If you were in a Target or Walmart toy section recently, you might have noticed the Jenga Quake game on clearance for $15.28. But over on Amazon, a seller was fetching $64.02 for the game; on eBay, $56.85.
If you want to make some extra money — and who doesn’t? — those price differences represent an opportunity for you called retail arbitrage. It means you could buy locally, say, 10 of the Hasbro games featuring “aftershocks and falling blocks” and then turn around and sell them to a global market — online. If you could get top dollar for all 10, that would be a profit of $487.40, less selling fees and shipping costs.
You can see the potential.
Retail vs. collector arbitrage
Retail arbitrage can work for many types of products, not just games. NPR last year followed a man who turned a profit reselling Babies R Us brand baby wipes he picked up at the big box store for $17 a package. While shopping, his assistant used a smartphone to check the price on Amazon, which was $46. It’s not high anymore, but they cleaned up in time.
Clothes, household goods, electronics — anything brand new, undamaged in its original packaging and found at a deep discount has potential for retail arbitrage. In addition to clearance items, look for closeout sales, going-out-of-business sales and other dramatic markdowns.
A different approach is called collector arbitrage, or specialty sales. You comb through items at garage sales, thrift stores, flea markets, Craigslist and other private sales. Don’t limit yourself to antiques or collectibles like complete sets of bobble heads. You can buy clothes, movies, music, household goods or anything else you find that’s in demand and resell it online.
Developing an expertise in a few categories of specialty items, such as brand-name baby clothes or collectible Zippo lighters, will help because you normally won’t have bar codes to scan or an app to tell you what something’s worth. Researching prices on eBay can help you gauge going prices. Just be sure to focus on the selling prices on closed listings rather than the asking prices on active listings.
While you can sell specialty items on Amazon, consider other platforms such as eBay, Half.com for books and movies or Etsy.com for vintage items.
More and more people are getting in on the arbitrage action, driven especially by Amazon and its tools that make selling easier.
“Today close to 50 percent of units sold on Amazon are sold by third-party sellers,” Amazon CEO Jeff Bezos said in a recent letter to shareholders. Amazon hosts over 70,000 entrepreneurs with annual sales of more than $100,000, he said.
“What this really created is kind of a level playing field for entrepreneurs and small-medium businesses. You can now go directly to consumers,” Peter Faricy, vice president for Amazon Marketplace, recently told the Seattle Times.
A service called Fulfillment by Amazon (FBA) helped spur the growth of third-party sellers, experts say. Rather than storing items you want to sell and shipping one out whenever an order comes in, you ship your goods at discounted rates to Amazon, which stows them in its giant warehouses with its own and other sellers’ items. When an order comes in, Amazon workers pick, pack and ship your goods to your customers. You pay Amazon additional fees for the service, but in return you don’t have to store inventory or run to UPS or FedEx offices when your items sell.
An FBA Yahoo Group can connect you with other sellers who can help you become a pro.
If you don’t want to use FBA, or say you’re selling on eBay or elsewhere, a whole fulfillment industry has sprung up to help sellers. Companies like eFulfillment Service, ShipBob and Red Stag say they will handle your warehousing and shipping needs.
“Buy low, sell high” is nothing new. But the growth of technology makes it easier for people to get in on the game, though it sends shivers down the spines of traditional manufacturers and retailers.
“It’s as old as ticket scalping,” Susan Scafidi, Academic Director of Fordham’s Fashion Law Institute, recently told Fox Business. However, it’s perfectly legal, she and others said.
A Target spokeswoman said the reselling of its clothing created in collaboration with celebrity designers was a two-edged sword.
“On the one hand, it speaks to the high demand for our product, but on the other hand, it takes away from the heart of what these collaborations are all about: great design at affordable prices.”
Reselling through retail arbitrage and specialty sales creates opportunities for you to make extra money.
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