How to Make Money With Retail Arbitrage (Beginner’s Guide)
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If you are a pro at finding amazing deals on items that people want, you may be able to make some extra money with retail arbitrage.
This secret side hustle can be a great option if you need cash and know how to flip items for profit. I’ll show you how retail arbitrage has the potential to help you reach your financial goals.
What is Retail Arbitrage?
At its most basic level, retail arbitrage is buying retail items at a low price and then reselling them for a profit.
You do this by getting bargain rates on various products you can find online or in-store. Once you find a great deal, you resell the item at a higher price on Amazon, eBay, or using your own e-commerce store.
How Do You Make Money With Retail Arbitrage?
It takes some time, knowledge, and experience to make money with retail arbitrage. To be successful, you must ensure that the spread between what you pay for items and what you sell them for is large enough to cover your time and expenses.
Before buying an item to resell, evaluate how much your time is worth to ensure a decent profit. If you plan on shipping items, consider the cost as well.
Where Can You Find Inventory For Retail Arbitrage?
The first part of succeeding at retail arbitrage is finding inventory in the right places. Here are some ideas for searching for great deals on products you can resell.
Thrift Stores
Thrift stores can be a great place to find inventory for retail arbitrage. They are often ripe with new and gently used clothing and household items.
Most thrift stores don’t charge more than $5 for clothing. Household and personal items, such as accessories, are also priced affordably. Visit local thrift stores on deal days to save even more on your purchases.
Department Store Clearance Racks
At the end of each season, your local brick-and-mortar department stores will clear out all the seasonal merchandise by selling it at lower prices. For instance, once autumn rolls around, you can expect super low prices on any remaining summer items.
Clothing, outdoor patio furniture, and summer toys will be on clearance. Stores do this to clear the merchandise out to make space for fall items. If you search well, you can get great deals on clearance items you can turn around and resell.
You can also take advantage of clearance deals by shopping at online retailers. Some of the deals might not be offered in-store. You can save even more if you can meet the free shipping requirements. The cheaper your items, the higher your profit when you sell.
Tuesday Morning
Tuesday Morning is a retail store chain that sells closeout merchandise from other retailers. The company has over 400 stores located throughout the United States. If you live near a store location, you might be pleasantly surprised at the deals you can find.
Search for items that are easy to ship and will appeal to a lot of buyers.
Video Game Stores
If a video game store has a game or package deal on clearance, you might be able to find some arbitrage deals. Selling video games can be lucrative because many people enjoy this hobby.
One area to consider is retro video games, which are no longer made but often make a comeback. Parents introduce their favorite childhood games to their children, and they become popular again.
Bookstores
Books are another great arbitrage item since you can ship them at the discounted media mail rate. Look for sales and bargain bin specials at your local bookstores. Thrift stores and garage sales might also sell books for cheap.
As with any item you plan to flip, your profit potential increases if you can buy large quantities. Some merchants offer a bigger discount when you buy in bulk. However, buying more items requires a larger initial investment.
Fortunately, you can recoup your money with increased sales volume. Just be sure to price your books for a profit. If you plan on selling textbooks online, check out the 20+ places to sell textbooks online for money.
Grocery Stores
You may be able to score exciting deals at grocery stores. If you can find a store that is clearing out non-perishable items, you may be able to get a bargain.
Grocery stores going out of business are another option for finding deals. Each grocery store has a clearance section. When stores restock their aisles in the middle of the week, you might find your best deals.
Weekends can result in cleared-out shelves. You may have better luck on Mondays and Tuesdays. It can also pay to visit several stores across towns. Some areas tend to discount more products than others.
Walmart or Target Clearance Sales
Target and Walmart can be great places to find inventory for retail arbitrage. Look at season clearance items, but search store racks and end caps for items that the store simply wants to get rid of to make room for new merchandise.
Don’t forget to search Target and Walmart online as well. You can find some fantastic deals on their websites.
Costco and Sam’s Club
Warehouses like Costco and Sam’s Club are known for selling items at great prices. If you can double down on those prices by finding clearance items, you may be able to earn cash by reselling them.
It does help to know how to spot clearance prices at warehouse clubs. For instance, Costco clearance prices always end in “97,” like $10.97.
Sam’s Club clearance prices usually end in a “1,” such as $15.91 or $7.41. You might also find a “C” on the sign, which can indicate a clearance price.
eBay
You could also look on eBay for deals. Your best option might be finding items available for local pickup. Local items might sell for a higher amount on a different selling platform. Note that they may need some slight refurbishing.
Bidding in low-price auctions can also be advantageous.
When you’re ready to resell the item, you can list it on eBay, Amazon, or Craigslist. Alternately, you could choose another online or physical store.
Ikea
Many people rave about Ikea products. However, you must pay for shipping if you don’t live near a store. You can buy items from Ikea and offer free Amazon Prime 2-day shipping.
This will be cheaper than Ikea’s shipping costs, and you could make a profit. You could also offer Ikea products on eBay with free shipping to increase product exposure.
Toy Stores
Visit the clearance section of toy stores for timeless toys like Legos and Barbies. Choose toys that are always in demand. You may have even played with some of these toys as a child. Toys based on the latest movie or game might also be profitable.
However, these toys can be a bigger risk because their demand usually decreases over time.
Dollar Stores
You could also find products in person or online at dollar stores. Buy in bulk to receive a discount, and then charge retail prices.
Sometimes, dollar stores sell products for $1 at the regular retail price on Amazon. Buy what you can and sell it online to pocket the difference as profit.
