Authored by Ian Lecklitner of MEL Magazine
Turns out, clearing out a Target or Walmart, then reselling it all on Amazon, can make you enough money to pay off your house.
On one of my more recent voyages down a YouTube wormhole, I was introduced to a suspiciously profitable practice called retail arbitrage. The concept is fairly simple: You purchase products from a retail store, like Walmart or Target, and then you sell them somewhere else, like Amazon, for a higher price.
Here’s an example: In one video that I stumbled upon, an arbitrager purchases 182 ‘Monopoly for Millennials’ board games from several local Walmarts, for $19.82 each. Then, within less than 24 hours, he managed to sell 131 of them on Amazon for $77.29 each, which leaves him with an impressive profit of $2,500, even after deducting shipping costs and fees (he presumably sold the remaining 51 board games on a later date for even more profit).
After watching this video, I had so many questions — namely, does this actually work for most people, and if so, why aren’t more people doing it? I also couldn’t help but wonder whether employees (and other customers) get upset when you walk out of the store with 182 ‘Monopoly for Millennials’ board games. To answer these questions, and to get a better sense of how retail arbitrage actually works, I sat down with YouTuber and retail arbitrager Shane Myers, who also made a killing flipping the same ‘Monopoly for Millennials’ game.
First things first: How’d you even get into retail arbitrage?
I actually have a retail background — I worked in retail management for nine years, and I was also an executive manager for Target. I learned a lot of this business through retail, and I just apply it as retail arbitrage. I know a lot about inventory systems and stuff like that. If you have a little bit of that knowledge, you’re going to have a leg up on everybody else trying to make money online.
Can you tell me about some of your more recent retail-arbitrage endeavors?
I actually just picked up, about one or two weekends ago, a bunch of light bulbs. A light bulb is an everyday item that people use, so there’s always a need for them, and I picked them up on clearance at Walmart for $2 each. I was actually able to identify the markdown before Walmart caught it: They were assigned at $9 each, and I bought them for $2 each, which is a huge, huge thing — you’re almost guaranteed that nobody else has bought them, since they’re still assigned at full price.
So I bought 218 packages of light bulbs after travelling around to several Walmarts within a 150-mile radius, and I was able to send them all into Amazon FBA, which is Fulfillment by Amazon. I’m going to net anywhere between $4 and $5 of profit for each package, which comes to about $1,100 or $1,200, give or take.
Another example, which you can see in my most current YouTube video [above], involves me going around to Walmarts to buy iHome vanity mirrors. They were on a Christmas special, and I bought them for $12.45. But they sell on Amazon for anywhere between $75 and $90, so I’m probably looking at a profit of around $4,000.
You said you noticed the markdown before Walmart did. Um, how?
I use a site called BrickSeek, and I pay $30 a month for an extreme plan. It doesn’t only help people who do retail arbitrage, it also helps people who just love good deals. But it helps retail arbitrageurs, because we can actually see the markdowns at local Walmarts — it’s tied into their corporate somehow, and it gives us on-hand item counts in the store and tells us which stores have them.
How the hell do you even ship 218 packs of light bulbs?
I have a business license, and I’m registered on Amazon as a third-party seller, meaning I can leverage Amazon FBA. I just print out some labels to stick on every item, and then I put a bunch of items in a box — the boxes can weigh no more than 50 pounds and can only be 24 inches long. Then, I send them to Amazon, where they stock the items in their warehouse, and as they sell, Amazon fulfills them for you and takes care of customer service.
Doesn’t all that shipping dip into your profits, though?
No! I shipped out 298 pounds of light bulbs for about $65. Amazon leverages FedEx and UPS corporate shipping to give people a good deal.
Have you ever bought a bunch of stuff that just didn’t sell?
You’re always worried, especially when you’re putting down a large investment. For the light bulbs, I was out about $600, and for the iHomes, I was out about $1,200. But I’ve actually made bigger purchases than that: I have a video where I went out and bought 136 “Monopoly for Millennials” games, and the cost was probably around $3,000.
So you always worry, but you can leverage tools to help you build data to know that it’s a good product that selling. On Amazon, when you scan the item on the seller app, it’s going to give you a rank — it might say that you’re ranked 100,000 for that item. But I use two free programs that are amazing: camelcamelcamel.comand keepa.com. You can take the Universal Product Code, look up the item on those websites, and you can see a year’s worth of data(if the data exists) on price, like whether the price has dropped significantly during certain times of the year. You can also look up a sales rank chart to narrow down about how many times an item sells per month.
Do store employees ever get upset when you come in and buy everything?
Not usually. Walmart actually loves to sell clearance — if it’s clearance, they want it out of their store. Once in a while, though, you’ll run into a store that gives you a super hard time or won’t sell you the items. But for Walmart, that’s very few and far between. Different retail stores are different, though: I know that Target is very against resellers. If it’s clearance, they usually don’t care, but if it’s a normal-priced item, they’ll probably limit you.
Seems like you have this all figured out, so is this your full-time gig?
I actually work a full-time job, and I do this on the side. About a year from now, I’ll be doing this full time. Last month, on Amazon alone, I sold $10,000 worth of products. I’ve paid off about 78 percent of my debt doing this, so I’m playing the long game. I’m paying off debt, and in a couple years, I should have my house paid off. That way, I can just leave my job, do this full-time and not have to worry about bills and debt.
Impressive! Do you think people will be upset to find out that you’re making money by essentially selling items for more than they would be at the store?
If you go to a retail store and buy all of one item, some of the customers might be a little upset at you. But you have to realize that, when you sell online and do retail arbitrage, you’re doing the exact same thing that Walmart or Target is doing. They’re buying an item at a low price, and they’re selling it to a user for more. It’s the exact same thing, but it has a negative connotation, because people don’t understand that Walmart is doing that, since they’re so used to going to the store to buy stuff.
via ZeroHedge News http://bit.ly/2WgN1wc Tyler Durden