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The Beginners Guide To Retail Arbitrage (Step By Step)

Published on: December 9 2022 by MyWifeQuitHerJob Ecommerce Channel

The Beginners Guide To Retail Arbitrage (Step By Step)

The Beginners Guide To Retail Arbitrage (Step By Step)

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00:00:00 00:00:04 in this video you'll learn how you can
00:00:01 00:00:05 make money online just for shopping at
00:00:04 00:00:07 your favorite brick and mortar stores
00:00:05 00:00:09 with retail arbitrage now if you've been
00:00:07 00:00:11 hesitant to start an ecommerce store
00:00:09 00:00:13 then this business model can be a great
00:00:11 00:00:16 stepping stone to selling your own
00:00:13 00:00:16 private label products
00:00:20 00:00:23 now first off i just want to preface
00:00:22 00:00:26 this video by saying that if you're
00:00:23 00:00:28 looking to create a profitable long-term
00:00:26 00:00:31 e-commerce business then amazon retail
00:00:28 00:00:32 arbitrage is probably not the answer but
00:00:31 00:00:34 if you don't have a large budget then
00:00:32 00:00:36 retail arbitrage can be a great way to
00:00:34 00:00:38 make some quick cash and learn how to
00:00:36 00:00:41 sell on amazon at the same time now the
00:00:38 00:00:42 best part about retail arbitrage is that
00:00:41 00:00:44 if you enjoy shopping and finding
00:00:42 00:00:46 bargains then you can flip the deals
00:00:44 00:00:49 that you find at retail stores like
00:00:46 00:00:51 marshalls tj maxx big lots on amazon for
00:00:49 00:00:53 a profit now on the surface retail
00:00:51 00:00:54 arbitrage is straightforward all you
00:00:53 00:00:56 have to do is buy cheap products at
00:00:54 00:00:58 retail stores from the clearance section
00:00:56 00:01:01 and sell them on amazon at a higher
00:00:58 00:01:03 price but when you dig a little deeper
00:01:01 00:01:05 retail arbitrage has several pitfalls
00:01:03 00:01:07 that you need to be aware of in order to
00:01:05 00:01:08 not lose money now this video will teach
00:01:07 00:01:10 you how to get started with retail
00:01:08 00:01:13 arbitrage along with the pros and cons
00:01:10 00:01:14 of this ecommerce business model now the
00:01:13 00:01:17 first question i want to answer is how
00:01:14 00:01:18 can you possibly make money shopping
00:01:17 00:01:21 well retail arbitrage is the act of
00:01:18 00:01:23 buying inexpensive or clearance products
00:01:21 00:01:25 from a retail store and then selling
00:01:23 00:01:27 them for a higher price on marketplaces
00:01:25 00:01:29 like ebay or amazon now most sellers
00:01:27 00:01:31 prefer amazon retail arbitrage because
00:01:29 00:01:33 you can easily take advantage of price
00:01:31 00:01:35 differences between retail stores in
00:01:33 00:01:38 your area and amazon so here's an
00:01:35 00:01:40 example of retail arbitrage in action in
00:01:38 00:01:42 1995 tikle me elmo dolls became the
00:01:40 00:01:44 hottest selling toy in the world and
00:01:42 00:01:46 they were in extremely short supply and
00:01:44 00:01:48 even though the toy only cost 30
00:01:46 00:01:50 retail arbitrages would buy and sell
00:01:48 00:01:52 tikle me elmo dolls for more than a
00:01:50 00:01:54 thousand dollars on secondary
00:01:52 00:01:57 marketplaces like amazon and ebay
00:01:54 00:02:00 now is retail arbitrage legal well
00:01:57 00:02:02 retail arbitrage is 100 legal retailers
00:02:00 00:02:04 cannot legally prevent a consumer from
00:02:02 00:02:06 reselling their products as long as the
00:02:04 00:02:09 merchandise was legally acquired
00:02:06 00:02:11 as a result you can sell popular name
00:02:09 00:02:12 brand products like lego sony and apple
