The top retail arbitrage sourcing tips include keeping track of sale events, joining BOLO groups, using cashback cards, and dozens more. These tips will help you avoid mistakes, save money, and maximize your profits.
Retail arbitrage sourcing involves finding clearance products at a physical store and selling them online for a higher price. While it sounds simple, retail arbitrage has its disadvantages - takes too much time, is hard to scale, and is too unpredictable.
So, it's best to consider retail arbitrage as just the start of your online business journey. Use it to learn a new way to make money online and then add another income stream like local lead generation.
Sourcing Tips for Retail Arbitrage Beginners
As a long-time Amazon FBA seller, I know how important is retail arbitrage sourcing to your success. I’ve compiled my top retail arbitrage sourcing tips so you can avoid my mistakes and make the most of your deals.
Planning
- 1Start with a few item categories. It’s easy to be overwhelmed in the beginning. Starting with a few categories - like clothing, pet supplies, and tools - makes it easier to study and master these categories. It also makes it easier to manage your online store and keep track of items that are saleable. As you learn more and become more confident in your buying decisions, you can slowly add new categories.
- 2Keep track of sale events in your sourcing locations. If a chain retailer runs a chain-wide sale, go to all locations you can reach. If an outlet mall announces a mall-wide sale, make sure you're there and you're early.
- 3Plan your buying trips ahead of time. Try to hit all locations along one route. Try to hit different outlets of the same chain on the same day. Chains usually put the same items on clearance aisles. When you do this, you only scan all items in your target categories in the first retail store. You don't need to scan again in other outlets because it's usually the same. This saves you your most precious resource - time.
- 4Prepare a sourcing list. This is your list of items to buy on a sourcing trip. At the start, you may not have a sourcing list, but on your subsequent trips, as you sell items, identify the items that you want to replenish in your online store and put them on your sourcing list. I have more tips later on how to find sourcing lists.
- 5Plan for the biggest days in e-commerce like Prime day, Black Friday, and the Christmas season. If you have an Amazon Business, you should be preparing for Prime Day. Buy seasonal items during the off-season when they are cheaper.
- 6Subscribe to email newsletters of retailers in your area to get coupons and notifications of sale events. For other people, these newsletters are spam, but for arbitrage sellers, these are a must-read. Don't miss opportunities to make money.
- 7Look at what you have recently sold and replenish these listings. Keep a healthy number of stock on a fast-selling product listing. You don't want to wait for the available stock to go to zero before going out and buying more. When the available stock goes to zero, it automatically loses Buy Box and you have wait again to regain it. Don't let an Amazon product listing go to zero stock.
- 8Call the stores to ask if they have items on your replenishment or BOLO list. This saves you time and you can order by phone or online already. Check if it makes sense to do online arbitrage for some of your products. Always be on the lookout for opportunities to save time because sourcing eats up a lot of your time.
Tools and Resources
- 9Use a scanner app to determine your profit margin and return quickly. The Amazon Seller App is free and provides a lot of useful data already. You can also check other top retail arbitrage scanner apps that have added features to help you make better decisions. When you have more relevant data, you can make better buying decisions.
- 10Join BOLO groups. BOLO is an acronym for Be On The Lookout. A BOLO item is a hot-selling retail arbitrage product that you can buy for cheap right now. BOLO groups are groups of arbitrage sellers that share hot-selling items with each other. The idea is to help each other out to make sourcing products easier for everyone. You gain an advantage over the solo arbitrage seller when you can source more profitable products.
- 11Don’t overlook items just because the scanner won’t scan the barcode. You might miss a profitable item simply because you missed scanning the item. I've had sellers share with me this tip because they have found so many items this way. Remember, other sellers likely skipped those items because they couldn't scan either. Be different. Manually enter the product code if you can't scan an item.
- 12After scanning and finding a potentially profitable product, check the item on Amazon to get a better idea. Check the customer reviews, especially the recent reviews. You want to see the relevant reviews done recently, not the reviews from 10 years ago. Check the other Amazon resellers to gauge competition and your chances of getting the Amazon Buy Box.
- 13Check the item’s Keepa graph. Keepa is a tool that tracks an item’s price and sales rank history. This will allow you to judge if it’s good to buy the discounted item now based on its history.
Maximize Profit
- 14Check sales rank. Items that are below 100,000 for their category sell fast but you need to verify for your category. Watch how long items sell. You want items to sell within 3 months, preferably less.
- 15Some stores allow you to negotiate if you’re buying a bunch of items. Ask and negotiate a better price every time. Negotiating is the simplest way to maximize your profit with very little time spent. It's a high-leverage skill worth learning.
- 16Use your coupons and cashback cards where applicable. This maximizes your profit per haul. Unlike negotiating, gathering and organizing coupons can take up a lot of time, but it's time worth investing. This is one task that you can delegate to an assistant when you make more money.
Build Relationships
- 17Befriend managers and staff, especially for the smaller dollar stores and thrift stores. They can alert you when new stock comes in or when they’re holding special promotions. They can do favors for you, that they may not do for other people.
- 18Don’t leave a clearance aisle in disarray after scanning. Be considerate and nice to the staff and managers. I can't tell you how many clearance aisles are left a mess by inconsiderate resellers. Don't be one of them.
