What is Retail Arbitrage?

Photo Credit Andrew_Writer

If you've been following the latest online money making trends, and especially selling on Amazon's FBA, then more than likely you've heard the term "Retail Arbitrage". Maybe you've wondered what it is, maybe you've already figured that out, or maybe you've never even heard the term. No matter, here we're going to talk about it, explain it, and I'm even going to expand on it a little.

Ever heard the term buy low and sell high? It's kicked around a lot in the business world, and it basically means you buy the product low, and you sell it high for a profit. It is the very lifeblood of how business works, from the smallest to the largest it's all about keeping costs low and selling at a premium price for the best profit margin possible. Okay, so what does this have to do with retail arbitrage? Well, essentially it's exactly the same thing, only as it relates to the retail world.

It means that you walk into a store (retail) say Walmart, and you find the clearance isle, while there you find some widget that is 90% off retail cost. You find 5 of these widgets and buy them all (after some research online about popularity, price, and what they are being sold for). You then take those widgets home and through some form of selling avenue, we'll say Ebay for this example, you turn around and sell those 5 widgets at full retail price. Say those widgets were $10 each, you bought five @ $50, you then sold those 5 widgets for full retail price, $100 each, so $500 total. That means that for your initial $50 investment you made $450 off those little widgets. Are you starting to see how it works now.

The above is a very simplified example of what retail arbitrage is, but it gets the gist across. Now, you may be thinking that's crazy, why wouldn't that person that bought my widget online just go buy it on clearance themselves? Really, that's a great question, and one that has a lot of layers to peel back to answer. I'll quickly cover a few reasons, but understand that there are a lot of reasons people buy online vs. in person and not all can be neatly explained.

• The item may not be available in their area, or it could be a long drive for them to get to a store that carries the item. I live in a rural area myself and need to drive around 40 miles to even get to a Walmart or Target so believe me when I say this is a consideration for people.
• The item may not be on clearance in their area. Clearance is a funny beast, mostly because consumers are funny beasts, so while your store may have over bought a certain item so that it sat on a shelf until they marked it down to get rid of it, it could've sold out in a matter of hours in another region. 
• Inability to shop. It could be a mental health consideration, think extreme anxiety in crowds, to a fear of leaving home, or physical reasons that prevent them from shopping. Maybe they don't have a licence or vehicle to get to and from the store. Whatever the reason for some it's a hassle, if not impossible to shop in traditional stores.

Those are just a few examples there are really so many reasons someone may choose to purchase something from you rather than the store. Here's another example: At the town that I mainly shop at there is a Tuesday Morning store and they have a wonderful little toy section chock full of great toys that are marked down 50% or more from retail. It would be a simple thing for me to scan a few items with a smartphone app, find a couple profitable items, and turn around and resell them on Amazon. 

Don't think this is just an online thing though! The current buzz may be all about Amazon FBA and Ebay and such, but you can still do this locally at home. There's always selling sites for your area, craigslist, bookoo sites, and of course Facebook buy/sell/trade groups. Yes, you still need a computer and an internet connection, but no shipping and such required. You could choose to have a garage sale as well. The thing to remember about these kinds of selling avenues is that people expect deals and discounts when they buy stuff this way. So while you can still ask more than you paid for an item, the chances of you getting close to retail cost of an item is slim. So make sure if you buying to resell locally or face to face that you make sure your initial cost is dirt cheap! A few ways to sell offline would be:

* Local buy/sell/trade sites

* Local craigslist listing

* Garage sale(s)

* Local flea markets

Okay, so let's expand a little on the retail arbitrage theory a bit. Let's move outside the strict zone of buying something retail and new. Let's say you go to a garage sale and see a dresser that's in decent condition for $10, knowing that dressers are a hot item on the buy/sell/trade sites you snap it up. You take it home, clean it up a little, take a picture, and post the item in your local buy/sell/trade facebook group for $25 dollars. Within 15 minutes you've got 5 interested people and someone on their way to come get the item. With just a minimal amount of effort and money on your part you've just made a quick $15. Knowing your local market is important in this example. If you see an item consistently sell quickly and with a lot of interest then be sure to keep your eyes peeled for those items when you are out bargain hunting. 