00:02:11 00:02:14 online
00:02:12 00:02:16 and you do not need permission or a
00:02:14 00:02:19 special license to do so now if you
00:02:16 00:02:20 browse listings on both amazon and ebay
00:02:19 00:02:22 you'll find that there are many sellers
00:02:20 00:02:24 selling other people's brands a
00:02:22 00:02:26 significant amount of products offered
00:02:24 00:02:28 on amazon and ebay are not sold from the
00:02:26 00:02:30 same retail store where the seller
00:02:28 00:02:31 originally purchased the item most of
00:02:30 00:02:34 these sellers are not buying their
00:02:31 00:02:36 products wholesale either in fact the
00:02:34 00:02:38 legality of retail arbitrage was tried
00:02:36 00:02:40 in the u.s supreme court who ultimately
00:02:38 00:02:42 ruled that retailers cannot stop anyone
00:02:40 00:02:44 from selling their products if their
00:02:42 00:02:46 merchandise was legally acquired so
00:02:44 00:02:48 overall you are allowed to sell any
00:02:46 00:02:50 legally purchased merchandise online but
00:02:48 00:02:53 when it comes to selling on amazon and
00:02:50 00:02:55 ebay you also must obey their rules so
00:02:53 00:02:58 for example amazon may require express
00:02:55 00:02:59 approval from the manufacturer in order
00:02:58 00:03:01 to allow you to sell on their platform
00:02:59 00:03:03 in most cases your ability to sell on a
00:03:01 00:03:06 marketplace is not a question of
00:03:03 00:03:08 legality but more a matter of following
00:03:06 00:03:10 a marketplace's selling policies now
00:03:08 00:03:12 today many larger brands will not allow
00:03:10 00:03:13 you to sell their products on amazon
00:03:12 00:03:16 without their approval so here's how
00:03:13 00:03:17 retail arbitrage works you buy a product
00:03:16 00:03:19 from a retail store that sells for
00:03:17 00:03:22 significantly lower than the market
00:03:19 00:03:25 price on amazon or ebay you then list
00:03:22 00:03:27 the item on amazon fba at a 3x or higher
00:03:25 00:03:28 markup and then you pocket the
00:03:27 00:03:30 difference between your cost and the
00:03:28 00:03:32 selling price minus marketplace fees
00:03:30 00:03:35 when your item is sold
00:03:32 00:03:37 now most retail arbitrage sellers shop
00:03:35 00:03:38 the clearance section at retail shops
00:03:37 00:03:40 and are always on the hunt for
00:03:38 00:03:42 discrepancies and prices across large
00:03:40 00:03:44 marketplaces now this sounds attractive
00:03:42 00:03:46 to you here's how to get started with
00:03:44 00:03:48 retail arbitrage now in order to get
00:03:46 00:03:50 started on amazon you need to follow
00:03:48 00:03:53 these steps in order to make a profit
00:03:50 00:03:54 step one sign up for an amazon seller's
00:03:53 00:03:56 account when you first start you should
00:03:54 00:03:58 sign up for an amazon individual
00:03:56 00:04:00 seller's account which is free
00:03:58 00:04:01 an individual seller's account will
00:04:00 00:04:04 allow you to list products in amazon but
00:04:01 00:04:07 you will be charged an extra 99 cent fee
00:04:04 00:04:08 on top of amazon's typical 15 fee for
00:04:07 00:04:11 every product sold
00:04:08 00:04:12 but once you exceed 40 sales per month
00:04:11 00:04:14 you should upgrade to an amazon
00:04:12 00:04:17 professional sellers account which costs
00:04:14 00:04:19 39.99 a month with an amazon
00:04:17 00:04:21 professional seller's account the 99
00:04:19 00:04:22 cent fee is waived and you get access to
00:04:21 00:04:23 additional selling tools for your
00:04:22 00:04:25 account
00:04:23 00:04:28 step 2 go shopping to find products and
00:04:25 00:04:29 sell on amazon now finding great deals
00:04:28 00:04:32 is the hardest part about making money
