Retail arbitrage is not a new concept. Throughout human history, people have bought things at a lower price point to resell them for a profit. Perhaps you have even thought about it yourself. Why not buy discounted products and take advantage of the price difference? And with more people shopping online, there are more opportunities than ever before. If you are thinking about getting into e-commerce, here are 4 secrets to start earning quickly from retail arbitrage on Amazon.
What Are the Advantages?
Before launching any new venture, it’s essential to have a sustainable business model. Here are a few advantages that retail arbitrage has over other selling models.
It has proven to be profitable. A recent study from Jungle Scout provided some interesting data about online retail. They surveyed over 2,000 sellers on Amazon and discovered that 89% of Amazon sellers show a profit. Of these, 75% have profit margins over 10%, and more than half reported returns above 15%. Numbers like this inspire confidence for new entrepreneurs.
The startup costs are lower. In the same report, the data indicated there are lower startup costs for retail arbitrage on Amazon than other models. From the pool of respondents, 12% started with less than $500, and 32% launched their business with less than $1,000.
You see a faster turnaround. It takes an incredible amount of time and effort to start your own business. But, some take more time to establish than others. With online retail arbitrage, you can get much faster returns on your investment. Over 33% of sellers from the study launched their businesses in less than a month, offering a much faster turnaround than other selling models.
You have more scalability. Selling online offers more scalability since you can start with as many products as you are comfortable with.
It is completely remote. Since it’s possible to do everything online, it’s something you can do remotely. With several online suppliers and marketplaces, you never have to leave home.
How Can You Make a Profit through Retail Arbitrage with Amazon?
1. Do your homework.
Like all major decisions, you should do your homework and know what you’re getting into. Spend some time scanning items at local stores to determine which products will be profitable for you. But be patient; it may take time to find the right products.
2. Pay attention to trends and seasonal products.
Since prices and demands can change quickly, you should also pay attention to trends and seasonal products. If possible, you want to get ahead of them to maximize your profit margins. Pay attention to what is popular and if prices change at different times throughout the year. Finding holiday decor, summertime toys, clothing styles, and other inventory out of season could prove to be your cash cow.
3. Look for discontinued items.
Many people make their money through discontinued items. These products are often sold for huge discounts, especially if distributors are trying to move old inventory. Depending on the product, loyal customers may be willing to pay premium prices for products that are no longer available.
4. Start small.
There is always a learning curve when you start a new venture or enter a new market. So, it’s better to start small to help you adjust and learn the process.
When you get into retail arbitrage on Amazon, you want to make sure it is sustainable before you sink all your capital into it. While there will always be inherent risks when starting your own business, there is less risk when you start small.
What has been your experience with retail arbitrage? Share your stories and advice in the comments below!
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