Here's another example: You go to a local auction, a decent washer and dryer set come up for bid, they are a good name and seem in good condition. You bid $50 for the pair, for whatever reason no one else bids and the set is yours. You take them home, make sure they work (always a risk with an auction or garage sale item) clean them up, take some pictures and list them for $125 for the pair. You sell within the week, mostly because it's a higher priced item so it may take longer to sell. Here you've made another $75 with again a minimal amount of effort on your part. 

By now I'm sure the wheels are starting to turn and you're starting to see the possibilities all around you. Hopefully you're even getting a little excited! Before you get to far ahead though just remember to carefully enter this game. Be as tight with your money as you can, because you will buy some items that will fail. You'll be lucky to break even on them, if not flat out lose money. If you're going to sell online research if it's selling and for how much. If you're selling offline watch the local selling groups and such and see what seems to be in demand. Eventually you'll start to get a "feel" for it and will gain more confidence with your decisions. 

I myself have been so focused on the online selling aspect that I think I've missed out on selling locally and quickly for cash in hand. As fall approaches and garage sale season will begin to wind down soon I'm going to look around a little more for these local opportunities and be sure to post my results and progress here on the blog. Online is great, and the potential for huge success is amazing in the online world, but it's often slow. It takes months, and/or years to build a profitable blog, create and sell ebooks, start selling consistently online and so on. Local efforts to make extra money have a greater short term gain, with the potential for long term. Never allow yourself to become blinded to another way of making money because you've been to focused on just one thing.

So there is retail arbitrage in a nutshell. Buy it low in the store, or wherever, and sell it high online, or wherever! Business 101 at it's best.

Scouting Out Local FBA Sourcing Opportunities

Photo Credit Håkan Dahlström

Although I haven't really done much with Amazon FBA recently due to budget restraints I have still been researching like crazy. I've been reading blogs, joined facebook groups, and reading books on the subject. Mainly soaking in sourcing products, what kinds to find, what sells, how to make bundles, etc. So the last couple weeks I've been keeping my eyes peeled, and visiting possible sourcing stores for products. I feel at this point that I have a good idea of what I'm looking for and what I'd like to focus on. Now, I'm gathering local info on prices and availability to see what if I can find the different things I want to look for.

There are a bunch of different ways you can find products to sell on FBA, and a bunch of different routes you can take, including different budget considerations. I'll run through a few that I'm mainly interested in, and my thought process when looking through stores.

Retail Arbitrage: Sourcing products that are new, and sold in traditional stores (think Walmart and Target). Generally clearance items that are still commanding top dollar online.

• Tuesday Morning - This store was fun for me to look through! I had been in there once, like 5 years ago when they opened. They have a decent selection of items to sell, mainly household, but what was exciting for me was their small toy area and their pet area. People spend money on their kids and their pets. It's a fact, and most of the toys and such that I found were at least 50% off retail! Including popular, namebrand toys and character toys. On a side note, I also discovered where I will be Christmas shopping this year ;)
• Marshalls - Marshalls is mainly for clothing, and hey, they had some great deals on namebrand clothing. However, clothing is a gated category to sell in on FBA, meaning you have to be approved, and from what I understand it's extremely hard to get approved for. So, clothing was not what I was looking for, but from research and groups I knew that they offered a small selection of toys. I wasn't that excited about the toy selection or prices, but what did surprise was their small natural foods area! Soy, gluten free, healthy and natural foods are hot right now, and finding this little gem of specialty foods in a completely unexpected store makes me very happy.
• Big Retailers (Target, Walmart, Dillons) - Pretty much exactly what you would expect from these stores. Just from experience over the years I know that their clearance isles are usually well picked over, at least in my area, but if I'm going to source I'm going to look everywhere!

