Making money with retail arbitrage is as simple as buying low and selling high…with a few tricks in-between
Today’s side gig idea is one almost everyone has tried even if few people do it well enough to make any real money.
Retail arbitrage is one of the oldest side-hustles we’ve covered on the blog but has gotten a new image. It seems technology has finally caught up with buying low and selling high.
I guarantee, by the time you finish this article, you’ll have all the tricks you need to make reselling a legitimate source for extra cash whether it’s as a hobby or a full-time gig.
What is Retail Arbitrage?
Retail arbitrage is just a financial term for buying low and selling high.
It’s as simple as that, buying something for a price lower than you think you can sell it for to someone else, or somewhere else. The simple definition hides the not-so-simple strategies to do it right.
While the internet has opened up a whole world of retail arbitrage, allowing people to easily find opportunities to buy and resell, it’s also made making money this way much more difficult. When everyone has access to the same tools, prices tend to come together and eat up the profits.
That’s how a free market works.
But there are still some tricks and tactics you can use to make retail arbitrage work for you.
Where to Find Things to Sell Online
One of the most important keys to retail arbitrage is being able to find your items from as many places as possible. It’s your ability to find a deal anywhere that will mean the most profit when you go to resell it to an online audience.
I’ve found seven places that are always gold-mines for finding retail arbitrage deals and another idea that can work depending on the product.
Shop your Closet! This is where most resellers start out. It’s a no-cost, no-risk way to find things you can sell online and see if you like the arbitrage strategy without spending a lot of time.
If you can’t find things around the house to sell…you’re not trying very hard. We’ve all got stuff sitting around that we never use. I call it ‘shtuff’ because it’s really the shit we spend money on but got absolutely no value in using.
We’ve resold more than one treadmill, a lot of furniture and more clothes than we could ever wear.
Craigslist may be an online marketplace but it’s still completely local. That means prices will never be as high for things if they were sold to a larger market.
You really have to plan out a process for reselling Craigslist items though. Too much driving around the city for pickup or wasted trips will eat up all your profits. Make sure there is a healthy profit from the price you pay and try to schedule all your pickups in a single route.
Garage Sales are more for the hobby reseller like my mom. You can find some great deals and make some great extra cash but you never know what you’re going to find, if anything.
You can spend a lot of money driving around with very little to show for it so this one is best left for when you’ve got time to kill.
Flea Market Flipping is more profitable than garage sales because you have many more sellers in one place. Besides a great way to make a side hustle income, this can also make for a fun Saturday morning with the family.
Check out Rob and Melissa’s tips for making money as flea market flippers in this exclusive interview.
Estate Sales are kind of a sad version of a garage sales. I love ‘em because you can find some amazing items at ridiculously low prices…but it’s also the fact that someone died that makes the whole experience a downer.
Despite feeling bad for the owner’s family, resist the temptation to ‘be nice’ on the price. This is still your financial being we’re talking about as well so negotiate to a price that still leaves plenty of profit when you resell it.
Thrift Stores like the DAV and Salvation Army are surprisingly good places to find clothes that you’ll swear are new. I always scoffed at the idea, thinking the stores were only for ‘poor’ people, but loved it the first time I walked in.
It will take some searching through the racks and there are more than a few nasty pieces that just need to be in the trash, but you’ll usually find at least half a dozen pieces you can make good money selling.
Store Closings don’t happen regularly but they’re an excellent resource for finding arbitrage items. This is the ultimate ‘motivated’ seller and everything is still new.
Like most of the places to find arbitrage items to sell, keep an eye on the local paper for announcements.
Bulk Stores like Costco can work to find some deals to resell online but you’re talking about a very thin profit. I wouldn’t normally suggest looking here for opportunities but if you’ve got a membership and are there anyway, check out some prices. You might just find something in bulk you can separate and sell individually.
Retail Arbitrage Apps
Technology has finally caught up with retail arbitrage. I remember starting a reselling side-hustle in my early 20s. Back then, the golden rule was focus on one specific product because you could get a feel for how much things were worth.
We didn’t have smartphones to instantly check prices on eBay or Amazon. If you paid too much for something and then couldn’t resell it for a profit…well, that was just the name of the game.
Now there are retail arbitrage apps that specialize in helping you find the price for a product over different platforms.
- Profit Bandit allows you to scan a barcode and instantly searches for pages on Amazon to compare descriptions, ranking and prices.
- eBay has its own app that will find pages on the auction site to compare with Amazon prices.
