Many people think that you need a brilliant idea for a product or service in order to make money. But many businesses have been created simply by taking advantage of market inefficiencies. It doesn’t always take a stroke of genius to be build something profitable and sustainable.
Quite often, it only takes a small tweak to an existing product, or providing better customer service, to build something better. This week, I heard an NPR story about sneakers, which explained how “Sneaker Joe” used to buy rare shoes and sell on eBay to those who were looking to get their hands on them. Sneaker Joe didn’t invent anything, he did not develop a great idea that nobody else had, he simply bought a product for one price and sold it for more. He made a whole business out of it and built something out of nothing. He just learned the market well and knew what he could sell a given pair of sneakers for. If he could buy them for cheap an sell them at a big markup, he’d buy the shoes and walk away with a nice profit.
I am not suggesting that making money takes no effort. That is rarely the case, especially at the beginning. But if you put in the time and energy to learn the market of one product well, you can find a niche and take advantage to make money simply by being the middle-man. You just need to find products that you can buy at one price and sell at a higher price.
Anybody Can Find Arbitrage Opportunities
I have been interested in these arbitrage opportunities for awhile. I work with people who buy online traffic and convert it into clicks on their site to make a very hefty profit. This is nearly their entire business model, and they make it quite profitable for everyone. While they are doing it with online traffic and Sneaker Joe did it with shoes, if you are knowledgeable about the products in a niche, there are likely arbitrage opportunities there as well.
I once bought a tablet that was selling for very cheap online, sold it on eBay for nearly double the price, and netted a couple hundred dollars. While it was a one-time price so I couldn’t repeat over and over, it shows that these opportunities exist, we just have to look for them. The real money comes when you find that perfect product that you can buy in bulk (hopefully, at a discount) and sell that product frequently to continuously make money.
I am investigating doing something similar, buying a product in bulk for low and selling it at a markup to what others are willing to pay. We’re in the early stages, and we’ll see how sustainable it can be. It is certainly an interesting opportunity. Finding the product with enough margin is by far the most difficult part, but as with just about anything we do, the more effort we put in, the more success we’ll have.
How To Successfully Test Products For Arbitrage
Before trying to scale up and make this into something significant, we’ll have to follow these steps:
1. Find a product that we can sell with a big enough margin after all shipping and fees.
2. Buy a few samples, so we don’t commit before testing on a very small scale.
3. Sell on eBay or Amazon (or Craigslist)
If we can do that and it works well, we can look at buying from a wholesaler, which will further reduce our costs. Maybe we’ll get there, but we have to take it step by step, never risking more than the cost of a couple products to see if everything we project on paper translates into the real world.
Have you ever tried retail arbitrage? Have you ever tried to do it at scale?