Arbitrage is the word or term used when a product or service is bought at one price and sold at another, preferably higher price. We are simply taking advantage of price differences. Retail Arbitrage Flipping and Online Arbitrage are the two main ways in which this is done to generate an income.

retail shop

Retail Arbitrage

This is buying physical products from shops and/or retail outlets (wholesale and non-wholesale) and then selling either offline car boot sales etc or online, eBay, Amazon etc.

More often than not, retail arbitrage products are resold online, and probably mostly on eBay as opposed to Amazon.

The profit is made when you buy, not when you sell. The better the buy price, the better the eventual profit.

Will it Sell Online?

If you are unsure if the product will sell, then resist the urge to just buy and hope it sells. Check on eBay first if the product (or similar products) is listed and what they are selling for. If the product has lots of sellers it’s a high competition product, but that doesn’t necessarily mean you can’t sell it.

You might still be able to undercut other sellers, and also they will eventually sell out so as long as your product is listed and there is a demand for it, it should eventually sell.

Remember, You’re Investing not Buying Short Term

This is another arbitrage mindset tip. The product you are buying to sell on might take weeks or even months to sell. This is an income generation exercise, it’s an investment and should be thought of as such, not as a shopping exercise. So yes you will need a little capital to get started.

It can help to have a separate bank account, or a ‘pot’ within your bank account where you ‘seed‘ some capital initially and then plough any sales back into the same ‘pot‘ to use to reinvest in more arbitrage. This way you see the compounding effect of your arbitrage income effort, which is motivational when you see the account balance growing much faster than a normal savings account.

Doing this will also help you to view this more as a business than a casual income sideline.

Buy Bargains in the Sales

Clearly, retail sales are the best time to pick up the discounted prices to max your profits.

Christmas sales and January Sales are good times to go bargain hunting. You just have to remember you are not buying for yourself, you are looking for the biggest discounts for products you think you can sell online. That’s it. If you think there is a demand for the product and it will sell on eBay that’s all that matters. Whether you personally like the product or not is irrelevant and you should change your mindset if you find yourself thinking in that way.

Throughout the year there are temporary sales, ‘closing down sales’ and maybe other seasonal sales apart from the above. So it’s really a case of being aware when you see a bargain for something you know you can flog.

Another example is ‘end of season’ sales and discounts. When summer is coming to a close, unsold summer stock is often discounted by retailers to clear out space for winter stock and to just clear out the current summer stock so they can sell new summer stock the following year.

Bargain Hard!

The advantage of retail arbitrage over online arbitrage is bargaining power. If you’re in a shop or a car boot sale or auction, you can always try your luck and offer below the price on a product. Bargaining and not giving in is an art form and one that can lead to higher profits. Remember, the profit is made when you buy, not when you sell.

Retail Wholesalers

Search for wholesalers in your area and check out what they are selling that you could sell online, using the knowledge and mindsets described above

online sales

Online Arbitrage

This is exactly the same process as retail arbitrage, just sourcing/buying the product online

Online Sales

As with retail, Christmas sales and January Sales are good times for online bargain hunting. The advantage with online arbitrage is the convenience of searching for sales without having the physically walk out through your front door, physically buy the product and bring it home. Instead, you can use the time to search for the deepest bargains to max out your profit.

With the advent of Black Friday sales and other sales specific to online buying, there are more and more opportunities to buy at discount, so just as with the retail arbitrage awareness I talked about above, the same awareness about these sales and when they are on etc is important to maintain.

As with retail, the Seasonal sales also apply online so fighting with all the other bargain hunters in-store is not necessary. Those end os season summer or winter clothes are sold online also

Online Wholesalers

Just googling “bulk buy auction sites”, “online wholesalers” etc will bring back a whole bunch of research results for wholesale and bulk auction sites where some huge discounts can be found. Of course, you are committing to bulk buying so you have to have a fairly good idea about the product and how quickly it should sell.

Maybe you have had success selling a particular product from a retail store so you know the product sells and now you want to try to sell it in bulk. This is a good way of evaluating a product first before you commit to bulk buying and selling.

A cautionary note: In the past, there have been a number of dodgy and even scam sites/wholesalers. Using services such as ESources and Wholesaledeals have vetted all of the wholesalers and suppliers they use so you know you are dealing with real businesses.

Finally, We have eBay Wholesale.

Buying from eBay will give an added sense of security. And there are real bulk buy bargains to be found there.

Mix & Match

Why not try both online and retail arbitrage? See which works out best for you, or just which you prefer. Doing both will expand your knowledge of what sells and where the profits are and possibly increase your overall income.

mix and match


Hugh

Just a regular dude, dedicated to new digital economy income streams

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