00:04:29 00:04:33 with retail arbitrage unless you know
00:04:32 00:04:35 where to find bargains you won't be able
00:04:33 00:04:37 to make a profit with this ecommerce
00:04:35 00:04:40 business model here's a list of places
00:04:37 00:04:42 to find great deals for retail arbitrage
00:04:40 00:04:43 thrift stores thrift stores often sell
00:04:42 00:04:46 new and gently used clothing and
00:04:43 00:04:47 household items at rock bottom prices
00:04:46 00:04:50 and most their stores don't charge over
00:04:47 00:04:51 five bucks for most clothing items
00:04:50 00:04:53 department store clearance racks
00:04:51 00:04:55 department stores like nordstrom's and
00:04:53 00:04:57 macy's must clear out all merchandise at
00:04:55 00:04:59 the end of a season by drastikally
00:04:57 00:05:01 marking them down so for example you can
00:04:59 00:05:03 expect heavy discounts from summer goods
00:05:01 00:05:05 once autumn rolls around
00:05:03 00:05:06 walmart or target clearance sales
00:05:05 00:05:08 walmart and target traditionally
00:05:06 00:05:10 advertise low prices on their products
00:05:08 00:05:12 but during clearance sales their prices
00:05:10 00:05:14 are often the lowest you can find
00:05:12 00:05:16 anywhere if you shop at walmart look for
00:05:14 00:05:18 stacks of merchandise in the aisles that
00:05:16 00:05:20 are heavily marked down you can also
00:05:18 00:05:22 look at costco or sam's club shopping at
00:05:20 00:05:24 warehouses like costco requires an
00:05:22 00:05:26 annual paid membership but you can't
00:05:24 00:05:28 beat their prices like any other store
00:05:26 00:05:29 costco and sam's club occasionally run
00:05:28 00:05:31 clearance sales where you'll be able to
00:05:29 00:05:33 find extremely low prices
00:05:31 00:05:35 you can also look on ebay by monitoring
00:05:33 00:05:37 ebay you can almost always find an
00:05:35 00:05:39 auction for a product at drastikally
00:05:37 00:05:41 reduced prices compared to amazon and
00:05:39 00:05:44 vice versa so take advantage of these
00:05:41 00:05:46 price differences to make a profit you
00:05:44 00:05:47 can also look at dollar stores dollar
00:05:46 00:05:49 stores often sell products for a buck
00:05:47 00:05:50 that are selling at retail prices on
00:05:49 00:05:52 amazon
00:05:50 00:05:54 you can shop at outlet malls large
00:05:52 00:05:56 retailers send their excess goods to
00:05:54 00:05:58 outlet stores to be sold at clearance
00:05:56 00:06:00 prices there's an outlet mall in your
00:05:58 00:06:02 area you can visit a bunch of outlet
00:06:00 00:06:04 stores in a single trip to find some
00:06:02 00:06:05 great deals and then finally there are
00:06:04 00:06:07 liquidation stores
00:06:05 00:06:10 amazon return palettes are large chunks
00:06:07 00:06:11 of amazon returns that are sold site
00:06:10 00:06:14 unseen to any seller willing to buy in
00:06:11 00:06:17 bulk liquidation stores like bulk
00:06:14 00:06:19 liquidation.com and 888lots.com
00:06:17 00:06:22 will sell you random lots of liquidated
00:06:19 00:06:23 merchandise at rock bottom prices now in
00:06:22 00:06:25 terms of stores here are the most
00:06:23 00:06:27 popular stores retail arbitrage sellers
00:06:25 00:06:30 shop at for bargains
00:06:27 00:06:32 walmart target kohl's lowe's home depot
00:06:30 00:06:35 best buy big lots tj maxx trader joe's
00:06:32 00:06:37 staples office depot and marshalls step
00:06:35 00:06:39 three is to calculate your profit
00:06:37 00:06:41 potential now once you find a potential
00:06:39 00:06:43 practike on amazon the next step is to
00:06:41 00:06:45 look up the sales for that product using
00:06:43 00:06:47 a tool like jungle scout jungle scout