Used Items - You can sell items that are used on Amazon. This includes toys, puzzles, board games, videos, and books. I'm mainly focusing on books.

• Goodwill - I had rather low expectations for this store, mainly because the only used items I plan on focusing on to start are books, and college textbooks at that. I forgot that the town I shop in though has a vocational college, and outreach campus for one of our state universities, AND another small college. It's not really "known" as a college town, so I was surprised when I found quite a few textbooks in Goodwill, a lot of them for nursing. Once I thought about it though, it made sense, we have two different schools that offer the nursing program, and two that offer business degrees, which was the majority of the other books. We're talking most were only $2.99 or less, a couple were a dollar or two more, but not bad at all. There was also a small selection of audio books, which I would also like to try and sell, as well as VHS and c.d.s. Neither of those are real high on my list, but money can still be made on those items, and they are next to the books and audiobooks, so I'll probably scan and check them all out whenever I go to source. I also found that they have "loyalty card" that gives me 10% off all the time when I shop there. I only paid $4 to get it for a year, and I'm sure I'll easily make back that $4 and then some.
• Local Thrift Store - The goodwill is actually 45 miles away from me, but I go to that town to shop all the time, so I consider it local lol. Anyways, there is a small one here in town, and I've been scoping it out to get a feel for it. Really the pickings are slim, selection is small and so is the building. What I do like about them though is that they count the puzzle pieces and tell you if a puzzle is complete or not! So, scanning used puzzles and checking out their small book and media selection from time to time is worth it. They're only 6 blocks away from me, and they are often running different specials on different items. The hours suck though, especially if you work nights like me. Mon, Wed, and Friday they are open from 8-12, and the occasional four hours on Saturdays. Still, it would only take a few items here and there to justify the small expense of going.
• Local Library - My local library has a small room that is always open to the public that has their Friends of the Library books. A small selection of DVDs and the occasional audiobook as well. Most of the titles are mainstream, and not worth much, but again, it's close and convenient and the potential is always there for a score. They price soft backs @ .50, and hardbacks at $1, and sometimes they'll mark a book a little higher, but the highest I've ever seen is $3. At prices like that, and the fact that I'm in the library all the time anyways, I'll be sure to swing through and check out the selection from time to time.

Other stores and avenues.

• Dollar Tree - You're probably think WHAT! They don't have anything people will pay good money for, and mostly you are right. I'm going to encourage you to rethink that opinion though, if you've never been in a Dollar store you should go with a different mind set. While most is offbrand items, they do have small selection of namebrand food, and small toys. I've gotten little paint by numbers sets that were popular Disney characters there before. They also have namebrand health and beauty items. So don't discount them off hand.
• Yard Sales - We already talked about how you can look for used items to sell at garage sales, again I'm mainly thinking media items, especially books. Still, the amount of stuff you can get cheap on a good day of garage saleing is limitless! Most people just want this stuff gone! Make a decent enough (don't be insulting) offer on an item, or group of items, and a lot of times they're happy to take it.
• Auctions - I'm not sure on this one. I've only been to two or three auctions, and I was not looking at them through the FBA sourcing lense. What I do know is that the all of the ones I went to had a selection of books. I'm sure there are other things (like vintage toys) you can find, but be aware that there are likely other dealers and sellers in the crowd, so know your price before you start bidding! I personally find auctions fun, and with garage sale season slowly coming to a close over the next couple months, I'll have to start really researching finding things this way. I'll share my findings when I do of course ;)

