Growing “On the Side” Arbitrage into a Full Time Business

//Growing “On the Side” Arbitrage into a Full Time Business

Over the past seven years, I have seen my fair share of people start selling on Amazon. Heck. I trained a lot of them on how to get started. From those who I have watched, I have seen success stories and I have seen businesses fail. If you are in the camp of having a business that is growing and thriving, you might have wondered about the following:

When and how do I take my “on the side” arbitrage business and turn it into a full-time business? 

After spending several months building a part-time online arbitrage business, it’s common for many people to consider taking their business full-time. With potentially millions of dollars to be made, it’s very reasonable to consider going full-time and leaving your current job for a more free and self-determined lifestyle.

However, many people make poor business decisions that can end their chances of working full-time on their online arbitrage business. The real tragedy is that a lot of these mistakes are avoidable!

In this article, we are going to breakdown when you should consider making the transition to full-time arbitrage, how to transition, and mistakes to look out for and avoid during the transition. 

How to Know When You’re Ready

Before you even begin thinking about writing your letter of resignation for your job, you should first identify if you are ready to delve full-time into your online arbitrage business. Below are the three main factors that may indicate you are ready to transition into working full-time on your arbitrage business. 

You Have Too Much Money, And Too Little Time

When first starting your online arbitrage business you likely only had between a few hundred and a thousand dollars to invest into products. Due to your small amount of funds, you initially only required “part-time” hours to work on your arbitrage business. 

However, after reinvesting your profits over a period of several months, you may arrive at a stage where you have too much money and not enough hours to invest into researching, buying, and selling additional products. Growth becomes stunted! After coming home from your full-time 9-5, there just isn’t enough time to source and flip as many products as you would like.

Therefore, if you are at a stage where you do not have enough time to research and reinvest your money, then you are potentially in need of an expansion to a point where you are working full-time on your online arbitrage business. 

You Are Earning Enough to Take a Salary

If you find yourself earning enough profit that you can both reinvest in products, as well as put some money aside for yourself, then you may be ready to jump full-time into arbitrage. 

Having money to reinvest into products will allow your business to grow, while having money to take away will allow you to pay your bills without relying on regular full-time job. Thus, these two points are essentially a marriage of the most important factors you should consider to determine whether you are ready to work full-time on arbitrage. 

You Have Great Control Over Spending

Before you expand your online arbitrage business, first ensure that you have a solid foundation to build upon. You should spend some time evaluating your spending situation. Are you reducing costs to maximise profits? Or are you over-indulging in expensive and unnecessary tools and gadgets?

Being strict over your spending and avoiding unnecessary costs is a great indication that you are ready to expand your arbitrage business. On the other hand, if your business is packed with bloated expenses and inefficiencies, then you are most likely going to fail in transitioning into a full-time set-up, as you will be spending far too much to make any substantial and sustainable profits. 

Bonus Factor: You are Approaching the Final Quarter of the Year

In order to maximise the chances of succeeding in transitioning your part-time arbitrage business into a full-time one, it is important to get the timing right!

Halloween, Christmas and peak shopping days such as Cyber Monday and Black Friday all land in the final quarter of the year. This means that the 4th quarter of the year can be the perfect time to transition into working full time on your arbitrage business. 

The sharp rise in sales that normally occur during this time of year will allow you to have plenty of capital to reinvest and take home in order to sustain working full-time on your business for a long period of time. 

However, there are also risks associated with this timing. Are you going to be able to restock your products regularly? Or are you at risk or experiencing shortages? This is why this factor is a “bonus” factor, because if you can pull it off then going full-time during the final quarter of the year could bring you phenomenal results. On the other hand, if you aren’t confident that you can prevent shortages during the busy seasons, or move products quickly enough to avoid losing margin as prices reduce before you can sell, then you should aim to become accustomed to working full-time on arbitrage long before this time of year. 

Working On Your Online Arbitrage Business Full-Time

After you’ve determined that you are ready to work on your online arbitrage business full-time, then it’s time to begin taking action to grow your business to a point where you can freely quit your job.

Focus on Sourcing Products Online

Arbitrage businesses that source their products primarily online are usually much more viable and scalable than arbitrage businesses that rely on physically looking for products in retail stores. If you want to expand your business to a point where you can work on it full-time, focus more on sourcing products online. 

An arbitrage business that primarily sources products from local retail stores can be limited and difficult to scale due to the fact that you end up devoting a disproportionate amount of time to travelling to large retail stores and hunting around for products worth selling. On the other hand, with online product sourcing, you can instantly search and order online for products that you are interested in flipping.

