The term arbitrage has popped up a lot lately in my world. I had heard it a few times, but was not entirely sure what it meant. So, I did a little research and determined that I must come from a different planet because we called it something else…and it wasn’t exactly a nice term. Let’s talk about arbitrage and how you can use it as part of your business.
What is arbitrage?
The term seems to vary based on the industry, but it seems to best be identified as undercutting someone else selling the same item. It is a more dominant term in the trading industry, where it means something slightly different, but people keep using it to refer to reselling items. I have listened to a lot of people that sell on Amazon and most of them got started this way. They would go to their local stores, find an item that is selling well on Amazon but is on sale or clearance locally, then sell it for less than the listed price on Amazon. Clearly, this is time consuming and they have some secrets they have not shared (perhaps auctions?) or they would not be making enough money to make it worthwhile.
Another version of arbitrage, which I discuss in my ebook and in my FREE REPORT, is the concept of finding an item selling somewhere, buying it, and then reselling it for a profit. This is a strategy that many resellers use to some degree. In some communities, you can even make quite a bit doing this just on places like Craigslist. To learn more about this method (I don’t call it arbitrage), sign up for my FREE REPORT.
Why participate in arbitrage?
This is a business strategy where you profit from opportunity. Unfortunately, this can also create a price war for more popular items (like anything related or in electronics). You could easily buy an item that is selling well, only to have someone else almost instantly undercut you. You both go back and forth for a while until neither of you are making money. On the other hand, if you are selling locally, you are sort of providing a service. For example, if I have someone looking for a specific set of dishes and they can’t find them, I might keep an eye out while I do my auctions. If I happen to come across an auction with those items in it, I keep in mind the estimated price I should be able to sell them for and make sure I keep my bidding right. If I win the auction, I give my customer a call and make the sale. If I don’t make that purchase and someone else wins, it is likely that my customer will not get those dishes. I talk about some other ways this helps in my free report.
Is arbitrage really fair?
I look at it 2 ways. It’s not fair if people are being jerks about it. While I admire the people who sell on Amazon using the method, it seems like someone is bound to get hurt in the long run. It is fair, though, when there are people selling something for ridiculous prices because they have little competition. In that case, they are being a jerk and I don’t have a problem helping to provide the healthy competition they deserve.
I’m interested in learning more, what do you recommend?
To be honest, this is not my cup of tea (outside of how I recommend selling). I like to manufacture my own products (or have them manufactured for me), I offer services, and I buy items at auction and resell them without ever knowing the items in advance. Thus, I recommend you check out my free report and these resources for additional information…but be warned these are really more for ebay (those of you who are resellers). A lot of the “secrets” are revealed directly from the experts and they hold those for their own presentations for their products. The last one is on trading, and I have no experience on this- it’s just a resource for you.