Retail Arbitrage – Just a game.
After stumbling upon an article on this ‘side hustle’ I thought I would give it a try. I knew starting retail arbitrage was something I wanted to try. I have to admit, I was pretty excited to give it a go but where do you start? I did a lot of blog reading and podcast listening. I learned about FBA, RA, WA, private labeling…wow, this was a lot bigger than I ever imagined. Where do I begin? I don’t have a lot of discretionary but I did have about $150 I could use towards an investment. I told my wife about it and though she didn’t want all the details, she was willing to support me.
I started this in the fall so I had just missed the deadline to be a new seller in the Fulfillment by Amazon (FBA) space. My only option was to get started with the self-fulfillment. I wanted to get going so I decided to store all my purchases at home and ship orders myself as they came in. My initial planning was to start self-fulfillment and move toward FBA after the holiday season. If all works well, move to private labeling after that. Only time will tell if I actually follow through on that. It is nice to set goals though.
My first shopping experience
The first step in starting retail arbitrage as a side hustle is finding product to resail. There was a local book store that was closing and I went in on the last day they were going to be open. I wasn’t going in to buy a lot. Just to take a look and see what they had. I wanted to see if they had anything that interested me at a steal of a price. Well, it was midafternoon with only a few hours left of them being open….time for a bag sale. What? A bag sale? $10 for as many books I could fit in a large industrial size garbage bag and $30 for as much as I could fit in of not book items into a kitchen size bag. I was in retail arbitrage (RA) heaven. I was armed with my cell phone and apps to scan items in the beginning but realized when they opened the bag sale, scanning was futile. I just started loading my bags.
I walked out of the store with every type of book you could imagine. Self-help, diet, finance, children’s, you name it, I packed my book sack until it could stretch no more. The other bag I filled the same with anything from cell phone accessories to collectibles. All in all, I counted my total stash of about 150 items and estimated each item to be about $.28. Out the door I went, ready to get my treasures home and start scanning. I probably spent about an hour and a half scanning all my items into my account with my Amazon Sellers app.
Caught the bug
Within a day of starting my retail arbitrage adventure on Amazon, I had my first sale. I caught the bug. No, I have not made a million but there is just something satisfying about getting that notification of a sale. Since my first sale, I have been on the lookout for other items as I do my day to day shopping. I have searched the isles at Walmart and Walgreens as well as daily checks to craigslist listings. All and all, the first week of purchases was about $128. For this trial, I figure that would be a good place to start. Time to sit back and reap the rewards.
My First Weeks Profit Breakdown
$123.32 in gross sales off about $11.68 in inventory cost!! That is a profit margin of 1056%. See what I did there? I already made you even more interested in doing this yourself. Am I right? Here is the actual breakdown. Of that $123.32, take out the $29.43 in Amazon fees. Those fees include: $99/item fee for not having a pro account, 15% referral fees and $1.35 variable closing fees. Now subtract shipping. For those items sold, I was about $37.13 in actual shipping. Now subtract cost of packaging. I averaged $0.40 for padded envelopes to ship books and I recycled packing for one of my non book items. All in, I figured a net profit of $41.69 or roughly 375% profit margin. That is still pretty good in my eyes, but I am still sitting on about $116 in inventory. I need to earn another $75 to really be sitting in the black. I am still undecided about it but am going to continue giving it a go and will update you on my progress through the blog. Right now, I am going to say that starting retail arbitrage can be a successful side hustle if you just put your first step forward. After all, you only win by doing!