6 Reasons Why People Fail at Online Arbitrage

//6 Reasons Why People Fail at Online Arbitrage

Retail arbitrage is a fantastic opportunity.

The retail arbitrage community is filled with stories of great success, tempered by many who tried it but found that it didn’t meet their expectations. While each case is different, there are a number of common reasons why people either fail or dismiss online arbitrage as an opportunity make an additional income or even start a business.

Let’s take a look at X reasons why people fail when trying to make money from online arbitrage.

1. Online Arbitrage Isn’t Easy

Find a product available at a cheap price. Buy it. Sell it at a more expensive price. Buy more products at a cheap price. Repeat ad infinitum.

The principle behind online arbitrage is simple, and it does admittedly sound like it will be easy.

However, being successful with your arbitrage activities takes work. You aren’t going to succeed if you think it’s a straight pathway to easy street.

2. Online Arbitrage Isn’t a Get Rich Quick Scheme

A close relative of the last point, there are many people out there who give up on online arbitrage if they don’t make thousands of dollars of profit in the first month.

If you view online arbitrage as a get rich quick scheme, you’re going to be disappointed.

Ensure your expectations are realistic before you start your arbitrage activities. Can you make good money and potentially even make your living from online arbitrage? Yes, but it will take work.

3. People Let Emotions Get in the Way

Human beings are emotional creatures.

Unfortunately, when it comes to arbitrage, emotions usually aren’t a good thing.

You need to be a cold and calculated buyer and seller when it comes to arbitrage. One of the benefits of using an online arbitrage tool such as ours is that you can work with cold, hard data and facts. You can see what’s available, how much you can sell it for, what your profit margin will be, and much more.

It’s very rare for someone to succeed with retail arbitrage when their approach is “Yeah, I’d buy that” or thinking something is going to sell with no evidence to back it up.

4. Revenue is Vanity, Profit is Sanity

Yes, we know we’ve stolen that saying, and while arbitrage might not be “pure” business, you definitely need to treat it as such.

You can go on YouTube or trawl “Make Extra Money” sites and easily find people presenting graphs of how much revenue they have taken. What you don’t know is what the profit margin is.

Don’t let your emotions – there they are again – get in the way and allow yourself to be seduced. Always look for the potential profit and look to source the highest margin products – from an arbitrage perspective – you possibly can.

5. People Want to Grow, Until They Don’t

Why did you start exploring online arbitrage? Why are you considering online arbitrage as an income source?

In most cases, people start doing this because they want to make a little extra money.

Then, when they see that they can make a success of it, they re-invest and keep growing. Many people then reach the point where they can consider arbitrage being their main income source.

But this is where the problems can often kick in.

People are happy to grow, until they don’t. What we mean is that many people allow their arbitrage activities to get on top of them because they don’t take on any extra help. Things can then get challenging and you might decide to give it up due to burn out. You’re thinking online arbitrage isn’t sustainable in the long-term, but in reality it’s just that you need to be smarter and treat what you’re doing like a business.

We’re not saying you need to write a business plan before you first dip your toe into online arbitrage, but if you want to grow and get “business like” with it, you’ll need to consider doing this, as well as potentially taking on staff, as you start to treat this as your main source of income.

6. Utilising an Accounting System

You need to know where your money is going, when it is being spent, and where you are bringing money in.

This might not seem like a major need when you’re new to online arbitrage. After all, if you make an initial investment of $1,000 into products and make $1,200 from selling them, pocket the $200 profit and then re-invest the $1,000, you know where you are with your money.

However, if you’re starting out today and you don’t know where your online arbitrage journey will take you, start accounting straight away. That way, you’ll always know where you’re at, and if you do grow, you’ll have a system in place already rather than suddenly having to set something up when you want to be buying, selling, and growing what has become your online arbitrage business.

People who don’t utilise even a basic accounting system often fail with their arbitrage activities as they don’t know where their money is, how much capital is tied up in products they’ve bought, and over extend themselves financially.

Get a system in place and look to grow slowly and steadily!


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