- 19When shopping at clearance aisles, ask the employees if they have more clearance items. Sometimes, they still have more things in storage waiting to be stocked in the aisle. If you befriended them already, you may not even need to ask.
Grow Your Retail Arbitrage Business
- 20Find new stores to add to your sourcing trips. Google "discount" or "outlet" stores near you. Check new stores every trip. Don’t go to the same stores if you cannot find items to buy.
- 21Study items to sell in the future. Start scanning items or categories that you avoided before. Doing constant product research is important in growing your business. It's not likely that you'll be able to just sell more of the same items because of increasing competition. Growth in retail arbitrage usually comes from expanding your product listings.
- 22Get ungated if you haven’t started applying for approval. Start scanning and studying gated categories when you're getting comfortable in the open categories. The best opportunities are in the gated categories because they have fewer new sellers.
- 23Don’t limit yourself to retail arbitrage. I already mentioned online arbitrage and also consider going wholesale or private label for your most profitable products. Your best-selling replenishable items are already proven in the Amazon marketplace, so there's less risk when you go wholesale. Compare Amazon retail arbitrage vs wholesale or Amazon retail arbitrage vs private label to see which one is better for you.
Miscellaneous Tips
- 24Look at the top shelf and bottom shelf. Look all the way to the back because sometimes items get pushed to the back. This happens often when you're not the first reseller to get to a store.
- 25Be mindful if you are doing Amazon arbitrage and competing against Amazon. Make an honest assessment if the discounted product you are about to buy can beat Amazon’s private label products. This is admittedly hard because you can't really tell if Amazon is close to running out of inventory to give your listings a chance to compete. Usually, it's a hard fight going up against Amazon, so make sure you have enough margin of safety to allow you to compete.
- 26Don’t make assumptions. Scan items instead of assuming that they won’t sell or you won’t make a profit. Make data-driven decisions. That's why in the Tools section earlier, I gave you a lot of tools that you can use. Use as many of them as workable.
- 27Check the condition of items. Make sure they are not expired or have damaged or scratched packaging. Check the packaging. It must look new. Buyers don’t like seeing old packaging. Bad packaging leads to a high chance of product returns and critical reviews.
- 28Watch the cashier’s monitor while you’re checking out to make sure that the prices are not higher than the ones displayed on the price sticker or shelf sticker. You don’t want to pay for a higher-priced item that will eliminate your profit.
Finding a Retail Arbitrage Sourcing List
The best way to find a retail arbitrage sourcing list is to make one from your store data. Start with your most profitable product, then move down the line of replenishable products in your store.
The next best way is to join legitimate BOLO groups. BOLO lists can help add new profitable products to your shopping list and save you time. You want to join groups that are small, paid and have experienced sellers with clear rules and expectations. Free BOLO groups have too many inexperienced sellers that share products you can’t buy.
I don’t recommend buying sourcing product lists because these lists go out to too many sellers and lead to the price and profit tanking. Also, most sourcing lists focus on online arbitrage because it's not practical for them to go to retail stores to build this list.
Best Categories For Retail Arbitrage For Beginners
The best categories for retail arbitrage for beginners are the gated categories because these have slightly fewer competitors. Since every beginner starts with ungated categories, those have the most competition.
So it’s best to get ungated as soon as possible, although this can be hard for new sellers on a budget. If you can’t do it right away, it’s ok to stay in the open categories.
These are the ungated categories that are good for Amazon retail arbitrage beginners. There are other categories, like Personal Computers, but the products are usually at a higher price point, which is hard for beginners with little capital.
What products are good for arbitrage?
Products good for retail arbitrage sell between $15-25 and have a seller rank of less than 100,000 in their category. That's the usual price range and seller rank of fast-selling items. This will ensure you have good inventory turnover and you don't pay too much on Amazon fees because you have items stuck in your inventory. Even if you are an Amazon FBM seller and don't use Amazon FBA, it's still a good idea to have a good inventory turnover. You don't make money from products sitting on your warehouse.
I find Nikki Kirk's guidelines work well for beginners - products with 50% ROI and a $5 minimum profit. That way, you have enough margin of safety so you don’t lose money in case the price tanks.
These are just general guidelines. We found products that have been bought for $5 sell for $50 to $100. There are oversized items that cost $100 but can be sold for $500 or more. This makes retail arbitrage so enticing and exciting for a new retail arbitrage seller. You can find these products as you scan items and increase your knowledge of the online marketplace.
Best Stores For Retail Arbitrage For Beginners
The best stores for retail arbitrage for beginners vary depending on your location. You want to look at all potential sources. The top stores for retail arbitrage sourcing are:
- 1Thrift shops like Goodwill and Salvation Army
- 2Dollar stores like Dollar General and Dollar Tree
- 3Liquidation stores like QuickLotz and 888Lots
- 4Discount retailers like Walmart, Home Depot and TJ Maxx
- 5Outlet malls.
Conclusion
Retail arbitrage works when you put in the time and effort to scan and learn what sells. A discounted item on clearance doesn’t always mean it will sell on Amazon. Understand what makes a product profitable. When you do that, you could make good money in retail arbitrage.
That said, think about diversifying your business portfolio. I've set up a lot of online businesses, including Amazon FBA. There's just too much competition that it gets harder to start every year. I wouldn't recommend beginners to get into it now. I have much more confidence in a business that's scalable, has less competition, and doesn't eat up too much of your time, like local lead generation.
