I earn a living through shopping by using the retail arbitrage business model. Retail arbitrage is sourcing (sourcing is the business word for SHOPPING!) products and selling them on different marketplaces, so buying say a Barbie doll in Toys R us for £10 and selling it for £18 on eBay or Amazon. Yes it happens, a lot, over 50% of goods sold on Amazon alone are from professional resellers like me!
I’ve been using this business model, selling mostly on Amazon and also Amazon Germany, Spain, Italy, France and eBay for the last twelve months.
It’s all about being on the lookout or ‘BOLO’, the amount of crazy amazing clearance deals I’ve come across, there is an abundance of opportunity and stock everywhere. I’ve tried sourcing everything, from second-hand board games in charity shops, books, to anything reduced on sale in high street shops and online, but with a bit more experience and knowledge from the books and courses I studied I am so much better at it.I guess I’ve identified and simplified what works best for me, now I don’t touch anything unless after costs it will turnover at least a 30% profit.
The above hair dryers were £20 in Boots, plus the lovely advantage cards points, oh and I had a 10% off a £40 spend voucher making them £18, yeehar! Yes I bought the lot!
SUPPLY AND DEMAND
I’m very aware of the demand factor and this can easily be determined when selling on Amazon, each product has a sales rank, it’s on every listing page, the closer to 1 the better.
Why don’t people buy the clearance items themselves? Why do they buy it for more on Amazon?
Amazon is a marketplace based on convenience and ease, Amazon customers are very different to say eBay customers, they’re usually affluent and happy to pay more for convenience and quick delivery, but expect the product to be perfect. Amazon Prime members are surging sales, according to a recent Cowen & Co survey, 53% of all Amazon purchases came from prime members (an all-time high). If you sell through the FBA programme, then your products are eligible for Amazon Prime and this usually means you win the buy box.
Usually when people buy things from Amazon they know specifically exactly what it is they want and type this into the search bar.They expect it to be delivered quickly and to be in perfect order.
How do you source the stock?
You can go to actual shops, check on your phone if you see something priced really cheap or perhaps on a 3 for 2 deal etc or on clearance, there are even apps where you can scan the barcode of the product and it will tell you the sales rank, selling price etc so you can work out the margin and identify demand for the product.
Or you can do it in the comfort of your own home, or online arbitrage (OA) Argos, Tesco-Direct, all of these stores have clearance sections on eBay.
I’ve even bought items on deals on Amazon and sent it straight back to Amazon and as the price has gone up, sold it on at a profit. This is known as an Amazon flip.
Some of the disadvantages
Sometimes you can list an item on Amazon to find lots of other sellers are also listing it, this can drive the price down, too much stock outweighing the demand and sellers competing for the buy box. I find this happens if theirs just been a sale on Argos or somewhere, the same sellers are all competing to sell their item. For me I am very conscious to look for goods in different ways and to not follow the crowd.
Also Amazon are very strict about the customer experience and rightly so, you have to constantly ensure you are meeting very high standards in customer feedback, low returns and perfect orders etc.So I guess a disadvantage is the element of risk of being shut down due to poor performance, sometimes an Amazon customer may leave a negative review which may have been an issue out of your control.
YOU GOTTA RISK IT TO TAKE THE BISCUIT!
For me I have used arbitrage to build up my business, not just in capital and turnover, but also in knowledge in understanding market places, margins, growth, demand, having systems and targets in place.
It’s really easy to start, you just set up a selling account on amazon, once you start to turnover close to £4,000 in product sales they will ask for more details about your, to makesure you will pay tax/vat etc as a business so at this stage you will need to decide if you want to go sole trader or limited company.
So whats stopping you? Perhaps give it a month to try it, see how you get on, try to learn as much as possible, source the right products with good margins take action and see where it leads! Maybe you too can live #theFreedomLifestyle, feel free to get in touch if you would like further information on coaching.
If you would like any more information or you have any questions, check out my blog to read about my journey selling through Amazon from Arbitrage to private labelling my own products.
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