What Is Retail Arbitrage?

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Retail arbitrage (RA) generally means “purchasing goods with the best prices and selling with higher prices”.

Retail arbitrage (RA) generally means “purchasing goods with the best prices and selling with higher prices”. Before doing retail arbitrage, you need to assess the marketplace and competitive conditions in detail. Correct supplier, product, market and profit calculations must be analysed in detail. Therefore, both theoretical and practical information and experience are important for retail arbitrage. The retail arbitrage operations exist on global e-commerce marketplaces such as Amazon, eBay and Etsy. This article will work for you about the things you need to know about retail arbitrage strategies, advantages, risks, methods and findings products!

What Are The Advantages of Retail Arbitrage?

Retail arbitrage is purchasing a product from one market and selling it in another market at a higher price. Generally, the product is purchased from the original seller with discount and in bulk. The product is re-sold to gain profit. For example, it is possible to buy discounted books from $5 from a book website and sell on Amazon for $10. In this case, dealers and delivery companies will profit as well.

The advantages of retail arbitrage can be listed as follows:

  • The initial budget is low. You can start at a low cost after finding the product you want to sell and looking at the sales conditions.
  • You can start earning with low capital.
  • You can sell listed products on Amazon, eBay, Etsy or Turkish online marketplaces such as N11, Hepsiburada, Morhipo and Trendyol etc.
  • You don’t need to deal with products ads since the manufacturer or distributor will do that.
  • When the necessary conditions are met, you can return the product if you can’t sell it.

What Are The Disadvantages and Risks of Retail Arbitrage?

Any third party seller that uses retail arbitrage must know that this business model has certain risks and challenges. The greatest risk is that the business can be successful at the inventory level collected for re-selling. You are always restricted with the inventory and contracts of the first purchases.

The disadvantages and risks of retail arbitrage are as follows:

  • The profit rate is lower than other integration systems. It is always more profitable to directly supply from the producer or supplier.
  • You need to follow campaigns and products with good price.
  • The competitors can enter the same market.
  • You can be limited with the brand and marketplace policies in terms of sustainability and control.
  • A brand can instantly make a discount, launch a new product or decrease marketing activities.

Findings Products in Retail Arbitrage

Before starting retail arbitrage, you need to calculate the costs of the products in detail. You can research the arbitrage platform from the search engine and learn about the estimated profit. Since the exchange rates in Turkey are increasing fast, you need to make the right timing and profitability plan. You can collect data from various platforms and wholesalers. You need to investigate the opportunities to contact with product supplier by searching the discounted products of the season. Products with high market traffic should be selected by analysing the product sales graph on the search engine.

Retail Arbitrage on Amazon

When you are on amazon.com, you can follow “lightning deals”. It is possible to see that numerous products in the deals are sold with half price, 1/3 of the original price or with 40% discount. You can buy these products, add them to your inventory and sell for higher prices. You will get almost the same money as dropshipping. How can you do that?

You can start by sending the purchased products to Amazon Fulfillment Centre in the US or amercaship.com shipment company. While doing that, it is important to do market research and know which products are sold the most. When your products are received to the inventory of Amazon, you will create your inventory like dropshipping. If you have multiple barcoded products in a parcel, Amazon will individually take the products to inventory and create the environment to sell the products. This is called FBA or “Fulfillment by Amazon”. Here, it is important to determine product purchasing price, Amazon commission, logistic costs, sales price and profit margin.

Amazon profit margin calculation engine

Retail Arbitrage on eBay

To profit from retail arbitrage, you need to sell products by using the price and demand difference in different markets. Retail arbitrage on eBay is about purchasing products at lower prices than normal and selling by profit. Successful arbiters often purchase and sell in their fields of experience to earn money. The key for arbitrage is to have a fast turnover in some products. One of the main reasons for important arbitrage opportunities by eBay is that most sellers do not know how to properly list their products. eBay retail arbitrage requires some practice.

As a result:

If you want to earn a high profit with retail arbitrage, don’t forget to follow these steps! Make detailed research about the products you want to sell. Add the products with innovative product name and details to attract the attention of the consumers. Lastly, be careful about having high-quality product photos and describing all details of the product.

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