Retail Arbitrage: definition, how to start, pros (explained)

What is Retail Arbitrage?

Retail Arbitrage is the purchase of a product from a retail store at a lower price afterwhich it is resold at a higher price to make profit.

Do I need to own a shop for retail Arbitrage?

One good thing about retail Arbitrage is that you don't need to own a physical shop to be able to sell products. Retail Arbitrage can be done through online market places like Amazon and ebay.
Even when selling the products in person, a shop is not necessary as you can easily meet and deliver the products to your customers at an already agreed location but if you still want to establish the presence of a shop, you can still go ahead to create your own pop up shop or a flea market where you can use for your sales.

How Can I Start Retail Arbitrage?

Reserach

Research is necessary as you need to find products that are in high demand but are selling for lower price than their actual value. This will help you acquire them at the lower price inwhich they are being sold for, afterwhich you resell them at their actual value or even higher than their actual value.
It is also important to research on the cost of shipping of the products you intend to buy and to determine whether the potential profit margin will be worth the shipping expense.

Fix A Budget

After conducting your research and finding the product you will like to buy. The next step is to fix a budget. You have to fix a budget for how much you will buy the product and also for the price range inwhich you will like to sell. This price range inwhich you are going to sell the product has to be fixed in such a way that the amount made from the sales of the product would cover the actual price of the product purchased and still have some money left as profit generated from the sale.

Purchase The Products

After setting your budget. The next step is to purchase your products at either physical or online retail stores depending on what suits you most. But bear it in mind that if you decide to endulge in retail Arbitrage using online retail stores, then all your resell should also be done using online marketplaces, if at all you decide to purchase from an online retail store and resell physically to a customer then you should make sure that the policy regarding the resale of the product from the online retail store inwhich it was purchased does not prohibit buying and reselling physically to a customer.
It is also important to note that you can resell products purchased physically to a customer online using online retail stores. It is totally okay to purchase products from offline sources and resell them on online marketplaces.

Sell The Products

After the purchase of the product, you can go ahead to resell.

Repeat The Process

Inorder to master the act of retail Arbitrage and become successful at it, repetition is needed. Keep researching, keep fixing your budget, keep buying and reselling. After all, this is what retail Arbitrage is all about. You cannot be successful at something you do not constantly do or learn to do.

Where Can I Find Products To purchase For Retail Arbitrage ?

Clearance sales

Retailers engage in clearance sales to make room for new inventory. Find retail stores around you who are embarking on a clearance sale, purchase some products at the discounted prices and go off to resell them at a higher price.

Liquidation Sales

A retailer may go out of business and decide to hold a liquidation sale inorder to sell off the remaining of their products. Take advantage of this opportunity by purchasing products at discounted prices at these liquidation sales afterwhich you sell them off at a higher price.

Seasonal Products

Products like christmas decorations, back to school supplies, valentine day gifts are in high demand during Seasonal occasions like chrismas, Easter and Valentine. You can purchase them during the time of the year when they are not in high demand and the prices are low, afterwhich you keep them until the seasonal periods, and sell them for a higher price during Seasonal periods when their prices would be high.

Online Market Place

Products can be purchased on an online marketplace such as Amazon at a low price afterwhich the product can be resold on another market place such as eBay for a higher price.

Thrift store Arbitrage

Thrift stores sell second hand items and at lower prices. One can purchase items from a Thrift store and go ahead to sell them at any online marketplace higher price.

What Items Can I sell Using Retail Arbitrage?

A wide variety of items can be sold using retail Arbitrage ranging from electronics such as laptops, phones to clothes and clothing accessories to toys and games to beauty products such as makeup and skincare products to home and even kitchen equipments. All you have to do is to select items of your choice, buy them from a retail store after which you go ahead to sell them in an online marketplace or in person.

Pros Of Retail Arbitrage

• Little Start up Capital:
  Little capital is needed to start retail Arbitrage. All you have to do is buy a product at a lower price, resell at a higher price and you get back the money you used in purchasing the product as well as the profit that comes with it.




• Quick Cash:
  It is a means to make quick cash especially if the product you are selling is in high demand.




• Side Hustle:
  It is good as a side hustle as you do not have to leave your day job for retail Arbitrage.




• Variety Of Products:
  With retail arbitrage, you can choose from a wide range of products to sell.




• High Profit:
  It is profitable as you get to purchase the products at lower prices even through discount or clearance sales after which you resell them at higher price. The cost of the product purchased as well as profit is made.

Cons Of Retail Arbitrage

Despite having so much advantages, there are some disadvantages of retail Arbitrage you should look out for.

• High level of Competition:
  Many other people who are into retail Arbitrage may offer to sell the same products you sell at prices lower than yours. This would lead to a high rate of competition as customers are likely go for those who sell at cheapest prices.




• Demand Fluctuates:
  Demands for products may fluctuate. A product may not always be in high demand and this may cause a reduction in sales.




• Cost Of Shipping:
  Cost of shipping products to customers can be a problem in retail Arbitrage as it can eat into the profit margin.




• Time Consuming:
  Alot of time and effort is required to finding good deals, packaging and selling of the products.