There are of course a lot of other stores around me, and a lot of places I haven't found yet I'm sure. Still, it's a good start for when I start buying. One thing has become painfully obvious to me though through this process. I need a smartphone with a scouting app! A scouting app scans the barcode on an item, and will look up how much it is selling for on Amazon. They do other stuff as well, but that's the gist of it. Originally my plan had been to get a smartphone in the winter with my tax return. This has made me change my mind and realize I need one sooner. In Oct I will be getting a small bonus and the plan was to take $500 to spend on sourcing products and shipping products. Now I will be taking part of that $500 to get a smartphone, buy 3 months on a month to month plan, and buy a scouting app. I'm hoping to stay around $200 for all three, and that will still leave me with $300 for sourcing products. There are just to many things I could buy to sell that if I don't have that scouting app I'll be returning a bunch of duds all the time! Not a good use of my time when a small investment in a phone and app can easily cure most of that.

It's a start for me, and while I'm moving slow on this as long as I'm still moving forward it's all good. My suggestion for you is to read, and research! While there is such a thing as researching to the point you never do anything, when it comes to FBA a lot of research is needed! There are so many different ways source products, sell products, bundle products, and on and on that really research is king. Scout around your local shopping area, even if it's mostly 45 miles away like mine, and see what you can find. Then you can make a better plan on what you can get and what you can sell.

Can I Teach A Class For Money?

Photo Credit: Purple Sherbet Photography

I have a confession, I'm a couponer. NO I am not some crazy lady with 50 jars of mustard and 100 jars o pickles (who has room for that?) in her garage (I don't have a garage) but I do buy things in multiples when the price and coupon are right. I'm telling you this not to convert you, there are a million blogs you can go to for that, but to give some background into this class. See, I've been doing this coupon thing for over 4 years now, and over time I've had a lot of people approach me and say they wish I would teach a class. So I recently decided to give it a go.

This is a quick post for me to get my thoughts on how I'm going to do this, and what I'd like to accomplish with this. I guess you could call it an experiment, and this post is the post that outlines the experiment. There are a couple different things I would like to do with this class, and of course i have ideas for expansion down the road. For right now I'm going to think about the class. 

I believe that I will make a handout to go with my class. This one will have some pictures, a copy of my class outline, some useful charts and examples. I'd like to keep it to under 10 pages ideally as my printer is broken so I'll have to pay for copies. Still, I feel the handout will add a great deal of value to my class and justify the cost of the class for the customer. I would like to have the class at my local library, as I feel this lends a bit of credibility to my class, but I need to speak with them about it. I don't know cost, and if they don't do it then I will definitely have to rent a space, which will mean more $$ out of my pocket to start with. I will test interest in some surrounding towns after this class is finished and decide if I will offer my class outside my local town. Charge for the class will be around $20, although I'm thinking of different special rates I could apply.

That's the general plan for my class. Ideally expanding into surrounding towns would be best. My town is small enough, and so are they, that I can't really see offering the class more than a couple times a year. The population numbers just aren't there. If I had 3 towns though, that I gave the class in twice a year, and say I average 5 students per class @ $100 profit that's an extra $600 a year. Nothing that's going to make me rich, but that's pretty much my car insurance all year. Or say Christmas and birthdays, or a vacation, well, you get the idea. Here's where my idea veers away from traditional local thing to online business as well, because I seem to always think in online terms.

 I recently read a very interesting comment by a lady in one of my online selling groups. We were actually discussing the current disagreement between Amazon and publishing houses over the cost of ebooks, specifically for the Kindle. This lady was sharing her experience of self-publishing on the Kindle platform. She wrote a romance novel, self published on the Kindle, then offered her book for free for x amount of days, this boosted her rankings and when she went to charging for her book ($2.99) her high rank helped her to continue to sell her book for a short time frame after the free trial. She said she made and initial $5,000 off that first burst of sales, and still got small payments from time to time today. Stay with me here, I'm not rambling and this has a point.

