Amazon Retail Arbitrage: How does it work?

Today we’re gonna talk about retail arbitrage so my previous video I talked about Amazon FBA private labeling versus drop shipping and somewhere in between I did mention retail arbitrage briefly and in that comment section you guys requested that I create a separate video about retail arbitrage so here it is okay so I do want to mention that there are two different kinds of arbitrage that you can do with your business you can do retail arbitrage and you can do online arbitrage so are a and o it you might have seen these terms somewhere today we’re going to talk about retail

arbitrage but comment below if you want me to create a separate video about online arbitrage which i think is a much more efficient way of doing arbitrage so I started doing retail arbitrage when I was in between my Amazon FBA private labeling businesses I was kind of going downhill with my second what private label product it wasn’t doing as well and I was taking a little bit of a break from private labeling I also had come back from a very long trip where I spent a lot of money and I needed to come up with money fast and so I discovered retail arbitrage and I thought let me give it a try so what I did is I went to thrift stores I started to drive around and I the first thing I did was I downloaded the Amazon sellers app so on my phone you can go to the app store you can download the Amazon sellers app it’s for free and basically what this app does it is allows you to scan barcodes all products have barcodes guys if you go to Walmart if you go to superstore if you go to Trader Joe’s every product has a barcode and this app allows you to scan that barcode to see all the

information about this product on Amazon platform so or whatever marketplace you guys are planning on selling on and so when you scan a product you can see whether it is a good selling product or a bad selling product what

there is a lot of competition and whether this product is restricted you can basically see all the information about it and it will give you a good idea of whether or not to buy the product for retail arbitrage because then you’ll understand whether or not you’re going to make a profit and the whole point of doing this is to make a profit it’s basically to flip products to make a profit so I would go to these thrift stores and usually at thrift stores if you really look around you can find products that are brand new at packaging primarily like toys and books and games things like that you can find them brand new some people they buy them they never use them they donate them to thrift stores and thrift stores things are really cheap for obvious reasons so what I would do is I would find these items that are brand new and then I would scan them I would see how much they’re selling for on Amazon so if I found something in a thrift store for five dollars and on Amazon its selling for twenty five dollars that doesn’t mean that my profit would be twenty dollars because there’s still a Amazon FBA fees if you’re using Amazon FBA or shipping fees or other fees and so the app can give you a good idea of what fees to expect so I scan it I see okay the cost of my products five dollars the FBA fees are this much what ends up being my profit margins and if my profit margins are over twenty five percent and then I would buy the product or if there was many of them I would buy many of them and then I would bring them home with me which I’m gonna get into in a second so I would do this and I would look through the thrift stores I’d scan things and I’d find some items and this is basically the process and I would drive from thrift store to thrift store to thrift store really going all around and it was actually very fun for me I thought it was like oh this is fine getting good deals the problem with this is again you know I just did a time management video just recorded wine and I emphasized that you need to value your time how much is your time worth do you even know what your hourly rate is right now if you don’t know how much you’re worth per hour that’s dangerous so I highly encourage you to figure it out once you figure that out say I’m worth 31 dollars an hour let’s pretend and I’m spending five hours looking at thrift stores

okay well then does it make sense like how much profit am i making and compared to how much money I’m wasting you know traveling around to thrift stores and so at some point I realized that the five hours I was spending doing you know finding products and maybe finding products maybe not finding products that time I could be spending on my FB private labeling business two words something that would really take off build a brand and something that’s sustainable and and it’s something I can rely on in the future retail arbitrage is a good way to make money initially a lot of people will do this to save money a thousand two thousand dollars which they will then invest into their amazon private labeling business because that’s where the real money is where you can make a lot of money with less work less hustle okay so I would do the thrift store thing another thing I would do is I would go to Walmart I go to Walmart because they have a lot of sales all the time if you go to Walmart you can go straight to the discount aisle sometimes there’s no discount aisle it’s just like every you have to kind of look through all the shelves and you just see the yellow ticket items and then scan them and I would say okay this just counts not that good I’m not gonna buy it sometimes it would be like a 50%