A tool such as Tactical Arbitrage makes this process much easier – providing users with the ability to instantly filter through over a thousand stores and sites for products that can make them an enormous profit. Therefore, automating the buying and research aspect of your business will make scaling the business incredibly easy and painless. 

Consider Improving Your Product Selection

A major tip for anyone looking to go full-time into online arbitrage is to consider diversifying your product selection. Diversifying and expanding the selection of products that you sell means that you remove any dependence on a few individual products and ensure that any mistakes you make with product buying, or if you end up with a product that you can’t sell or only make a small profit on, can be dealt with and absorbed easily while other products continue to sell.

However, if you find yourself making considerable profits from a select few products, then you don’t necessarily need to diversify your product selection. If you find an absolute gem of a product, then it may be a great idea to focus solely on that product for a while. On the other hand, diversifying is also worth considering if no singular product sticks out from the crowd. Thus, a mix of diversifying and concentration is necessary to create opportunities to make huge profits while decreasing risk. 

Perfect Product Pricing

Effectively pricing your products is vital for any business! You don’t want your prices so low that FBA and shipping costs take away  any potential revenue, but you also need to be offering a price point that is attractive to your customers.

Price points from $20 to $250 is often the “goldilocks zone” for most arbitrage businesses, providing enough revenue to make an acceptable ROI, while not priced too high that something might be a slow seller or have a smaller interested audience.

When pricing products individually, research your competitors and use the FBA revenue calculator to know what profits you will make when taking into account FBA fees. The calculator enables you to know the ROI of a product for whatever price – informing your final prices.

Optimizing Inventory Management

To turn your online arbitrage business into a full time endeavour, you should become familiar with knowing how much inventory that you need – or can deal with – at any given time, as well as considering how often reorders are required. A shortage can very quickly become detrimental to your revenue if your arbitrage business is your main source of income. 

Keeping records of your stock inventory makes it significantly easier to keep check on your stock and set targets of when you should reorder and buy new products. At the same time, if you’re fully invested in arbitrage, then you may always be on the lookout for great deals and opportunities to flip products for profit, so you might not have what might be considered a traditional pattern of re-buying products.

Mistakes to Avoid Along the Way

Poor Product Research

A common theme within any guidance to making retail arbitrage a success is the emphasis on undertaking sufficient product research. This is because the biggest blunders that early arbitrage businesses make is neglecting product research – resulting in them investing excessive capital into deadend products. 

Some people make the mistake of selling a product due to its astronomical projected profit margins, despite incredibly low demand. This leads to dead inventory that takes forever to sell.

Providing Poor Customer Service

Reviews have a powerful effect on your listings, and therefore your arbitrage business. This means that you should avoid negative reviews at all costs and encourage positive reviews. However, many sellers make countless small mistakes that can negatively affect customer experience – resulting in painful negative reviews.

For instance, it is vital that your product looks exactly the same as it does on your Amazon listing. Many sellers grab an image from Google or retail websites without checking to see if  that the image is slightly different to the final product – perhaps in color, material or size. Thus, when the customer receives the product and sees that it looks different in comparison to the image, they may choose to complain in the form of a negative review, which can be a major blow to your listing’s ranking. 

Late shipping can also upset customers and create negative reviews. If you are on the Amazon FBA program, then this is much less likely to occur. However, if you ship products yourself, then be sure to ship off your products on time.

Put the customer first and ensure you provide the best service possible!

Having an Inefficient Product Research Method

All too often, arbitrage newbies spend an inflated amount of time researching and endlessly scanning the web and stores for potential products to sell. However, every experienced arbitrage business owner understands that there are tools out there that can significantly speed up the time it takes to find products to flip on Amazon. 

Tactical Arbitrage allows users to filter through and focus on products that fit their criteria for niche, price and more. We have proven that we can save arbitrage practitioners countless hours of researching, allowing them to invest more time into scaling their business, bringing in revenue, and achieving a profit. It is always worth considering investing into tools that will save much needed time on cumbersome processes. 

In Conclusion

Turning your part-time online arbitrage income into a full-time endeavour can be a great way to leave your current job behind and enjoy a significant lifestyle change. Working for yourself is liberating and allows you to spend more of your time doing more of what you love to do. 

The transition into a full-time arbitrage business can be difficult. However, absorbing and executing the points discussed in this article can bring you much closer to quitting your job and going full-time into arbitrage.

2020-04-07T02:25:26+00:00

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