This got me to thinking that I've always wanted to publish a book, and I recently downloaded a free ebook from Amazon that was on how to publish on the Kindle. Originally I was thinking I would write one of the fiction book ideas I had, and I still plan to, but then I started making my class outline. I realized that from that outline it would be a fairly simple matter to write a small ebook on the subject and publish to the Kindle platform. I plan on offering it free for a few days at launch, and whenever I have a class make it free again for 24 hours after each class, being sure to tell students that they can get it for free during that time frame. 

Obviously I'm hoping for results similar to commenter I mentioned above, a small boost in rank from the free times, and a boost in sales following when it's no longer free but still ranked highly. Using the class(s) to help with this is, I think, a good idea. I'll also ask students to leave a review of the book, hopefully they'll like it, and between this and the higher rank it should help me stand out from the page of other books on how to coupon. We shall see, and I will follow the Kindle book progress in seperate posts from the class posts. While they go hand in hand with each other, from a how to and how did it do standpoint they are vastly different. 

So my one experiment is really two. They are related in a way, but completely different ways to make money. Both have the potential to provide a small income over time, and one has the potential for a large initial profit. It should be interesting and a fun way to try and make a little money before the holidays. Of course if you're already brainstorming what class you could teach, you could also start brainstorming a book to go with. Below is the link to the ebook I was talking about, it's a small book published by the Kindle people themselves on how to publish on Kindle. I would like to find some great blogs about kindle publishing and I'll include links when I find some :)

Publish on Amazon Kindle with Kindle Direct Publishing  ebook

Tips For A Better Garage Sale

Garage sales are a great way to make a little extra cash and clean out your house at the same time. Like most things however, there is a right way to do it and a wrong way to do it. The first couple garage sales I ever had I didn't really have a clue what I was doing, and it showed by how much stuff I actually managed to sell. I've gotten better every year since, and I'd like to share some of the tips and tricks with you so you don't have to go through the trial and error stage.

• Have A LOT of Signs - Make sure they are clear and readable as well. The ones that allow you to write your address and have an arrow are the best. These can be homemade, or you can buy some in the store. I purchased 4 last year for $3.99 each, and I just reuse them every time.
• Use Smart Sign Placement - Make sure your signs are on busy street corners, and optimally placed to funnel the most people to your sale. A lot of garage sale goers are impulse people that see a sign and decide to stop.
• Have A LOT of Stuff - The more stuff people see the more likely they are to stop. If you don't feel like you have enough talk to a friend or family member(s) about doing one together. I often do one with my good friend or my Mother In Law. 
• Have A Neighborhood/Block Sale - See if you can get a few of the neighbors to join in. That way when you advertise you can put that in there. It will lure a lot more people to walk around and check out all the sales. 
• Be Outside & Be Friendly - People look to see if there is anyone around, and if they see no one they may not stop. When they do stop be sure to be friendly. Say hi, make small talk, ask if they need any help, or if they're looking for something. There's a reason stores do this, it makes people more likely to buy.
• Have Your Prices Clearly Marked - People will often put an item back that has no price rather than ask how much. It may be a pain, but make sure every little thing has a price.
• Keep Your Prices Reasonable - People expect low prices at a garage sale. If you have an item that you feel should get you more money, advertise on Craigslist, or selling groups on Facebook. The chances of it selling at a garage sale are slim.
• Keep Your Money On You - Invest in a fanny pack, or something similar. I know they're not very cool, but if your money is on you then it can't be stolen. Or, if you are having one with a friend make sure that one person stays with the money at all times.
• Placement is Key - Make sure that you don't pile things together. People are lazy, and they are not going to dig through your stuff. Do the work if you want to get paid. Place large, eye catching items out front, and the smalls in the back. The big stuff gets people to stop, and once they do they'll look around.

Since I started doing a lot of these things myself I've doubled to tripled how much I sold and made at my garage sales. Now I enjoy having them! They are a lot of work, but when done right you can make some decent money and free up some space in your home at the same time. It feels good to walk around your home with all the newly found space you made.