discount so if I buy it at 50% off I can sell it on Amazon at a hundred percent take up high price and I make you know maybe forty five thirty percent profits so that’s really good so that was kind of the process and so what I would do is I will bring all of these toys and stuff home with me but then what happens you know you can’t just ship these products straight to Amazon you do need to do a little bit more work and so what you have to do is you have to understand that Amazon they have a very strict policy with how they want to receive items to their warehouse and it’s obvious Amazon is growing so fast they need to be organized about this they can’t just be having people walk in with or driving their products in there they need to have a system in place and so you need to be part of that you need to make sure that you follow their policies and so that would involve making sure that all of your items are bar coded or labeled now when you buy an item

naturally there’s going to be a barcode on it like I said every item has a barcode but Amazon they want you to stick an effing SKU sticker to this and F and they scan SKU sticker is

essentially like a barcode but it’s the Amazon version of a barcode so you would stick it on the product and how do you print them you know you can get a printer I have a video which I’ll link below for you guys it’s called a diamond printer I show you how I print my barcodes at home with the diamo printer I think I paid around maybe a hundred bucks for it and I would print off all the labels that I needed I would stick them onto the products that I bought and then I would put them all inside one big box I’d get a really big box and I put them all together in there and then you go to your Amazon seller central account and you start to create an order and it’s very easy to do this I can make a separate tutorial on this if you’d like you basically find all the products that you have in the box on Amazon and you say create fulfillment order and then you will make sure that you tell them okay I have this item in the box I have this many units of it and then you print off your labeling your box labels and you seal the box up with tape and then you put your box labels on top of the box then you bring it to the post office and you ship it to Amazon okay that’s it and then you once the proxy it to Amazon you start making those sales so that’s the process the problem again with this is that you’re constantly hustling so you’re constantly going to thrift store is going to Walmart driving around trying to find good deals and there’s really no guarantee that you will find products to sell so it’s not sustainable because you might have some weeks where you really find a lot of stuff and you might find some weeks where you’re not really finding much another issue is that you know you are finding these big brand names like Barbie or Hot Wheels or you know like I don’t know mr. clean like big brand names and you are now reselling them but in the future who’s to say that these brand names will not allow this they can apply for brand registry on Amazon and they can prevent all the sellers the third-party sellers from selling their products because they’ll say you know what why should I let other people sell we can sell our products on Amazon so we make the profits and it also gives them control over distribution so it is something that I would be caution very cautionary about in the future because we don’t know how sustainable that says but if you’re looking to flip and make quick money this is a great way to do it because it requires low investment you know you can go to the thrift store with $20 and you could make maybe a hundred two hundred dollars on that $20 so it is definitely good profit margins but again it does take your time you have to put a dollar to your time how much your time is worth and it takes a lot of work to find these products you have to hustle you have to drive a lot think about the gas how much it’s costing you there and you know long-term it’s really not a business model that I think is

sustainable so it can be good for a few months

save the money though don’t just make money and spend it because then you’re gonna have to do that forever save the money that you make with this business to then reinvest it into an Amazon private labeling business which I talked a lot about on this channel so hopefully this helps you guys I’m trying to think is there any last things that I learned from that business sometimes you can buy products you think they’re great but they just don’t sell on Amazon sometimes you maybe did the math wrong or you thought wrong or there’s just no more demand for it and they sit at

Amazon warehouse and they can incur storage fees or sometimes you just have to ship them back to your house and take it as a loss so you do kind of have to really kind of be sure about things you can’t incur some losses but it’s really not too big of a deal the investment is low the risk is relatively low but the the long-term aspect of this business isn’t great so that’s all for this video guys thumbs up if you enjoyed it if you would like me to make a video about online arbitrage which is basically the same thing but you don’t have to leave your house you don’t have to drive to thrift stores you actually just sit there with your laptop and you do all the research we have your computer so I think it’s a much more sustainable comfortable easier way of doing

arbitrage and it’s actually a way that you can build your arbitrage business up faster because at a thrift store you only might you might find only one product that is you know one toy that’s five dollars but if you do it online and you go to Walmart calm you could order 500 of those rather than just one so that’s when you can really start to flip things at a larger scale so definitely comment below if you like that video all right guys I hope you enjoyed this and I hope it added value to you I’ll see you in the next one bye


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