00:06:45 00:06:49 will give you sales rank information for
00:06:47 00:06:51 any products sold on amazon including
00:06:49 00:06:53 average selling price and monthly sales
00:06:51 00:06:55 revenue jungle scout will also provide
00:06:53 00:06:57 you with historical sales data so you
00:06:55 00:06:59 can determine whether a product is worth
00:06:57 00:07:01 selling now if you can find a product
00:06:59 00:07:03 that you can mark up 3x with a good
00:07:01 00:07:06 track record or sales then it might be
00:07:03 00:07:08 worth selling now why a 3x markup it's
00:07:06 00:07:10 because amazon charges high selling fees
00:07:08 00:07:12 for the privilege of selling on their
00:07:10 00:07:15 platform for every sale made amazon
00:07:12 00:07:18 takes a 15 cut of your sales and if you
00:07:15 00:07:20 fill your order with amazon fba your fba
00:07:18 00:07:23 fees will usually amount to another 15
00:07:20 00:07:25 to 20 percent so all told amazon takes
00:07:23 00:07:27 approximately a third of your revenue
00:07:25 00:07:30 whenever you make a sale so with the 3x
00:07:27 00:07:32 markup you get to keep 33
00:07:30 00:07:34 amazon takes 33
00:07:32 00:07:36 and your goods cost 33 you also need to
00:07:34 00:07:39 be aware that prices on amazon change
00:07:36 00:07:40 constantly sometimes the amazon price
00:07:39 00:07:42 for your product can drop all of a
00:07:40 00:07:44 sudden which will kill your profits now
00:07:42 00:07:47 to find the optimal time to list your
00:07:44 00:07:49 products use a tool like keepa to keep
00:07:47 00:07:51 you alerted of price drops and increases
00:07:49 00:07:52 on any product you choose to monitor on
00:07:51 00:07:53 amazon
00:07:52 00:07:55 keepa will also provide you with
00:07:53 00:07:57 detailed price history charts for every
00:07:55 00:07:59 product sold in amazon and some products
00:07:57 00:08:01 might be seasonal so you want to check a
00:07:59 00:08:03 product sales history before making a
00:08:01 00:08:05 purchase you can also use the free
00:08:03 00:08:07 amazon seller app to research retail
00:08:05 00:08:09 arbitrage products but you will not get
00:08:07 00:08:11 historical sales data or trends by
00:08:09 00:08:13 default now with the amazon seller app
00:08:11 00:08:16 you must look at the amazon sales rank
00:08:13 00:08:17 or bsr to approximate the relative sales
00:08:16 00:08:18 of your product compared to the other
00:08:17 00:08:21 listings
00:08:18 00:08:23 use of the amazon seller app requires a
00:08:21 00:08:25 free amazon seller account step number
00:08:23 00:08:27 four is to check for amazon selling
00:08:25 00:08:29 restrictions now before you can list a
00:08:27 00:08:31 product for sale on amazon you must
00:08:29 00:08:33 check for product restrictions using the
00:08:31 00:08:35 amazon seller app or the check
00:08:33 00:08:37 permissions chrome extension simply
00:08:35 00:08:39 download the amazon seller app to your
00:08:37 00:08:40 phone and perform a search for the
00:08:39 00:08:42 product you want to sell if you see a
00:08:40 00:08:44 green check mark next to selling
00:08:42 00:08:46 eligibility you are allowed to sell this
00:08:44 00:08:48 product on amazon
00:08:46 00:08:50 step 5 look for coupons many retailers
00:08:48 00:08:52 offer coupons which can be stacked on
00:08:50 00:08:54 top of the great deals you find in the
00:08:52 00:08:56 clearance section for example
00:08:54 00:08:58 bed bath and beyond always gives out a
00:08:56 00:08:59 20 coupon that can be used to boost your
00:08:58 00:09:01 roi
00:08:59 00:09:03 but overall you should join the email
00:09:01 00:09:05 list of as many retail stores as you can
00:09:03 00:09:07 find so you receive their deals and