- Major retailer apps are all available from stores like Best Buy, Walmart and Walgreens.
- Amazon also has its own app to help find products and prices on the platform.
Using Google Trends to Find Hot Products to Resell
One of my favorite tools for just about anything online is Google Trends. The search trend site shows you annual trends as well as things just popping up in the news.
Google trends shows you the relative search popularity of a term, giving you a way to find hot products that might leave room for reselling profit. There are two ways I use trends to find arbitrage opportunities.
- Seeing when seasonal trends start and die out. Have your inventory ready and for sale each year before the season selling peaks. Make sure you’re sold out of your products before the trend starts to decline or you’ll be left with inventory and little demand.
- Jump on hot products by following the short-term trends in searches.
For example, fidget spinners started to become popular in mid-March 2017 but didn’t peak until early May. That was plenty of time to buy up inventory to sell into the boom.
Using Google Trends, you can explore different topics to get an idea of what’s popular or you can just browse recently trending searches to see what’s hot.
How to Sell it For More
If the whole idea of retail arbitrage revolves around selling something for more than paid for it, the question becomes, “How do I sell something for as much as possible?”
Getting a great deal on an item is a start. You have to know what’s the fair price of the item online first and whether there’s much room left in the price. There are also a few things you can do to eke a little more out of your sales, three strategies I use to sell for more.
- Create a Better Ad
The fact is a lot of people selling online just aren’t very good at it. They might just be selling what’s lying around the house so they don’t have much experience. Of course, they might just suck at selling too.
Creating a more persuasive ad with better pictures and a better description can go a long way to getting the price you want.
- Make sure pictures are high-definition and get images from multiple angles. Make sure to capture the item’s strengths in the images.
- Check out the retail description of the item as well as pages on eBay and Amazon. Make sure you list out all the product’s selling points.
- Describe the benefits, not the product. People buy things for what they allow them to do and feel, not just because they want that product. People don’t buy a camera, they buy the ability to capture a moment and share it with friends.
- Put in a Little Sweat Equity
Some product types lend themselves better to the rehab market but you can make more money in just about any product by cleaning it up a little. Make sure all the factory labels and stickers look new, replace any missing buttons, maybe even touch up the paint.
If you’re willing to put in the time to really make some money, look for those product types with more arbitrage profit on rehabbing. Furniture is a good example or computer hardware for the technically-inclined.
- Sell it to a Bigger Market
We’ve implied this one from some of the ways to make money with arbitrage, i.e. buying locally and selling online. The idea is that selling a product to a larger market, more people, means you give yourself the chance to find someone willing to pay more for it.
This means finding as many of your products locally as possible.
That doesn’t mean looking for deals at Walmart or Target. Those are international retailers with global reach and the knowledge to get every last penny on their sales.
It means going to flea markets, consignment shops, auctions and anywhere a product is limited to the local market. By taking these products from limited markets to global platforms, you increase your odds of getting a better price.
How is Retail Arbitrage Different from Amazon FBA?
I had planned on putting this section towards the top, in the general description of retail arbitrage, but I wanted to get to those special tricks and tips faster. The difference between retail arbitrage and Amazon FBA is important though…I just didn’t want to put you to sleep before you saw the good stuff.
But understanding how online reselling is different from FBA can help you see how to use them together or to pick the strategy that fits best with your goals.
In contrast to reselling, where you find another brand’s product to buy and resell, you create your own brand in Amazon FBA. This means going straight to the manufacturer to produce your own products and sell for a profit.
Whereas in retail arbitrage, you’re profiting from the different prices between retail and consumer, in FBA you’re profiting from the difference in price between manufacturing and consumer.
That usually means a lot more profit.
Any retailer that is trying to sell a product is already trying to squeeze out a profit between manufacturer and customer. The breakdown that gives the arbitrage profit is that the retailer either didn’t know how much the product was worth or didn’t market it to the right group of customers.
I would say retail arbitrage involves less risk compared to FBA. You can instantly see how much you should get in a resell with the apps listed above. By comparison, you might lose some of that brand value by selling the same product with your own label through FBA. There are also just more moving pieces involved in FBA, and that means more risk.
Retail arbitrage can be a great opportunity for work from home side income and can even become a full-time gig if you’re able to buy in bulk or develop a regular process. It’s more labor-intensive than FBA and isn’t nearly as scalable but can still be a legit way to make extra money. Make sure you put together a process that takes advantage of arbitrage apps and the different ways to resell online.