Amazon Selling Expert & Internet Marketing Thought Leader
If you want to skip this article and just trust me, Ill cut straight to the point. Retail Arbitrage (RA) is NOT dying its going to be with us forever, or at least as long as we have free markets where products can be privately bought and sold.
If you want to hear my reasoning in the briefest possible terms, read on
First, for the sake of those new to online business, lets define Retail Arbitrage.
Retail Arbitrage, or RA is the art & science of finding items locally on retail store shelves that you can flip and sell for a profit online (i.e. Amazon, eBay, Craigslist etc.). In the biz we call it RA.
While RA is just ONE of numerous ways to source profitable inventory (we teach over 50 strategies in our Amazon course for example), the fact remains that RA remains a very popular starting point for many online sellers.
Its never been necessarily easy to do RA, but its always been simple to grasp the concept which is perhaps why its been popular for a couple of decades. Its also been a viable sourcing option for that same length of time. Along with many other experts in the online selling industry, I believe that RA will ALWAYS be an opportunity as long as there are relatively free markets in operation. I have no hidden agenda or secret reasons to prop up RA. Like I said, we teach 50 strategies for sourcing profitable inventory and RA is just ONE! If Im wrong, and RA becomes unviable for my business, Ill confess I was wrong publicly, and easily walk away from it but Im nearly positive that RA is NOT going anywhere but UP. I pay a team to do RA for me. The deals are out there and will continue to be.
Ill make my case for the long term stability of RA below as briefly as I can. If you grasp the basics of economics and free trade (supply & demand etc.) it will really help this article to soak in. If the basics of economics are foreign concepts to you, it might not make as much sense, but I reserve the right to say See, I told you so in ten years either way.
First,a bit of history of the retail arbitrage opportunity:
RA first popped up on eBay as a viable way to earn a nice living nearly a couple of decades ago like I said above. Since that time, on eBay, Amazon and many other online selling platforms weve seen hundreds of billions of dollars of product move from retail stores to enterprising entrepreneurs like us and then on to Amazon or eBay and then of course finally to consumers.
Anexample of RA: Lets say you are out shopping retail for yourself and you notice a large bin of products marked down 80%. You quickly check eBay and Amazon with one of the available apps many of which are free, and you discover that many of the items are selling quickly online for much more than the discounted price available to you. Next, you buy the products (after asking for a deal of course), and then you flip them for a nice profit.
There are those in the industry however who are predicting the end of RA as an opportunity, and Im here to say publicly I think they are quite wrong on that point. Also consider that many experts who are predicting the death of RA have an easily identified agenda behind their premature announcement of RAs demise. I on the other hand have no vested interest either way in the fate of RA except for the fact that I love free markets and would enjoy preserving that particular stream of income for myself but I have many other sourcing and product creation concepts I both teach and utilize in my own business.
From where I sit, the only way RA will ever die is if free markets die while consumers are dragged in kicking and screaming at every step.
The supposed threats against RA are as follows:
This theory says that so many of us are doing RA that the opportunity will soon die or become unviable. The same argument has been around for about 15 years.
Brands are being protective of their goods & price points and some are now going direct to Amazon which they HOPE will make it harder for us as RA sellers to find and sell profitable brands online (aka cut out the middle man)
The new vs. used goods debate:
This is a continuation of grumpy brands argument. Brands want to force us as sellers (often in cooperation with Amazon) to call otherwise brand new RA products something less than brand new once we pull them off the shelves.
Lets discuss these three faulty theories one at a time as I offer a simple argument against each:
Competition is a reality of any biz opportunity. Of all the rationals given for the demise of RA, this one is the strongest from my vantage point, but on a scale of 1-10, the competition argument is maybe a 2 in regards to making me nervous. Free markets correct themselves naturally and RA is the ground floor level of retail correction. As more people become aware, more competition will be in the picture. Thats how business works. Its not new, but so few people are willing to do the work and put in the time. The truly motivated among us are a rare breed and they will continue to thrive with this model.
More good news for RA sellers: eBay has been in the picture for 20 years now and youll still only encounter a handful of people in your community who get it. If you ask 1,000 people on the street if they know how to do RA, youll get 1,000 confused looksor 999 1/2 confused looks. This entire trend is STILL in its infancy as is online shopping which still only represents a tiny fraction of total retail activity. In other words, the hottest trends in retail shopping history are still the equivalent of babies in diapers. Those announcing the death of any Internet business trend are almost certainly doing so with an agenda that serves their own purposes.