You could find deals by buying from wholesalers, too. Some that sell to brick-and-mortar dollar stores will also sell to you.
Where to Sell Items For a Profit
Many retail arbitrage side hustlers target specific outlets when they go to resell the items they buy.
You can resell just about anywhere, but consider these options to start.
EBay
EBay is a popular site with retail arbitrageurs. Although eBay welcomes sellers, be prepared to pay fees. Basic (non-business) sellers will pay about 12% as a commission on each sale. Business sellers can choose from one of three seller plans.
Prices for the business seller plans range from about $60 per year to over $700 per year. You can choose monthly or annual plans. This means that eBay can accompany your retail arbitrage business through several stages of growth.
Amazon
You can also resell your goods on Amazon with the Amazon FBA program. The program will show you how to set up an Amazon seller account.
From there, you need only buy the product and send it to the Amazon fulfillment center (warehouse). When you make a sale, they will ship it to the buyer.
There are also a couple of best practices for reselling items on Amazon that can help you maximize your success.
Use the App to Scan Clearance and Sale Products
Before you begin buying and selling, you’ll want to research prices for the types of items you want to sell. The Amazon Seller App can help with this.
Look for items you think may be bargains and easy to sell. Then, using the app, find out what the same item is selling for online.
If you can’t sell it for close to or less than the price Amazon charges, you need to find another item.
Buy Products With a $3+ Profit and 50% ROI
It’s important to ensure that your spread is profitable enough to cover the work you put into finding your items and selling them.
Make sure that every item you sell meets two criteria:
- It ensures you earn at least a $3 profit (after expenses, shipping, etc.)
- You get at least a 50% return on your investment
Another rule that The Selling Family recommends is the 3x rule. This rule states that you shouldn’t buy an item unless you can sell it on Amazon for three times the purchase price.
The 3x rule works best for items you can resell for $15 and up. So, your sale price of $15, minus your purchase price of $5, minus fees of $5, equals a profit of $5.
Using little tips like these when you look for items to sell helps ensure you’re not making too small of a profit for your efforts.
OfferUp
Selling on OfferUp or similar sites can be another option. OfferUp can be more appealing to buyers than Craigslist simply because it features photos on the homepage.
Great photos attract buyers and help make an item more likely to sell faster. With Craigslist, you must click through a page or two before you get to photos.
This can hinder fast sales. Homepage photos are one reason OfferUp is quickly outpacing Craigslist as a go-to online sales site.
Your Own Store
Another option is to start an e-commerce store to sell items. You can do this by using a platform like Shopify.
To maximize your chances of success with this option, make sure to use great photos and price your items competitively.
Retail Arbitrage Tips
Retail arbitrage can be profitable. However, like any business, it can also be an utter failure. Here are some tips to consider as you begin your retail arbitrage venture.
Know Your Numbers
It’s critical to know your numbers if you’re going to succeed at retail arbitrage. Have set numbers you can stick with to ensure you make a decent profit once an item sells. Don’t waste your time on items with a low profit margin.
Similarly, work to learn how much of an item you should buy from a quantity standpoint. If you choose the right items, you should buy as many as you can get your hands on. Learning the numbers will take time, but you’ll get there if you keep putting in the effort.
Don’t Assume
Another tip for a successful retail arbitrage side hustle is never to assume. It’s easy to think that just because you wouldn’t buy something, another person won’t either.
Never assume. We all know what “assume” stands for. People have different tastes and different needs. Use outside metrics such as the Amazon Best Seller Ranking to help you get an objective idea of what might sell.
Learn Store Markdown Schedules
Make sure you know the markdown schedules of stores around you. You can do this by simply watching when certain items tend to be marked down. Or, if you’re brave enough, you can ask an employee at your favorite stores.
If you can catch markdowns as soon as they happen, you can get more of the items you want to resell and hopefully increase your profit.
Be Patient as You Learn
Succeeding in your new retail arbitrage business will require patience. It takes time to learn how to find the best deals. Learning markdown schedules takes time, as does understanding which items will sell and which won’t.
You will probably lose money on some items as you learn what sells, what doesn’t, and what you need to price items at to earn a profit. Keep pressing forward and taking notes as you learn what works and what doesn’t.
Take Your Time in Each Store
Don’t rush yourself in each store. Get to know the layout and where they display their clearance and closeout items.
Learning the ins and outs of each store will help you save time in the long run. Eventually, you will know exactly where to find the best deals at each store.
FAQs About Retail Arbitrage
Here are some answers to frequently asked questions about starting and running a retail arbitrage business.
It depends. The amount of money you can make depends on which items you resell, how much you paid for those items, the demand for your items, and other factors.
How much time and money you spend on your business will also be a factor. Using your time and resources wisely will help increase your profit.
Yes. First, you should check out your own closets and storage bins for items to resell.
Next, you can hit up local garage sales to find freebies. Many garage sale hosts will start giving away items as the end of the sale draws near.
Lastly, check out the free sections of Craigslist and other sites that are similar to it. You never know what you might find.
You can look for items to resell at your local library. Libraries sell used books at steep discount prices and often have giveaway sections.
Flea markets are another place where you can shop to find items to buy cheaply and resell for a profit.
As with other outlets, it’s important to know that you’re buying at a price allowing you to sell for an attractive profit margin.
Summary
Starting a retail arbitrage side hustle can be a great way to make extra money, but it requires some learning.
Don’t expect to jump in and get rich within the first six weeks. Learn the process and learn from your mistakes as you go. If you do, you’ll be on the road towards reaching your financial goals.
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