00:09:05 00:09:09 promotions as soon as they are launched
00:09:07 00:09:12 there are also online deal sites like
00:09:09 00:09:14 retailmenot that constantly post coupons
00:09:12 00:09:17 for large retail shops step 6 check the
00:09:14 00:09:18 sales velocity for your product just
00:09:17 00:09:19 because you find a great deal doesn't
00:09:18 00:09:21 necessarily mean that your product will
00:09:19 00:09:23 sell if you choose an item that doesn't
00:09:21 00:09:26 have high sales velocity then you could
00:09:23 00:09:27 be stuck with unsold inventory as a
00:09:26 00:09:29 result you should use a tool like jungle
00:09:27 00:09:32 scout to check how well your product is
00:09:29 00:09:33 selling amazon jungle scout is an
00:09:32 00:09:35 extension of the chrome browser that
00:09:33 00:09:38 allows you to research how much revenue
00:09:35 00:09:39 any product is generating on amazon you
00:09:38 00:09:41 can also look up a product sales history
00:09:39 00:09:43 to check for seasonality and recent
00:09:41 00:09:45 volume of sales and ideally you want to
00:09:43 00:09:48 sell product that yields at least 3 000
00:09:45 00:09:50 units of sales per month step 7 send the
00:09:48 00:09:52 products to amazon fba if your product
00:09:50 00:09:54 checks all the boxes for a profitable
00:09:52 00:09:56 retail arbitrage product the final step
00:09:54 00:09:58 is to ship your product to an amazon
00:09:56 00:10:00 fulfillment center now it's important to
00:09:58 00:10:02 note that you don't have to use amazon
00:10:00 00:10:04 fba to fulfill your orders but amazon
00:10:02 00:10:06 fba allows you to have the amazon prime
00:10:04 00:10:07 badge which gives customers free two-day
00:10:06 00:10:09 shipping
00:10:07 00:10:11 now the amazon prime badge will also
00:10:09 00:10:13 increase your conversion rate roughly 3x
00:10:11 00:10:15 compared to merchant fulfilled listings
00:10:13 00:10:17 but overall the cost of amazon prime is
00:10:15 00:10:20 very reasonable and most retail
00:10:17 00:10:22 arbitrage sellers use amazon fba to
00:10:20 00:10:23 avoid inventory and fulfillment now the
00:10:22 00:10:26 million dollar question is can you make
00:10:23 00:10:27 money with retail arbitrage well you can
00:10:26 00:10:29 definitely make money with retail
00:10:27 00:10:31 arbitrage but your income is limited by
00:10:29 00:10:32 the number of hours in a day you can
00:10:31 00:10:34 shop for goods
00:10:32 00:10:36 below is a hypothetikal example of how
00:10:34 00:10:38 much profit you can make for a given
00:10:36 00:10:40 sale so let's say you buy a product for
00:10:38 00:10:42 10 bucks on clearance at target and you
00:10:40 00:10:44 sell for 30 bucks on amazon do you get
00:10:42 00:10:46 to pocket the whole 20 of profit and the
00:10:44 00:10:48 answer is no the reason is because
00:10:46 00:10:50 amazon charges fees for the privilege of
00:10:48 00:10:52 selling on their platform in order to be
00:10:50 00:10:55 successful selling retail arbitrage and
00:10:52 00:10:57 amazon most sellers use amazon fba to
00:10:55 00:10:59 avoid holding inventory and to outsource
00:10:57 00:11:01 fulfillment and customer service however
00:10:59 00:11:04 amazon fba comes at a cost
00:11:01 00:11:06 first off amazon takes a 15 cut of your
00:11:04 00:11:09 sales right off the bat and if you
00:11:06 00:11:11 choose to use amazon fba the amazon fba
00:11:09 00:11:14 fees will usually amount to another 15
00:11:11 00:11:16 to 20 percent so all told amazon takes
00:11:14 00:11:18 approximately a third of your revenue
00:11:16 00:11:20 whenever you make a sale
00:11:18 00:11:22 as a result in order to be successful
00:11:20 00:11:23 selling retail arbitrage on amazon you