RA is an entry level activity for many/most serious online sellers. Its how you get your feet wet. Those who do it well typically move onleaving plenty of $10 widgets that can be flipped for $50 on Amazon or eBay. Make no mistake this can easily put $100K per year in the bank for a part time effort, but still, its only a starting point. Serious sellers use RA as a launching point, and then often move on to slightly more complex models like wholesale or private label (both of which we discuss in our courses by the way).
Mistakes by brand owners and retail channels are opportunity for RA sellers. Brand owners and retail outlets take on a lot of risk when they make and ship a million widgets all over the retail channels. Inevitably, they make, order or ship too many or too few almost every time. Inevitably they price the products too high or too low. This over/under pricing and ordering game creates massive online opportunity for those of us in the RA game. In spite of Amazons attempts to stay on top of it all by getting in the buying game themselves, you still have a massive advantage if you are willing to scan a few prices at local retailer and spot the winners. This will not be going awayever.
Many brands are refusing to allow their stuff online though, or they want to work directly with Amazon and somehow cut out the RA sellers.
That may sound like bad news for RA sellers, but from a big picture vantage point I see nothing but opportunity unless the brand goes ONLY with Amazon and refuses to sell through any traditional retail channels. In that rare instance, the RA opportunities for that particular brand are indeed dead. This model represents only a tiny fraction of Amazon brands however.
Next, the law is on our side. Once you buy something you own it and can sell it. If Amazon or eBay wont let you for some reason, there will always be other options if the deal is good enough. If a brand sells via retail and you get it for a great price, there WILL be a way to sell it for a profit. Ebay has been fighting and winning battles on this front for 20 years, and now Amazon is in the fight too (to defend RA). Sure there are some exceptions, but in general we are winning (aka Free Markets are being protected). The worst case scenario is that you may not be allowed to call it brand new (well address that in point 3), but you can still sell it as like new. Remember shoppers arent stupid. If Amazon for some reason sides too often with brand owners on this point and allows ONLY retail level pricing on direct from brand owners, how do you think Amazons hundreds of millions of buying customers will respond? The answer: Theyll start shopping somewhere else where they can save some cash which is exactly where the RA sellers will follow. In other words, the pressure to keep the inventory flowing in at the cheapest possible prices is on AMAZON, not on us. Amazon will never care about what price brand owners want to assign to their products. Amazon cares only about getting as many as possible quality product options at the best possible prices in front of their customers.
If Amazon were to suddenly stop offering this discounted merchandise (which WONT happen), someone else would fill the gap. The free market will continue to win until laws are passed that shuts it all down (and then God help us all because thats the death of free markets.) Weve heard a bunch of these other arguments since the early 2000s with eBay when it was supposedly going to start preventing retail arbitrage in the early 2000s. Predicting trends is fun, but right now its business as usual from my vantage point.
This is an easy one to refute. While I could write a lengthy chapter on the topic I wont.
Again, consumers and free markets save the day and WE (as RA sellers) benefit.
Heres what I mean. Lets suppose for a moment that Amazon creates a new product category called like new/purchased retail and forces us to use it as RA sellers. Why would they do this? They might do it to make their brand owners happy, to guarantee perfect retail boxes as much as possible, and by doing so force RA sellers to distinguish truly brand new items from items purchased retail and flipped. In other words the same exact products in the same exact boxes, but categorized differently on Amazon.
This may sound like bad news, but again, supply and demand wins in the end.
Shoppers will find and buy the better deals even if Amazon tries to hide them. Smart shoppers (there are a lot of them) would quickly realize that there is rarely if ever a difference between the categorization of new vs. like new/purchased retail. Theyll take the better deal.
You have a chance to buy a bright clean widget in a perfect box for $50 or get one with a dented corner on the box for $30. With all other things being equal EXCEPT the seemingly irrelevant condition category, which price will you choose? Some consumers will pick the higher price -sure. Thats just goofy human nature, but as smart shoppers learn that the category like new/purchased retail is just as good as new, theyll begin to go where the deals are. That means WE WIN in the end as RA sellers.
And for the sake of being thorough, lets assume that Amazon no longer allows brands to be sold on their site unless they are direct form a manufacturer. How long will it take word to spread that the real deals are back on eBay or elsewhere? In other words, the pressure is on AMAZON to keep RA alive and they will do so even if they dont like RA sellers for some reason. Their buying customers will DEMAND it.
Bottom line: RA is NOT going anywhere anytime soon. Keep on scanning! The same can be said for OA. The deals will always be there for those willing to do the work.
Filed Under:Selling on Amazon,selling on eBay,Uncategorized
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Thanks Jim as always you give info that is clear and easy to understand.
