Retail arbitrage may seem like such a big word, but the concept of products you can buy cheap and sell high is very easy to understand.
You purchase a product (either online or at a brick-and-mortar store), and then sell it at a higher price to be able to pocket the profit.
Yeah, that’s it.
The best thing about retail arbitrage is that there are millions of products at any given time. Competing with another person or company buying-and-selling the exact set of products as you is highly unlikely (unless you copy their inventory, or they copy yours).
Because of this, there’s a huge potential to succeed in a business model where you buy cheap and sell high. Of course, your success depends largely on the products you choose, the stores you work with, and the method you follow.
How to Get Started in Retail Arbitrage
Retail arbitrage in 2019 is just as alive as it was when it first became huge on eBay more than a decade ago.
People have been using this technique to build a real work-at-home business thanks to buying wholesale-priced items then flipping them with retail pricing. It’s totally legit and effective, so what’s stopping you from getting started in retail arbitrage?
The problem boils down to two things:
- Where do I find low-priced products and where do I sell them?
- What products can I buy for cheap and resell for a higher price?
This guide will answer these two significant problems and help you get started into this business.
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The Best Stores for Retail Arbitrage
The key to retail arbitrage is finding items that people want, at a lower price point, so you could sell those items higher-priced without customers complaining. Here are the types of stores you could find items to sell:
- Wholesale chain stores like Target, Walmart, Home Depot, etc.
Every merchant goes to these stores to find many low-priced items. You might think that the competition is fierce if you’re sourcing through these stores, but choosing which clearance items to buy and which branch to buy them from still holds weight. Some people even have insider info about sale dates of each local branch.
- Mom-and-pop stores
These little gems in the community still hold value, even if they’re trapped in between multi-million dollar wholesale stores. You’d be surprised at the high-profit, low competition items you can find at mom-and-pop stores, since the lack of inventory often means you can up the price because no one else is selling them.
- Specialty stores
Here’s where your eye-for-good-finds will help your arbitrage business prosper. Visit specialty stores and look for items that shouldn’t be there. For example, check out the toy section at your local grocery store, hardware tools at the bookstore, electronics at the pharmacies like Walgreens, general merchandise at your local home improvement store, or DVDs at hardware stores like Ace.
- DIY stores like Etsy
Etsy is home to thousands of artists, crafters and creators making DIY items for a living. Here you’ll find custom-made jewelry, crystals, and everything random in between (from refashioned clothes to home décor). You won’t be able to buy a ton of items so quickly, but once you do find items that you think would sell like hotcakes, you can talk to the Etsy seller directly for future orders.
- Local and international wholesalers
If you’re not close to any wholesale chain stores, your next best bet would be to find wholesalers online and go the dropshipping route.
To save time, check out the subscription-based wholesaler directory SaleHoo (for $67 per year) and get access to over 8000 manufacturers, wholesalers, and drop shippers that have been verified and categorized by product or whether they offer dropshipping or not.
A similar service is Worldwide Brands, which has been certifying wholesalers since 1999 and can be accessed for a one-time, lifetime fee of $299.
The 20 Best Products You Can Buy Cheap and Sell High
Before we begin, head to Amazon’s Movers & Shakers page.
You’ll find what’s currently trending to help give you an idea of the areas you need to focus.
To succeed in retail arbitrage, your goal is to find low-cost products with high profit margins.
As of 2019, the best product categories are fashion, electronics, kids and pets, home and living, as well as trends. These categories below are where you’re going to want to focus your efforts.
1. Jewelry – Whether you go for a wholesale lot of jewelry, or specific branded jewelry, there’s no denying that this category has plenty of unisex products from cuff links to pins, bracelets, and so on.
3. Shoes and socks – For shoe collectors, there can be no such thing as “too many shoes.” You can sell anything from casual shoes to sports or hiking shoes and still make bank with the products. While you’re at it, you can also add socks to your store and kill two birds with one stone.
4. Sleepwear and underwear – Silk pajamas are the cream-of-the-crop of sleepwear, but they’re always super expensive. Go straight to manufacturers like Golden Eagle Home Textile and sell your customers sleepwear that are still cheaper than buying locally.
5. Lingerie and shapewear – Shapewear remains one of the most-sought-after products of 2018 and this industry will continue to blow up for years. Find a Spanx copycat, or the manufacturers of these best-selling shapewear and sell them for profit.
6. Active wear – This niche is booming significantly, so there’s no reason not to get into the athleisure (or active wear) industry. If you have to pick just one type of clothing, go with women’s leggings (they’re super popular and easy to sell).
7. Men’s Clothing and accessories – Bow ties are one of the most popular accessories for men in recent years. You can either sell only the basics (black ties for formal wear) or go bold with color. The choice is yours.
For the Tech Savvy
8. TV accessories – Kanto Living is popular for its TV wall mounts and other TV accessories. The store just focuses on this product category and nothing else, but still offers products with the best prices available.
9. Video games – Gamers are some of the most sale-hunting, window-shopping buyers out there. They spend a lot on video games, but are smart with choices, so if you’re interested in selling video games, be smart with the niche you want to enter because although video games offer high profit margin, there’s plenty of competition in this field.
10. Phone Accessories – The demand for phone accessories will never wane, as long as new phone models get launched every year. As a reseller, you’d go crazy with low-priced items at wholesalers like Reiko Wireless Inc.