00:11:22 00:11:26 must be able to mark up your goods at
00:11:23 00:11:28 least 3x this way your product costs you
00:11:26 00:11:30 a third amazon takes a third and you get
00:11:28 00:11:32 to keep a third for example if you find
00:11:30 00:11:34 a cheap widget in the clearance section
00:11:32 00:11:36 of target for 10 bucks you better be
00:11:34 00:11:37 able to sell for 30 on amazon otherwise
00:11:36 00:11:39 you're not going to make much money
00:11:37 00:11:42 now in our hypothetikal example earlier
00:11:39 00:11:44 you would make roughly dollars in profit
00:11:42 00:11:46 from a thirty dollar sale and with these
00:11:44 00:11:48 numbers in mind you can absolutely make
00:11:46 00:11:49 money with retail arbitrage in amazon
00:11:48 00:11:51 but it's going to be tough to
00:11:49 00:11:53 consistently find clearance items that
00:11:51 00:11:54 you can mark up three hundred percent
00:11:53 00:11:57 now here are the advantages to retail
00:11:54 00:11:59 arbitrage the beauty of retail arbitrage
00:11:57 00:12:01 lies in its simplicity anyone can start
00:11:59 00:12:02 selling online with practikally no
00:12:01 00:12:05 startup costs and no tiknical
00:12:02 00:12:07 experience here are the main advantages
00:12:05 00:12:09 getting set up is quick and easy there's
00:12:07 00:12:11 low upfront costs and it's great for
00:12:09 00:12:12 learning this is a great starting point
00:12:11 00:12:14 for new amazon sellers who want to learn
00:12:12 00:12:17 how to sell on amazon or ebay before
00:12:14 00:12:18 selling their own private label products
00:12:17 00:12:20 but here are the disadvantages of retail
00:12:18 00:12:22 arbitrage even though retail arbitrage
00:12:20 00:12:24 is easy to start it will never make you
00:12:22 00:12:26 life-changing money and it's
00:12:24 00:12:28 unsustainable in the long run the
00:12:26 00:12:30 primary problem with retail arbitrage on
00:12:28 00:12:32 amazon is that you are at the mercy of
00:12:30 00:12:34 two opposing forces the retailers where
00:12:32 00:12:36 you source your products and market
00:12:34 00:12:38 places like amazon the retailers control
00:12:36 00:12:39 your product supply and the prices you
00:12:38 00:12:41 can buy your goods
00:12:39 00:12:43 meanwhile amazon controls your selling
00:12:41 00:12:45 platform and can even prevent you from
00:12:43 00:12:47 listing a product for sale altogether
00:12:45 00:12:50 here the main disadvantage is retail
00:12:47 00:12:52 arbitrage you don't control your product
00:12:50 00:12:54 supply i've been selling online for over
00:12:52 00:12:55 13 years my e-commerce store over at
00:12:54 00:12:57 bumblebee linens now we sell
00:12:55 00:12:59 handkerchiefs and linens under our own
00:12:57 00:13:00 private label brand and we have many
00:12:59 00:13:02 wholesale suppliers who keep our
00:13:00 00:13:04 inventory flowing from month to month
00:13:02 00:13:06 over time we've developed strong
00:13:04 00:13:08 relationships with our vendors we have
00:13:06 00:13:10 full control over our supply chain this
00:13:08 00:13:12 means that we don't have to physically
00:13:10 00:13:14 go hunting for new deals every day like
00:13:12 00:13:16 a retail arbitrary seller we're about to
00:13:14 00:13:18 run our inventory for a partikular scoop
00:13:16 00:13:20 we simply place another order and it
00:13:18 00:13:23 arrives at our doorstep with retail
00:13:20 00:13:25 arbitrage sourcing you have zero control
00:13:23 00:13:27 over your retail arbitrage products or
00:13:25 00:13:28 your inventory once you've sold out a
00:13:27 00:13:31 product you have to physically go
00:13:28 00:13:33 shopping again for more inventory and if
00:13:31 00:13:35 your local retail store no longer cares
