There was a time last year when you could find Jenga Quake on clearance for $15.28 at Target or Walmart. 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. It’s called retail arbitrage. It entails buying items locally — say, 10 Jenga Quake games — and then turning around and selling them to a global market online.
If you got top dollar for all 10 games, that would be a profit of $487.40, less selling fees and shipping costs. You can see the potential.
Retail arbitrage vs. collector arbitrage
Retail arbitrage can work for many types of products, not just games. NPR once followed a man who turned a profit reselling Babies R Us brand baby wipes he bought at Toys R Us for $17 a box. While shopping, his assistant used a smartphone to check the price on Amazon, which was $46 at the 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 markdown situations.
A similar approach is sometimes called collector arbitrage or specialty sales. It entails combing through items at garage sales, thrift stores, flea markets, Craigslist and other private sales venues. Don’t limit yourself to antiques or collectibles. You can buy clothes, movies, music, household goods or anything else you find that’s in demand, and then resell it online.
To learn more about the garage sale route, check out “Earn Thousands a Year Shopping Garage Sales.”
Developing an expertise in a few categories of specialty items, such as brand-name baby clothes or collectible Zippo lighters, will help because you generally won’t have bar codes to scan.
Researching prices on eBay can help you gauge the going price on items, though. 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, or Etsy.com for vintage items.
Services for arbitrage resellers
Many people getting in on the arbitrage action are driven by Amazon’s tools that enable third parties to sell on Amazon with ease.
“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, told the Seattle Times last year.
An Amazon service called Fulfillment by Amazon, or 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 to Amazon, which stows them in its warehouses. So when someone orders something from you, Amazon workers package and ship your goods to your customers.
You pay fees for Amazon's FBA service, but in return you don’t have to store inventory or run to a postal service when your items sell.
In 2016, the FBA service set a new record for itself, with Amazon delivering more than 2 billion items for third-party sellers worldwide.
If you don’t want to use FBA, or if you’re selling on eBay or elsewhere, look into the whole fulfillment industry that has sprung up to help sellers. Companies like eFulfillment Service, ShipBob and Red Stag Fulfillment 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 sometimes sends shivers down the spines of traditional manufacturers and retailers.
For example, 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,” she said. “But on the other hand, it takes away from the heart of what these collaborations are all about: great design at affordable prices.”
For other creative ways to supplement your income, check out “20 Unusual Ways to Earn Extra Cash.”
Have you tried retail or collector arbitrage? Share your stories in comments below or on our Facebook page.