Using Retail Therapy to Make a Small Fortune
You’ve heard the saying when it comes to trading stocks: buy low and sell high. The same strategy applies to making money buying items in stores.
This is called retail arbitrage, and it can make you a small fortune pretty quickly if you know how to do it right.
E-commerce revenues are projected to grow to 4.88 trillion US dollars in 2021. If that number sounds high, consider that Amazon is already more valuable than all major brick-and-mortar retailers combined.
Amazon’s $1 trillion valuation is so big, it’s larger than Walmart, Target, Best Buy, Macy’s, Kohl’s, JCPenney, and Sears combined. What’s interesting though is nearly half of Amazon’s sales come from third-party sellers — independent sellers who offer a variety of new, used, refurbished, and collectible merchandise.
Most of these third-party sellers take advantage of Amazon’s Fulfillment by Amazon program, called FBA for short.
How FBA Works
If you shop on Amazon, you’ve sometimes ordered a product that doesn’t arrive in Amazon’s traditional brown box. This is because a third-party seller has handled the fulfillment and shipping part of the sale.
Fulfillment by Amazon on the other hand, lets third-party sellers turn the fulfillment and shipping part over to Amazon. You send your products to Amazon, and they store your items until they sell.
When someone buys one of your items, Amazon ships it to the customer on your behalf. The whole process is explained in this short video.
How to Make Money With FBA
There are tons of things you can resell on Amazon for a profit, so you’re never going to be too limited figuring out what to sell. But my recommendation is start with toys.
It’s one of the most popular retail arbitrage categories because it’s so easy to get started. And some FBA sellers make good money doing it, think upwards of $10K per month during the holiday season when there’s even higher demand for popular toys.
The toy reselling strategy is simple: start by searching online for retailers selling toys at huge discounts, buy the toys, ship them to Amazon’s FBA warehouse, and if you chose toys with enough demand, you’ll see your inventory sell through in no time.
Popular toys generally resell very quickly, especially when they’re becoming scarce in regular stores. It’s not uncommon to resell all of your stock within a week of listing the items, sometimes even within hours.
If you want to resell toys through FBA, start by shopping clearance sections at retailers. Also remember that Amazon FBA accepts both new and used items, which is great if you have some mint-condition toys lying around that you wouldn’t mind getting rid of. Otherwise, look for popular or perennial toys that are likely to be hot sellers.
One other thing to be aware of is Amazon offers a 100% guarantee on products.
If something is damaged in shipping or the customer decides they don’t like it, you’re responsible for the return. Amazon also charges storage and order-fulfillment fees that you’ll need to keep in balance.
How to Boost Profits While Buying Inventory
To really ramp up profits, ask yourself how you’re going to buy items you plan to sell through FBA. The best way in my opinion is through reward cards and discount gift cards.
Before you buy items to sell on FBA, figure out which gift cards you need to buy for those items. For example, if you are going to buy toys from Kohl’s, you’d want to buy those toys with a Kohl’s gift card.
You should use your rewards credit card to buy the Kohl’s gift card from a discount gift card site like Gift Card Rescue or Gift Card Granny.
Then, when you make the purchase using the gift card, you’ll get even more rewards. Also search coupon sites like RetailMeNot to save on the Kohl’s purchase and make that discounted gift card stretch even further.
To recap: Earn rewards on your credit card, increase the value of your gift card by buying it at a discount and combining it with online coupons, and then, after you make your purchase, sell the purchased items through FBA at a profit.
Just be sure to pay off your credit card in full every month, or else you’ll get hit with interest that could cancel out all your hard work.
There are a ton of resources available online to help you sell products through Amazon’s FBA program.
The more you learn about retail arbitrage and the FBA process, the better prepared you’ll be when you start using FBA to earn extra money yourself. But don’t spend too much time researching.
The best way to learn is simply by getting started. Either shop online or go to your local Walmart and dig through the clearance sections until you find a winner.
To a richer life,
— Nilus Mattive
Editor, The Rich Life Roadmap