00:13:33 00:13:37 your product you're out of luck you also
00:13:35 00:13:39 don't control pricing or your margins
00:13:37 00:13:41 when you source your products from a
00:13:39 00:13:42 factory or distributor you own your
00:13:41 00:13:44 product and you have a fixed cost of
00:13:42 00:13:46 goods and this gives you the ability to
00:13:44 00:13:48 set prices and control your margins for
00:13:46 00:13:50 example because i own my own brand at
00:13:48 00:13:53 bumblebee linens i can set my prices
00:13:50 00:13:55 however i want and no one can comparison
00:13:53 00:13:57 shop because i'm the only seller of my
00:13:55 00:13:59 products but when you do retail
00:13:57 00:14:00 arbitrage you are selling someone else's
00:13:59 00:14:02 product and there are likely hundreds of
00:14:00 00:14:03 other sellers offering the exact same
00:14:02 00:14:05 item
00:14:03 00:14:07 as a result you have less control over
00:14:05 00:14:09 pricing and margins because you don't
00:14:07 00:14:11 own the brand a retail arbitrage seller
00:14:09 00:14:13 will never ever get the lowest price for
00:14:11 00:14:15 their goods either because you're buying
00:14:13 00:14:16 your products from retail stores you're
00:14:15 00:14:19 already paying more than the wholesale
00:14:16 00:14:21 cost as a result you are at a pricing
00:14:19 00:14:22 disadvantage compared to a traditional
00:14:21 00:14:25 retailer who buys their products
00:14:22 00:14:26 wholesale to sell on amazon
00:14:25 00:14:28 overall when you don't have the lowest
00:14:26 00:14:30 sourcing costs you are at the mercy of
00:14:28 00:14:32 other sellers and it's often a race to
00:14:30 00:14:33 the bottom in terms of price
00:14:32 00:14:35 furthermore your profit margin is
00:14:33 00:14:38 further reduced by amazon seller fees
00:14:35 00:14:40 storage fees and shipping costs
00:14:38 00:14:42 it's also not scalable retail arbitrary
00:14:40 00:14:44 sellers must physically shop for their
00:14:42 00:14:45 inventory and shopping takes a
00:14:44 00:14:47 tremendous amount of time
00:14:45 00:14:48 finding great products to sell via
00:14:47 00:14:51 retail arbitrage is like running on a
00:14:48 00:14:52 hamster wheel once you're sold out you
00:14:51 00:14:54 have to go out and find more product
00:14:52 00:14:56 which means physically driving to the
00:14:54 00:14:58 store getting a truck and bringing your
00:14:56 00:15:00 products back to your house now
00:14:58 00:15:02 successful retail arbitrage sellers
00:15:00 00:15:04 often spend 40 hours per week shopping
00:15:02 00:15:07 are they making a profit yes but it's at
00:15:04 00:15:08 the expense of their time now if you
00:15:07 00:15:10 want to make more money you have to shop
00:15:08 00:15:12 more and constantly find new deals and
00:15:10 00:15:14 personally i would rather work a day job
00:15:12 00:15:16 than shop all day long amazon's
00:15:14 00:15:17 constantly changing the rules and they
00:15:16 00:15:19 can dictate what you're allowed to sell
00:15:17 00:15:21 and win now an acquaintance of mine once
00:15:19 00:15:23 found a great deal on nike shoes that he
00:15:21 00:15:25 promptly listed on amazon but right
00:15:23 00:15:27 around that time amazon started allowing
00:15:25 00:15:29 big brands to stop other sellers from
00:15:27 00:15:31 selling their products and unfortunately
00:15:29 00:15:33 nike was one of those brands and as a
00:15:31 00:15:35 result he could not list his nike shoes
00:15:33 00:15:37 on amazon and was stuck with a bunch of
00:15:35 00:15:39 inventory that he could not sell now
00:15:37 00:15:41 events like this happen all the time on
00:15:39 00:15:43 amazon and the truth is that amazon does