Glad to hear your thoughts on this, Jim. Thanks for sharing!
This is very insightful. I would love to take advantage of all of this opportunity, but have not figured out how yet.
I appreciate the depth on this topic. Ive been reading how others are trying to scare RA sellers that the end is near, and your logic is very sound. Thanks!
Thanks! Weve been teaching inventory sourcing for over a decade. Weve figured out a few things around here.
Thanks for the great article. Im new to RA. Until last week, I had never heard of it. Ive been reading articles and watching YouTube videos that are for RA, against RA, and everything in between. It can be hard to cut through the crap and get the real story. I feel like this article was pretty genuine. I have a full time job. But my wife has time during the week to do something like this assuming 1) its still a viable way to make money, and 2) I can convince her that its legitimate.
I promise its legit- I pay people to do this for me for a living! This stuff works!
I was talking to my wife about it. Shes interested in doing it. But we really dont know any of the mechanics of how it works or how to do it effectively. Do you offer a course or do consulting to get people started? Thanks.
Jim, Im on the edge about buying the course. Ive been watching a bunch of videos by Jordan Malik and bought a course on . Im been lured into schemes before and Im really cautious. My wife is skeptical and Im trying to convince her that I feel its legitimate and a great opportunity and not just another scam. I have a friend that is really tightlipped about what he does for a living. But putting the pieces together, I think it has something to do with Amazon FBA, private labeling, eBay, etc. He lives in a $6 million dollar house on the beach. Whatever hes doing, its really good at it. Im not looking for a get rich quick scheme, but I am looking for something I can sink my teeth into and really run with something that has a lot of financial opportunity. I read about success stories like Brett Bartlett and wonder if thats one in a million or if its literally achievable by anyone, with the right information and work.
If theres a more legitimate and wide open business opportunity in the world that is riding a bigger mega-trend wave than this Im fully unaware of it. We give lifetime money back guarantees on our courses. Try to find ONE complaint ANYWHERE online from a customer who BOUGHT something from us and felt ripped off in the end. You wont find one. Keep in mind weve been doing this since 1999 and have taught tens of thousands of people. Thats my entire pitch on the subject. God bless-
I wasnt meaning to come across as negative. Ive had a few bad business experiences in the past and it can be hard to tell whether something is legitimate or not.
I didnt take it as harsh at all I get it. YOU (and people like you who have been burned) are exactly who we target in our community. Sometimes life has to beat us up a bit before the right teacher comes along. I want nothing but your success ultimately.
Hey Russ, just a random guy here wondering if you tired the Proven Amazon Course and how its working out for you?
Hi Russ, my name is Paul and I just recently bought the ProvenAmazonCourse on 3/2/16. I am not new to selling on ebay infact I started selling cars on ebay in 2000 and my wife has been selling anything and everything on ebay. I like the idea of selling on amazon using FBA, I wont have to ship items when sold. One of the reasons I got the course is to have a quick learning curve. I was actually drawn to the offlinebiz program as I do marketing consulting and copywriting for sales and marketing. But I wanted to get the PAC for my wife so she can go back to making 400-500 a week from home. I want to make more money online but have a more consistent income and PAC looks like it fit the bill. One of the things that I like is the product sourcing info, the thing is we had done some of them but over time just stopped doing them. You would think we would be like we already know this, but it was nice to see these things are still working and well. One of the very powerful and boasted benefits is that the people who buy the course and work it are also major contributors to additional ways to source, make money, goldmine niche tactics, etc etc. I will say that this is a very good course and you will not be disappointed in it at all. We also learned a lot of new ways to source. I know I will also get the offline biz course also. I am of the mindset that if I learn just one thing that helps me make more money that its a jackpot. There is one idea in here about fiverr and I am going to implement it today, that alone will make me the course money back. Even if it is only one sale a month of $25, the course will be free in 12 months. I expect it to do much better than that but its just an example. Plus he offers a money back guarantee. I tell you all of this because I would hate to see you not get all of great stuff in this course and have the ability to sleep at night knowing you and your wife can take care of your family and not have to rely on a job. You can also teach your kids to be free, I do. I taught my kids to make money using their brain not their backs. FYI. I do not know Jim Cockrum and this was unsolicited, I just felt your doubt in the post. Good luck and I hope you get it.
During the last 3 months of the year (called Q4 or 4th quarter) there will be many great toys that will be very profitable. With careful research and buying you can do great stuff!
My partner started with $400 just a few years ago and now has an 8 figure business on Amazon. The opportunity is there!
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