer places an order, it’s up to you to be able to fill it, so work out logistics beforehand.
Once everything’s set up, get ready to start making your money back. That’s the real fun part of retail arbitrage!
Tips to Become Successful with Retail Arbitrage
Now, we’ll get into a few things you can do in order to ensure yourself the best success possible. Of course, success depends on a lot of factors, so you’ll need to make sure they’re all functioning high for the best chances. So, let’s get into what you can do:
Choose A Product Niche Carefully
There are so many things listed on Amazon that it can be nearly impossible to decide at first what kind of seller you want to be. Do you want to resell small, accessible items? Or do you maybe want to sell larger or more scarce items for a larger investment, but also larger profit?
These questions are never easy to answer, so assess your ability to sell. Do you want to do easier work, but more frequently? Or do you want to do harder work, but with a bigger payoff? Once you decide, you can start finding your niche.
Research the Market Extensively
We’ve said this a couple times, but we can’t stress enough how important it is to do your due research every time you decide to sell something. There are other sellers out there with a variety of different niches, so you’re going to want to find the best opportunity for profit.
To so this, use your Amazon Seller app and watch informational content on the internet. If you invest the time, you’ll get a lot more out of the retail arbitrage experience.
Set Prices Strategically
In tandem with the amount of competition you might face, you will want to research the best pricing strategy for your products. Depending on the niche you’ve chosen, your margins can vary a lot more or almost not at all. For more expensive products, you might have to put a little bit more thought into your pricing.
Reinvest In Your Business
Once you start making profits, don’t stop there. The most successful retail arbitrage businesses got there because their owners reinvested some profits. You can’t scale your profits if you’re not willing to change things up as your business evolves. So, analyze how the first couple sales go and constantly evolve based on your findings.
Never be afraid to spend money to make money, especially if you’ve already made a profit on your first batch.
Should You Do Retail Arbitrage?
If you’re still not sure whether retail arbitrage is for you, consider whether you have these traits:
Marketing Skills – If you know how to list items and get them sold by doing good marketing, you can make a profit with your hard work. After all, marketing is one of the core reasons people will see your items listed on Amazon!
Initial Capital – You don’t need much, but you will need a little bit of money to spend on your first batch of items.
Ambition – If you want to succeed and know how to analyze the past to do better in the future, you could have a promising profit margin in the future. If you have an entrepreneurial mindset and the drive to do well in retail arbitrage, it’s definitely for you.
Is Retail Arbitrage Legal?
Retail arbitrage is completely legal, as products that are marked down naturally go up again. As long as you wait until sales are over, you can expect to make a nice profit on many types of items. The manufacturers mark down for many reasons, and if you can buy them up, that’s all they care about.
This article covered everything you need to know about retail arbitrage and how to make money doing it. If you have any questions, comments, or concerns, feel free to let us know in the comments down below! We love to hear from you.
Thanks for reading! In the meantime, check out these related readings:
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