Arbitrage is buying low and selling high. The most common type of arbitrage is retail arbitrage and it involves buying products from retail stores then selling them online at a markup. It’s a little different with inventory arbitrage since you don’t need to stock the products.
All you need to do is find products online, advertise them on your site and then when you find customers, have the products shipped. Here is how you can benefit from inventory arbitrage.
Make Profit With No Or Low Capital
As an e-commerce business, you probably are already selling other products or services, but you want to engage in inventory arbitrage. One major benefit is that all you need to do is source for customers and have goods delivered to them directly without having to buy all your stock up front.
Therefore, it’s a profitable venture that requires very minimal capital.
It Shifts The Risk Away From Your Store
One major advantage of inventory arbitrage over other arbitrages is that the risk is nil. Since you’re not stocking anything, there are no chances for loss if customers are not be willing to pay the amount stated.
Also, there is no risk of dead stock and loss of capital. Since your sales do not come from stocked items, the risk for a dead stock is transferred to the store from which you’re getting the items.
The Advantage Of Product Selection
The first step with inventory arbitrage is finding products that you want to sell. This means you can look out for products in select stores based on their star rating to sell in your online store.
It’s always advisable to pick items based on keywords of the items you wish to sell and then go for the lowest prices, as long as you don’t compromise on quality. Furthermore, you can pick items with the highest quality and even check the star rating.
Therefore, you have the edge of selling what is already accepted by consumers as opposed to trying to set the pace for a new product.
You Have The Option To Price Pick
Another benefit of inventory arbitrage is that you can pick the price you want. When you have already identified the product you want to sell, you can check the different prices in the various stores like Amazon and Walmart within the US.
One thing about online selling is that you don’t have to buy within a certain geographic location. You can source products that have a price advantage even in stores like Aliexpress that are outside the US.
However, it’s always good to note that the delivery time may be slightly longer and therefore communicate the same to your customers at the point of purchase. It’s advisable that you conduct weekly price analyses as arbitrage is about getting the lowest prices.
Inventory arbitrage is a great way to make money in your online store. Unlike other forms of business, there is no risk involved and with a proper strategy and great marketing, you can reap numerous benefits from it.
It’s important however, to take into consideration a few tips like maintaining a good relationship with vendors since they can render your business unreliable by poor delivery.