What is Retail Arbitrage?
Retail arbitrage is an online business model where the business owner purchases clearance or low-priced products from a physical brick-and-mortar store, reselling the items online at a higher price and keeping and/or reinvesting the difference. Retail arbitrage is the type of business that a rookie retail arbitrage seller can start or a seasoned seller can expand into. It is often practiced on Amazon, Craigslist, eBay, and other websites.
What is retail arbitrage UK? Retail arbitrage UK is the act of purchasing discounted product from a physical store at a clearance sale price and selling it online for a higher price within the United Kingdom.
What is leverage retail arbitrage? “Leverage retail arbitrage” is a phrase people use to describe how they use retail arbitrage to make money online.
What is the difference between retail arbitrage and price gouging? Price gouging is the act of taking advantage of a specific turn in the market to amp up prices for a higher return. Retail arbitrage is similar, but is a full business model rather than an illegal strategy for making money online. Plus, to remain competitive, you won’t be able to raise prices too much while doing retail arbitrage, especially if you use Amazon.
What is retail arbitrage eBay? Retail arbitrage eBay is the process of listing products that you bought at a cheap price at a retail store on eBay.
What is retail arbitrage Amazon? Retail arbitrage Amazon is an online business strategy that involves listing products you purchased at a physical store online on the Amazon marketplace at a higher price.
Is Retail Arbitrage Legal?
Yes, retail arbitrage is legal, as long as you are selling products that are not gated by their brands or counterfeit. Reselling legit products through retail arbitrage is legal in the United States and in the United Kingdom.
Amazon is ok with retail arbitrage, too. Retail arbitrage on Amazon is allowed as long as the listed products are quality, legally sourced, and, if applicable, sold by authorized arbitrage sellers only.
Benefits of Retail Arbitrage
Hundreds of products to sell
Relatively low risk due to low investment
Low barrier to entry/ easy to learn
Smaller inventory to store
Some benefits of retail arbitrage for Amazon sellers are:
Having a very well known, trusted platform to list products
The Amazon seller scanner app is fairly easy to use
Plenty of resources online for selling retail arbitrage products on Amazon
Disadvantages of Retail Arbitrage
No chance of selling your own brand after scaling up
Possible lawsuits, possibility of trademark infringement
Takes a lot of time
If retailers have no good deals, you have nothing to list
The stores, brands, and your selling platform have control over your retail arbitrage business
Some disadvantages of retail arbitrage for Amazon sellers are:
Extremely saturated platform
Amazon FBA fees will eat into your profit margins
Strict guidelines on the external packaging on products sent to Amazon warehouses may lead to rejected products
Possible account suspensions
Retail arbitrage is risky. Not only are you dealing with smaller margins and gated brands, but you also need reliable transportation to and from physical discount stores. Then, you will need to transport those discounted items to your home and handle shipping yourself to whatever platform you choose.
Plus, you can lose money in arbitrage. This can happen when you purchase gated products by accident and cannot sell them because of the products’ guidelines. Or, sometimes products simply don’t sell- leaving you to eat the cost of the inventory items you purchased. Compared to other Amazon business models, you’ll lose less money this way with retail arbitrage, but it’s still a possibility.
Retail arbitrage is far more difficult than how it initially appears because often, the messaging online about this business model is sugar-coated by YouTubers and course creators. While it is a relatively simple business model, it is not a get-rich-quick scheme, or a guaranteed way of making money online.
Can You Make Money with Retail Arbitrage?
Yes, you can make money with retail arbitrage, though a typical retail arbitrage salary is around a few hundred dollars/month to start. Eventually, this amount can grow closer to $10K/month. So, you can make a living off of arbitrage, but it will be difficult to become truly wealthy with this business model.
Likewise, you can still make money on Amazon in from retail arbitrage (or online arbitrage). The earning potential remains similar to Amazon FBA; around $100-$500/month for the first few months, slowly growing as time passes.
Note: it costs around $500-$1K or more to sell on Amazon FBA with retail arbitrage, which will limit your margins in the first few months of selling.
How Do I Get Started with Arbitrage?
Amazon Arbitrage for Beginners: How to Get Started with Amazon Arbitrage
Amazon is the most popular online platform to list retail arbitrage items. They have specific processes that apply to Amazon only:
Is Retail Arbitrage Worth It?
Retail arbitrage is worth it if you want to make a small amount of money fast on the internet or you want a low-risk way to sell online. It’s also a good way to fund a bigger endeavor to make money online without pulling from personal savings. An excellent strategy for “warming up” your online business is starting with retail arbitrage and reinvesting your earnings. Then, broaden to the online arbitrage business model and continue to scale your business from there.
What is the Difference Between Retail Arbitrage and Online Arbitrage?
The difference between retail arbitrage and online arbitrage is that retail arbitrage sources products from physical stores while online arbitrage sources products from online stores.
What is online arbitrage? Online arbitrage is a business model where sellers purchase low-priced products online from one online marketplace or store and resell it on another online marketplace at a higher cost. It costs about $500 to $1000 to start Amazon online arbitrage, the same as Amazon retail arbitrage. The difference is there’s no chance of selling items you already own and having a 100% profit margin, since the sourcing must come from the internet to be true online arbitrage.
What is the Difference Between Retail Arbitrage and Dropshipping?
The difference between retail arbitrage and dropshipping is that retail arbitrage involves going to a physical store, buying low-priced items and reselling them for a profit online. Dropshipping eliminates the first step. Instead, you list a profitable product that you see online without buying it first. When a customer purchases from your listing, you buy that item and ship directly to the customer.
Dropshipping is one way to be an online middleman, but following a dropshipping model can get you banned from Amazon if you do not first season your Amazon seller account. So, consider starting your business with retail arbitrage, growing to online arbitrage, then switching to dropshipping to free up some time while you start a private label brand.
Is Amazon Retail Arbitrage Worth It?
Amazon retail arbitrage is worth it for those who are learning how to make money online and want to learn the Amazon platform. However, remember it is unlikely that you will become wealthy just following this Amazon business model.
Moreover, retail arbitrage can be used to improve Amazon seller performance. If you are already selling on Amazon and want to improve your margins and metrics, you could slowly transition your seller account to the retail arbitrage Fulfillment by Merchant (FBM) model.
By switching to FBM, you can save on Amazon FBA fees. By selling well-known, tested products, you can also increase your customer satisfaction metrics and perhaps your Amazon sales overall. Still, sellers may not be able to prevent a suspension even if they use retail arbitrage, especially if their account is so unhealthy that a suspension is imminent.
How Does Retail Arbitrage Compare to Other Business Models on Amazon?
Overall, retail arbitrage is less complex but also less profitable than other business models on Amazon.
CONCLUSION: Retail Arbitrage vs. Local lead Generation
The traditional retail arbitrage definition is an online business model that involves finding products in physical stores at a low price and selling them online for a higher price. The definition of local lead generation is also an online business model.
But, with local lead generation, you create a website in a localized niche focused on a certain needed service. These sites have less competition than a well-known global brand. In fact, we deal uniquely with local zip codes and rank for keywords like “Detroit Limo Service.” That way, when people need a service, they find our site and we direct traffic to a small business. It’s a highly profitable business model that is mostly passive after the website is created and ranked.