My Retail Arbitrage Experience

I’ve now gone out three times to find products to source for retail arbitrage (RA) via Amazon FBA. I’d heard about it on a few seller podcasts/YouTube vids and wanted to see firsthand what the experience was like. I’ve decided to provide some answers to questions that I had when I started. Perhaps they can help you.

Is it hard to get started? No. I created an Amazon Seller account and in less than 30 minutes and was listing my books and electronics. I had boxes, tape and a printer to package what I needed. I didn’t even have to pay the UPS shipping costs up front. I’m currently doing RA from the road and do my label printing via available business centers (hotel/apartments). Unlike the books I originally sold, I only needed to print a shipping label for each box.

What is your game plan? Each day, I map put an area of town that has a number of retail stores (Walmart, Target, Kmart, Big Lots, Toys R Us). My main focus has been toys as I heard it was a great category for bargains. Some tips:

• Set a target value for the day. For example, try to get $400 (sale price) worth of  products per day. You can always go over but this gives you a good baseline
• Set a profit target per item. I’ve heard various opinions on this one. Some people want $10 per item. Some are happy with $5. Others simply want products they can sell for 3x their acquisition cost (approx. 1/3 of that will go to Amazon/shipping costs).
• Scan each item if you find similar items that are a different color/size. I bought a bunch of markers only to find out that Amazon won’t let me ship the yellow ones (the green and orange are fine). I’m sure it’s a bug but it was a reminder of the old carpentry adage: measure twice, cut once.
• Upgrade to Pro Seller Account if you think you want to keep doing this. I missed out on many deals simply because I was restricted from a category based on my account type.

How much time do you spend doing this? I try to spend no more than an hour per location and sweep through the clearance sections. After about 4-5 hours, I’m usually ready to call it a day. I’m sure a more savvy shopper could come right behind me and fill a shopping cart with deals that I didn’t think to investigate. Total time in 3 trips was less than 15 hours (including shipping).

How much does it cost/Is it really worth it? I can’t say what the actual ROI is for my time/costs until the products are all sold. Through 3 trips, I’ve spent about $520 for products that should sell for about $1418.

Will you keep doing this? No, as I will be returning to SE Asia in a few days. It’s a fun activity I do each time I’m stateside but I’ve already accomplished my goals in doing RA, namely:

• Learning more about selling on Amazon
• Provide first hand experience to anyone interested in trying it for themselves
• Getting product ideas for private labeling, online arbitrage, wholesaling (all of which I may try at some point)
• Breaking out of my comfort zone by doing something else to make money.
• After using existing tools available for doing RA, I now have an app idea to pursue. I constantly joke that my motto is ABD (Always Be Drinking) but in reality it’s ABT (Always Be Thinking of new product/service ideas)

Overall the experience has been overwhelmingly positive. It’s basically a real life scavenger hunt game show with real cash and prizes awaiting you in the end.