00:15:41 00:15:45 not like retail arbitrage sellers and
00:15:43 00:15:48 has taken measures to reduce retail
00:15:45 00:15:50 arbitrage on their platform today any
00:15:48 00:15:51 large brand can prevent a second-hand
00:15:50 00:15:54 amazon seller from selling their
00:15:51 00:15:56 products furthermore many categories in
00:15:54 00:15:58 amazon are gated and require an invoice
00:15:56 00:16:00 from an authorized distributor or
00:15:58 00:16:02 wholesaler in order to sell on the
00:16:00 00:16:03 platform so bottom line you can't just
00:16:02 00:16:06 sell anything that you find from retail
00:16:03 00:16:08 stores amazon is cracking down on retail
00:16:06 00:16:10 arbitrage sellers and will often ask you
00:16:08 00:16:12 where you're getting your products from
00:16:10 00:16:14 and the worst part is that you can't get
00:16:12 00:16:16 repeat business the nature of retail
00:16:14 00:16:18 arbitrage is that you are constantly
00:16:16 00:16:20 selling random disparate products online
00:16:18 00:16:22 if a product you find in store can make
00:16:20 00:16:24 you money then you sell it period
00:16:22 00:16:25 so what often happens is that you end up
00:16:24 00:16:27 selling commodity items that can be
00:16:25 00:16:30 found anywhere and you rarely sell the
00:16:27 00:16:31 same product twice furthermore when you
00:16:30 00:16:33 sell on amazon you don't receive any of
00:16:31 00:16:35 your customers information and you can't
00:16:33 00:16:36 build a following
00:16:35 00:16:38 but even if you do somehow manage to
00:16:36 00:16:40 build an audience for your business it's
00:16:38 00:16:42 impossible to establish customer loyalty
00:16:40 00:16:44 or repeat business because your
00:16:42 00:16:46 inventory is completely random and not
00:16:44 00:16:48 within your control now for my online
00:16:46 00:16:50 store repeat business makes up thirty
00:16:48 00:16:52 percent of my revenue every single year
00:16:50 00:16:54 and our best customers provide a solid
00:16:52 00:16:56 base of sales that we can easily expand
00:16:54 00:16:58 upon from year year with retail
00:16:56 00:17:01 arbitrage you are always fighting for
00:16:58 00:17:04 new sales from ground zero now overall
00:17:01 00:17:05 retail arbitrage is not a good long-term
00:17:04 00:17:07 business model and with the amount of
00:17:05 00:17:09 time that it takes to make money you may
00:17:07 00:17:10 as well just keep your day job now when
00:17:09 00:17:12 it comes to selling physical products
00:17:10 00:17:14 online there are far better ecommerce
00:17:12 00:17:16 business models to choose from that you
00:17:14 00:17:19 can eventually grow to a six seven or
00:17:16 00:17:20 even eight figure business with a retail
00:17:19 00:17:22 arbitrage business you'll be lucky to
00:17:20 00:17:24 hit five figures per year and it
00:17:22 00:17:27 requires a tremendous amount of time
00:17:24 00:17:28 that can be better utilized elsewhere
00:17:27 00:17:30 now you can watch this video for a
00:17:28 00:17:33 complete list of every e-commerce
00:17:30 00:17:34 business model hope you enjoyed this
00:17:33 00:17:36 video now if you like what you saw
00:17:34 00:17:38 there's actually a lot more where that
00:17:36 00:17:40 came from if you subscribe to my channel
00:17:38 00:17:41 below and if you are interested in
00:17:40 00:17:43 learning how to sell physical products
00:17:41 00:17:45 online then click over here and take my
00:17:43 00:17:46 free six day mini course where i'll walk
00:17:45 00:17:49 you through everything that you need to
00:17:46 00:17:51 know to get started in ecommerce thanks
00:17:49 00:17:51 for watching

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