A Rough and Ready Case Study in Retail Arbitrage
Retail arbitrage is the fine art of finding deals on things in stores as opposed to wholesale, then finding a way to resell them at a higher price. It might seem complex, especially as those who regularly engage in it are hesitant to actually talk about direct examples since someone can swoop in and snatch “their” deals, but it’s a common tool in the reseller’s repertoire.
A Simple, Functional Example
This fall, the retail office supply store Staples has been hosting an enormous clearance event. While the difference isn’t evident to customers in the store, an inside source reveals that each store has a clear goal of getting rid of 75% of their clearance inventory.
The stated goal actually eliminates one of the obstacles that those who engage in retail arbitrage face: stores disapprove of this and buying many copies of the same item can both arouse suspicion and cause a manager to intervene and cease the sale.
The prices on many of these items has dropped quite rapidly, in some cases to less than a tenth of what they were previously. Consequently, someone with advanced knowledge of Amazon and E-Bay pricing could make a killing.
Or, anyone with a smart phone. Several apps exist whose sole purpose is to allow you to read a bar code off an item and then the UPC code can be read on online marketplaces.
Some actual examples from a recent walk through Staples shows quite a few ways that someone could turn a profit:
- Five packs of older Post-It notes such as the Marrakesh variety from the Colors of the World collection are marked down 75%, coming in at $2.
- Several Junior ARC customizable notebooks were found to be marked down 80% and priced at $2 each.
- Fans, heaters, and other small, functional electronics could be found for as much as 90% off their normal price
- Several varieties of plastic storage were found marked down up to 80%
Fortunately, most of these price examples are only Staples internal pricing. Most of them will still go for near retail costs on e-Bay or Amazon.
There are some other opportunities available in the stores as well, including Moose Munch which is currently priced at $6.99 in stores but can sell for as much as $24 per can online.
How to Sell Them
Fufillment by Amazon is the most hands-free route, but it can also be the hardest to get into. Different categories of items have different requirements in order to participate but most of the items mentioned above should be quite easy to get into selling.
With this service, you send your items to Amazon, who takes a percentage commission off of the sale, but once you send it out it’ll be completely hands-off and the money will arrive when your items sell. This is best for commonly bought items, most resalers won’t buy any items not ranked at 50,000 or higher, and some have even narrower margins.
E-Bay requires more effort, but you can often command higher prices. It might not seem like people would browse e-Bay for something like office supplies, but selling common items on e-Bay that can be purchased for less on Amazon is exactly how most dropshippers run their operation.
The low barriers of entry here make it the ideal option for those who can’t get through Amazon’s stringent requirements but it’ll take more effort.
Facebook groups are also a great way to sell things you acquire for this purpose but if you’re using a local group it’s quite likely that you’ll want to wait until the sale has run out.
Keep in mind that, for the most part, retail arbitrage relies on purchasing bulk quantities of items and then making a small margin on each, not jacking up prices 300% and having them sell quickly, otherwise everyone would be doing it.
Staples’ Fall Clearance Event this year is just one example of the kinds of things that happen, and frequently items that go on sale in this way are kept as a closed secret by those who are involved in the business.
It’s a golden opportunity for someone willing to do the work, and might just spark the flame that will show you the world of possibilities that can occur when you think outside of the box when it comes to business.