3. Retail Arbitrage (RA) Game


Retail Arbitrage – Just a game.

Selling online

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.

My Model

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!

For more information on starting retail arbitrage with Amazon, check out this post.

5. Can I make money doing Retail Arbitrage?

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