Retail arbitrage may seem like such a big word, but the concept of products you can buy cheap and sell high should be easy to understand.
Quite simply, you purchase a product, either online or at a physical store. You can then sell it at a higher price and keep the profit.
The best thing about retail arbitrage is that there are millions of products you can buy and sell at any given time. Competing with another individual seller or company trading in the exact set of products as you are is highly unlikely unless you intentionally copy their inventory, or they copy yours.
Thus, 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 where you source your products, and the method you follow.
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In today’s article, you’re going to learn about how to get started with retail arbitrage, the best stores to buy your products, and the best products to buy cheap and sell high.
How to Get Started in Retail Arbitrage
Retail arbitrage in 2020 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, profitable home-based 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?
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The key to retail arbitrage is finding items that people want, at a lower price point, so you could sell those items at a higher price 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 online merchant goes to these stores to find many low-priced items. You might think that the competition is fierce if you’re sourcing from these stores, but choosing which clearance items to buy and which branch to buy them from matters a lot. 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 an eye for good finds would help your retail arbitrage business prosper. Visit specialty stores and look for items that don’t belong. For example, check out the toy section at your local grocery store, hardware tools at the bookstore, electronics at drug stores 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 artisans 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 don’t live 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 or $127 one-time subscription) and get access to over 8,000 manufacturers, wholesalers, and dropshippers 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 25 Best Products You Can Buy Cheap and Sell High
Before we begin, head to Amazon’s Movers & Shakers page.
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You’ll find what’s currently trending to help give you an idea of the areas you need to focus on.
To succeed in retail arbitrage, your goal is to find low-cost products with high-profit margins.
As of 2020, the best product categories are fashion, electronics, kids and pets, home and living, as well as current 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, this category is highly diverse. There are many different types (e.g., earrings, necklaces, bracelets, rings, anklets, belly rings, cufflinks, pins, etc.) made with many different mediums (e.g., gold, silver, rhinestones, gemstones, shells, beads, etc.) to cater to many different customers.
2. Sunglasses – eBay store intouchwithstyle sells 10 pairs of sunglasses for only $20. You get to save more as you buy more pairs. Similar to jewelry, the diversity of sunglasses can be astounding: the styles, materials, mediums, and customers.
3. Shoes and socks – For shoe collectors and enthusiasts, there can be no such thing as having 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 sell socks and earn even more from upselling.
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 in the past few years and this industry will continue to grow for the foreseeable future. Find a Spanx copycat, or the manufacturers of these best-selling shapewear and sell them for profit.
6. Activewear – This niche is booming significantly, so there’s no reason not to get into the athleisure or activewear industry. If you have to pick just one type of clothing, go with women’s leggings; they’re super popular and easy to sell.
Another type of activewear that you can sell is sports bras. Sports bras are no longer just workout attire nowadays; thanks to celebrities like the Kardashians and Bella Hadid, showing off your sports bra outside of the gym is now trendy.
For the Tech Savvy
7. Smart watches – Wearable technology has been on the rise in recent years, with plenty of new features and new manufacturers. Smart watches are now a billion-dollar market, and finding the right supplier is the key to getting the maximum profits from your product sales.
8. 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 margins, there’s plenty of competition in this field.
9. 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.
10. USB charging dock – When you have various gadgets at home that you need to charge, having a charging dock that can charge multiple devices at the same time. Sink your teeth into a billion-dollar market.
11. Security cameras – DIY home security, including security cameras, surveillance equipment, motion detectors, and sirens, is a steadily growing field.
Don’t Ignore Your Family
12. Kids’ toys – In between Christmas and birthdays, toys for kids are always in demand. As an e-commerce store, you can either sell by age, by interest, or by product price (for example, you can market your online store as a $10-dollar toy store). Check out Aquarius Entertainment Merchandising, Inc. for inspiration.
13. Kids’ formal wear – The best thing about selling babies’ and kids’ clothes is that they can be bought in bulk for pretty cheap. Formal wear for kids often have higher quality, so you can easily sell these items at a higher price point without customers feeling ripped off.
14. Pet clothes and toys – Selling pet clothes and toys are specialty niches that you should explore. People with fur babies buy almost as much merchandise as parents of actual babies.
15. 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.
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Around the House
16. Beauty products – Exploring this niche can be overwhelming – there are tons of pampering product categories from hair care to skincare, 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 hair care products.
17. Men’s grooming and skincare products – In recent years, skincare and men’s grooming have grown in popularity. Skincare is traditionally a female-dominated category, but beauty brands have now tapped into the male market and started creating products especially formulated and marketed to men.
Products like body washes, shaving kits, beard-trimming kits, cologne, and other grooming products for men are also gaining in popularity, not just during peak gift-giving holidays like Father’s Day and Christmas, but all year round.
18. 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.
19. Fitness trackers – These smart devices you wear measure such biological data as the number of steps, heart rate, distance traveled, and elevation gained. Whether you’re a fitness enthusiast or a professional athlete, you’ll want one of these.
20. Indoor fitness equipment – Yoga mats, resistance bands, jump rope, kettlebells, etc. are great tools for those only starting on their fitness journey or those who can’t afford gym memberships.
21. Shaker bottles and personal blenders – The same fitness enthusiasts are usually the same ones who make healthy smoothies and shakes to couple their physical activity with just the right nutrition. If you plan to sell fitness equipment in your e-commerce store, these are great products to upsell.
22. Halloween – This niche may be a once-a-year industry, but it is always a profitable product category. Buy in bulk early, so you can sell Halloween items at a higher price when Halloween is near.
Apply this strategy to every occasion or season people spend money, so you’ll be buying and selling items throughout the year.
23. Specialty watches – Whether you’re checking out bamboo wooden watches, or 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.
24. 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 e-commerce business, then offer products like virgin coconut oil or matcha powder.
25. Vaporizers and E-Cigarettes – You don’t need to get into the “are e-cigarettes healthier than cigarettes or not?” debate, but this industry is exploding and converting people from classic 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 early on would avoid heartbreaks or wasted funds in the future.
The “Making Money” Part of Retail Arbitrage
Finding products you can buy cheap and sell high 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 the majority of your selling platforms are online, as about 78% of Americans prefer to shop online and this is a chunk of the market you don’t want 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: 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. 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 Rakuten) 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.
Retail Arbitrage: The 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.
Are you planning to start your own retail arbitrage business? Which products are you planning to sell? Tell us in the comments!