According to the Oxford Dictionary:
“the simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms in order to take advantage of differing prices for the same asset.”
e.g. “profitable arbitrage opportunities”
Retail Arbitrage for Beginners: What is Retail Arbitrage?
From the definition above, it’s a fairly simple question to answer.
Retail arbitrage is simply the process of buying something from a retailer to sell on for a profit elsewhere. You might do both the buying and the selling either online or from a bricks and mortar store. If you’re buying products to “flip” and make a profit from arbitrage, you’ll always be looking for whichever source you can buy from at the cheapest price, while also tracking where you can sell and make the highest profit.
While the concept of retail arbitrage is simple, and the potential is there to make significant profits, the practical act isn’t always straightforward.
If it was easy, everyone would be doing it! And if something’s worth doing it will be hard, right?
How is Retail Arbitrage Possible?
We’re regularly hearing about the power of the biggest retailers, so how can it be possible to get one over on them by buying from them cheaply and selling on at a profit?
Could the retailers not just keep hold of their stock and sell it at a higher price themselves?
Although this seems logical, retailers aren’t making money when product is dwelling on shelves and not being purchased. Consumer buying habits can fluctuate wildly. Fluctuations may happen across seasons, which would be expected and planned for, but sometimes a particular product might simply stop being popular.
If a retailer needs to sell it, down goes the price!
On top of this are several logistical issues. Retailers have usually planned their inventory at least 12 months in advance; stock is arriving regularly and their central warehouses and local stockrooms only have finite space. The world’s biggest retailers don’t tend to work on a “sale or return” basis with their own suppliers; they’ve paid for product at a price they believe will allow them to sell at a good margin. Their only option is to sell it. What’s the quickest way for a retailer to move product quickly?
Down goes the price!
Finally, we can’t discuss how retail arbitrage is possible without looking at the huge influence the internet holds over bricks and mortar retailing.
In the long-term, competing with e-commerce prices is unlikely to be sustainable for many retailers. However, stores will gamble on selling something at the same price as it can be bought online, for example on Amazon, sacrifice their profit margin and sometimes even making a loss, with the hope that a customer will spend their cash on other, more profitable, products while they’re in store. This is why supermarkets try to be price competitive for product categories such as consumer electronics and entertainment. They don’t make any money but the price point of the product is an incredibly successful footfall driver.
What happens when bricks and mortar retailers try to compete with e-commerce?
Down goes the price!
How Can I Execute Retail Arbitrage?
As we already know, on the face of it the process behind executing retail arbitrage is simple.
Yet, if this is your first introduction to retail arbitrage, you probably have a few questions in your head.
These might sound something like?
- So what exactly should I buy?
- How do I sell these products when I have them?
- Where should I buy from, and where can I sell my products?
The answers to all of those questions could reasonably be “whatever you want” and “wherever you want”, but we appreciate you need something a little more helpful than that!
For now, let’s focus on the third of the questions above.
Sourcing Products for Retail Arbitrage
If you don’t have products to sell, then you have no vehicle for making a profit.
Thankfully, you don’t need to jump in the car or hire a van and start driving around town looking for the best items on clearance that you might be able to buy in bulk!
Our Tactical Arbitrage tool helps you to find the best arbitrage opportunities for buying products to sell at a profit on Amazon. All you need is an active Amazon Professional Seller account and you can get started.
Once you have signed up to the tool, it is up to you (and will depend on your budget) what you buy to sell at a profit.
What Do I Need to Do?
Once you get started, know how much cash you’re starting out with, and have signed up for access to Tactical Arbitrage, your routine for making a profit from retail arbitrage might look a little like the below:
- You Choose a Product to Buy. With our tool you can choose a product that you’re interested in, the one with the highest volume sales on Amazon, or the one with the highest profit margin. Choose the products you want to buy to sell!
- The Product is Delivered; You Send it on to Amazon. While you can choose to sell your products yourself, most people execute retail arbitrage by choosing to send products onto Amazon Fulfilled By Amazon (FBA). This means that your products will be sold as Amazon products. When you receive your products, if you plan to sell via Amazon FBA, Amazon will send you a mailing label to send the products onto Amazon’s fulfilment centers.
- Amazon Sells the Item, You Get Paid! Your products are sold via Amazon, and are sent to the customer by Amazon. And you get paid! Any customer queries and returns are also dealt with directly by Amazon.
- Take Your Profit, and Grow Your Arbitrage Business. Once you’ve been paid, you can reinvest your profits into buying the next product that the Tactical Arbitrage tool has highlighted that meets your criteria.
Whether you want to make a second income “on the side” or want to grow your retail arbitrage activities into a full on business, we can help you to achieve your goals.
Get Started with Retail Arbitrage, with Tactical Arbitrage!
We provide all our new users with a no-obligation, seven-day free trial to try out our tool and discover how it works.
Sign up here to give it a try and see whether retail arbitrage could be a “side hustle” or a long-term earnings and business opportunity for you.