Don’t Ignore Your Family
11. Kids toys – In between Christmas and birthdays, toys for kids are always in demand. As an ecommerce store, you can either sell by age, by interest, or by amount of products (for example: $10-dollar toy store). Check out Aquarius Entertainment Merchandising, Inc. for inspiration.
12. Kids formal wear – The best thing about selling kids clothes is that they are bought pretty cheap in bulk. Formal wear for kids often have higher quality, so you can easily sell these items at a higher price point without customers feeling cheated of the quality.
13. Pet clothes and toys – Selling pet clothes and toys are specialty niches that you should explore. People with fur-babies are as much buyers as parents of human-babies.
14. Pet Care Supplies – If you decide to sell pet clothes, toys and accessories, why not go further and add care supplies as well? Grooming tools, clippers, blades, shampoo and a whole lot more. You can get plenty of discounts from wholesale suppliers like Pet Edge or Inspirer Pet.
Around the House
15. Beauty products – Exploring this niche can be exhausting – there are tons of pampering product categories from hair care to skin care, vitamins and health supplements, and a whole lot more. Go all out with a beauty-product general store or find a sub-niche where you can sell specialty products, such as organic shampoo.
16. Candles and essential oils – While candles are the go-to exchange gift for Christmas office parties, essential oils are the holy grail of gift-giving. Check out what’s instore at Gem Candles or in-demand aromatherapy oils.
17. Halloween – This niche may be a once-a-year industry, but it is always a profitable product category. Buy bulk early, so you can sell Halloween items at a higher price when Halloween is near. Use this concept for every occasion or season people spend money over, so you’ll be buying-and-selling items throughout the year.
18. Specialty watches – Whether you’re checking out bamboo wooden watches, or the super-minimalist timepieces, the income potential of trending products like these is amazing. You can buy these watches at dirt-cheap prices and flip them for huge profits.
19. Keto products – The ketogenic diet has gone from a fad diet into a lifestyle, so don’t expect keto-themed items to fade out anytime soon. You can build a keto-focused store, or any health-conscious ecommerce business, then offer products like virgin coconut oil or matcha powder.
20. E-Cigarettes – You don’t need to get into the “is e-cigarettes healthier than cigarettes or not” debate, but this industry is exploding and converting people from analog cigarettes to electronic ones. Take advantage of the influx of potential customers and check out what you can sell in the e-cig industry. Start with E-cigarette Direct.
A note about choosing products – once you’ve chosen a product or product category to focus on, make sure you read up on marketplace rules. For example: is it allowed to sell e-cigarettes on Amazon? Finding these things out earlier in the game would avoid heartbreaks or wasted funds in the future.
The “Making Money” Part of Retail Arbitrage
Finding the product by sourcing through multiple stores is just the first phase of this business. The final phase involves the actual selling, processing and shipping products to your customers.
Choosing where to sell your products should be a calculated decision, since your choice will affect how well you’ll reach your target market. It’s important that majority of your selling platforms are online, since about 78% of Americans prefer to shop online and this is a big chunk of the market to neglect.
And you can do this in multiple ways, such as:
- Become an Amazon Seller – Amazon FBA is the marketplace of choice for most resellers because of Amazon’s FBA service. Simply put, Amazon FBA involves only a few steps: first you ship the product to Amazon, Amazon lists your product, and you receive payment when someone buys that product. Amazon takes care of shipping, handling, and post-sale customer support for a fee.
- Selling via eBay – Before Amazon became the number 1 online marketplace, eBay was the go-to marketplace of anyone who wishes to shop online. As such, there are still millions of loyal users (both buyers and sellers) who prefer eBay than any other platform. Take advantage of this market.
- Selling via other marketplaces – If Amazon FBA or eBay isn’t working, you can try other platforms like Etsy, Craigslist, or other similar stores. The best thing about online retail arbitrage is that there are virtually no fees involved to register with most of these platforms, so joining as many as you can handle won’t really affect your business funds.
Depending on which platform you choose to sell in, some tools can be useful in calculating profit, list items from Amazon to eBay (DSM tool), Amazon seller app, compare prices across the board (Camel Camel Camel’s the Camelizer plugin), determine out-of-stock products, gather rebates and coupons (like Ebates) and many more. These tools (mobile phone apps, browser extension, directory listings, and so on) all help resellers create a business model for their retail arbitrage business.
The Retail Arbitrage Bottom Line
Ask around what they think about retail arbitrage and you’ll find out that many people think this business model is a get-rich-quick scam.
It’s mostly because of the two Massachusetts-based brothers Adam and Christopher Bowser who charged people up to $35,000 for coaching on how to sell products on Amazon.
Unfortunately for those who got scammed out of thousands of dollars, the victims didn’t know that everything they must learn about reselling, dropshipping, Amazon FBA, and retail arbitrage in general can be freely found online.
This isn’t a get-rich scheme, since retail arbitrage requires a ton of work from sourcing products to comparing prices, and then to selling items for profit. If you get started in retail arbitrage fully understanding what’s involved, you won’t be scammed out of your hard-earned money.
Now with the right mindset, the right product sources, the right products to sell, and the right marketplace to sell your products, your chances of succeeding in retail arbitrage improves as you put more hard work into your business.