Retail arbitrage is taking advantage of your knowledge in a certain industry (I focus on sneakers and streetwear). The concept is as follows; you find an item online or in an actual store/flea market that is being sold for a low price. You know it can sell for more on a different platform like eBay or your own webshop. You buy the item, list it on a different marketplace and sell for profit.
When I first encountered this concept, it sounded like a scam. Why would you buy and resell stuff like that? Isn’t that unfair? It is not.
Chances are that as a millennial you have been to a vintage shop before. This is retail arbitrage on steroids. The clothing is often not even bought from previous owners. People donate their old clothes by dumping them in a container, which is then bought by a commercial company and resold, for profit.
And look at all the business we use nowadays: a grocery store buys items from the manufacturer to resell in their own store. They up the price to make a profit. In the process they make your shopping convenient by having all of the items in one place. If a customer would buy the items from the manufacturer directly, the goods would be cheaper, but that mostly means having to go to different manufacturers in different countries to get hold of them.
And I think it is a good thing. If this concept was not in place, I would have to buy avocados from a manufacturer in Amsterdam, lol. Not possible. So in short, a retail arbitrage seller takes advantage by increasing the buyer’s convenience.
In early January I was window shopping and I was browsing through middle to high end items like Adidas jackets, Jordan and Nike sneakers, Champion hoodies and T-shirts, Obey clothes, etc. And I noticed that the post-Christmas sale meant that I could buy certain items for a 70% discount. I was ready to blow my whole paycheck on all these items to resell but I remained conservative and bought a pair of Nike Janoski sneakers for €20. I made sure they were my size, so if all failed I could wear them.
I then took some professional looking pictures (important!) and listed them on a Dutch marketplace for €50 (they probably would’ve sold of €70, but I just wanted to test it this time). Two days went by without any bids, which was odd. I went back to figure out that a major European webshop was selling them for €30 on the same page, which is why nobody bothered. A week later the listing had gone so I reposted my listing and sold the shoes for €50. The buyer also paid for shipping, which left me with a €30 profit.
Why would I do this if my job pays well?
The reason I am doing retail arbitrage is to make some money on the side to pay for my e-commerce business. Now, starting a dropshipping business with €60 is possible, but I do not plan on reinventing the wheel. I am planning on buying courses and saving up money to test ads for products, test out different Shopify stores, etc. These costs could go well up to €500. Retail arbitrage is a nice way to still go out shopping, and buy assets instead of liabilities.
So far I have been able to save up €230 by buying and reselling items, which means I get to start my e-commerce business at the end of March! It also means that I can use the savings from my job to pay of debt and build up my emergency fund.
Lastly, it is also a lot of fun to buy and resell items. I recently subscribed to the supreme newsletter, and I have just received a delivery from a Supreme waist bag that I am reselling online next week. I bought it for €80 and it is selling for $210. These are items I would not really buy myself, but I enjoy reselling them.
If you want to make a little money on the side to raise capital for your business, give it a try, have some fun with it!
Watch the Youtube video here: