Retail Arbitrage - Profits and Advantages
Retail arbitrage is basically an ecommerce strategy focused on purchasing stock in a retail store at a significant discount from its normal retail price, then reselling it on the internet for a large profit margin. It sounds like easy money, right? Unfortunately, there s a huge catch. The true cost comes in the shape of time, effort, and assets needed to go from retail to online, scouting discounts, and hopping on sale-or-buy purchases. Retail arbitrageur is going to make a lot of wholesale prices in a short amount of time and make a ton of money, or they will be out of business before they hit the street.
Many people make the mistake of assuming that wholesale prices on retail products are fixed. They assume that retail arbitrageur business models only involve buying wholesale and cutting retail, and that the end result is profits for everyone involved. While this may be true in some cases, it also involves a lot of guesswork, time, and resources, not to mention that there is a high risk factor involved with this business model. Retail arbitrageurs need to know their market, how retail prices have been fluctuating in a given time frame, how to effectively locate bargain hunting merchandise at retail prices, how to purchase large amounts of inventory quickly and efficiently, how to warehouse the product so that it is ready when it is ordered, how to keep the inventory cheap when selling it on retail, how to get products in and out of the store efficiently, and how to minimize labor costs.
Not all sellers and buyers participate in retail arbitrage, though. Some customers do not want to pay retail prices for products, so they will look for bargains online instead. Others buy only certain items at clearance prices, so they will search stores for deals on the Internet. Still others shop at multiple stores for the best prices, either by going to specialty stores or going on auction websites. Whatever the case, these buyers and sellers of retail goods are not the same as those who engage in retail arbitrage.
Retail arbitrage allows the seller to purchase goods from wholesalers at retail prices and then resell them for a profit, usually on eBay, Craigslist, Craiglist, or other online marketplaces like Trade Doubler. This is one of several ways to get rich quick through online marketing, though. Retail arbitrage also occurs offline in retail stores. In fact, some retailers actually make a living buying and selling second-hand merchandise. Examples include the owner of an antique store. He can buy used books, furniture, computers, and other items in good condition, sell them, pocket the difference, and make a profit on each one.
A different form of retail arbitrage occurs when a retailer buys products from a manufacturer or distributor, holds the product for a certain amount of time, then sells it back to the same distributor or manufacturer at an inflated price. This is a gray area that sometimes includes markup for service, shipping, etc. The same sort of situation may arise with suppliers, as well. For example, it is not uncommon for retail store owners to source inventory from companies like Costco or Sam's Club, and then resell it to their customers. The problem with this sort of sourcing is that the products have already sold, so there is no potential to earn an additional profit. If the reseller is also interested in making money off of the supply chain, he has to find another company to enter into a distribution agreement.
The fact that wholesale goods offered at a lower price than usual are sold by individual sellers on an auction website like eBay gives the whole process a facelift. Retail arbitrage becomes much easier to track because of the sale tax deduction. On eBay, buyers have the option to purchase at a lower price than usual or "bid" a higher price. If the seller cannot afford to buy at a bid price, he may have to sell his merchandise at a higher price, which makes the transaction even more liquid. That means that the eBay transaction goes through at a faster pace.
retailarbitrage.org of retail arbitrage is that it is a great way for sellers to make use of excess inventory they have. In the old days, it was almost impossible to turn down a customer's order, regardless of the item's quality or condition. With eBay, however, there is a buyers' remorse factor, so sellers have to be a little more careful in accepting orders. This is why it is a good idea to hold onto extra inventory for emergencies, as the waiting period for delivery on eBay can be quite long.
Some sellers make a living by using retail arbitrage to make profits off of discontinued and overstocked merchandise. A retailer can turn any unused stock into profit by either holding on to it, selling it at an auction, or putting it up for auction on eBay. In some cases, the stock may not sell at all, but it could still be a good investment. For example, many new products go on auction at a substantial discount, especially during the holiday season. The product may even have been discontinued for a few months, but the retailer will still have the right to sell the product for a low price, since the product is still in excellent or very good condition. This is what we call a clearance sale, where the item becomes obsolete but the buyer is willing to pay a price lower than its actual retail value.