An Easy-To-Start Business – How To Make Money Buying Offline And Selling Online

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An Easy-To-Start Business - How To Make Money Buying Offline
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Introduction



You would be amazed at the sheer number of opportunities there are to leverage the price differences between offline and online markets. This is called arbitrage – a business opportunity that is very widely available, has immense potential and can be begun with relative ease. It surely has to be one of the world’s biggest goldmines at the moment. It is under-exploited and the potential is enormous.

The typical way this system works is to find items that are underpriced in the local market and sell them in the global market (online) at the typical going rate.

You will benefit from a smart phone – so you can check Amazon / Ebay while you are right there in the store or at the sale location, and see what the current price is, using for example the completed listings feature on ebay to see actual sale prices. If you can undercut the competition after shipping, ebay fees, paypal fees etc – you’re in business.

There are many possibilities here – and hopefully with these “starter” ideas to get you going (all of which have potential for actual revenue generation), you will begin to gain a keen “eye” for opportunities that you would have walked right past before and which countless people walk right past every single day…

If you have a trader in you, you will have an instinct for it. If it sounds like fun (I love it personally!) then… it might be for you. 🙂

What Is Arbitrage



The classic definition of an arbitrage is the ability to utilize differences in price or value between different markets to make profit. So for example, if you can buy a product for $5 in one place and sell it immediately for $10 in another – this is Arbitrage.

The merchant or arbitrageur typically organizes the movement of the goods (or even transports the items themselves); either following existing models or creating new ways to supply the demand.

Ebay and Amazon

There are people who are quietly getting rich exploiting the differences in price between online and offline markets. It might amuse you know that it can work either way round: Some of them buy things out in the “real world” and sell them online; others buy things online and sell them out in the real world.

E-commerce typically used to mean selling products from your own web site; but now it has shifted somewhat towards creating a presence on one of the major e-commerce portals. The reason is obvious – it’s where the shoppers already are and it’s typically much easier to get free traffic to an eBay or Amazon sale than by posting the item to a new page on your own web site.

Ebay and Amazon can be seen as stores that are open round the clock. Once an item is listed, you can make sales 24/7/365 – even selling multiple instances of the same item with one listing. Furthermore, many opportunities exist for the automation / outsourcing of various parts of the business – for example creating the listings, packaging and shipping.

Ebay and Amazon are the “big two” but there are also a large number of other significant online trading portals, such as the fascinating www.etsy.com for people who make their own products and www.half.com (an eBay company) for books and music. There are of course price differentials between online marketplaces too!

List Of Possibilities:



• Potential sources for underpriced items: Flea markets, thrift stores, boutique outlets, liquidation sales, yard sales, car boot sales, charity shops, open air markets, free stuff of all kinds.

• Buying items wholesale / bulk (online or offline) and selling them in smaller lots to take advantage of the economy of scale.

• Buying a “loss leader”, clearance or heavily discounted product from a local store and selling it online. Giant stores such as Home Depot often have loss leaders inside the door. A “loss leader” item has wide appeal, may even be priced lower than it originally cost, but generates a profit because once people are inside, they end up buying more items that make up the profit.

• Purchasing items from real-world auctions (notably government, repossessed property or police auctions) and selling them online.

• Unique closeout deals, overstock, liquidation.

• Sourcing old books either for nothing or next-to-nothing (plenty of opportunities here) and selling them on half.com Sometimes people are willing to give away books to those who offer to haul them away for free.

• “Free stuff” – for example from http://www.freecycle.org or the Craigslist “free” section can sometimes be sold, after perhaps being cleaned up or fixed up first.

• Many people are buying and selling on Craigslist – here’s an example of someone buying and selling washers and dryers and making a few hundred dollars per day. There is a fair amount of running around involved in this method – though this could of course be outsourced.

• There are even a number of books on the subject – for example “The Complete Idiot’s Guide to Making Money with Craigslist” from Skip Press (no affiliation).

• Advertise: Once you know what sells well online and has minimal problems associated with it, why not advertise the price you are willing to pay for certain items and have them “come to you”?

Online to online A slightly different twist: There’s nothing to stop you buying something online at one price and selling it at another. I did this for a while with silver bullion (Old USA 90% silver coins), buying bulk from www.providentmetals.com and www.goldmart.com and selling on ebay in smaller quantities at profit. People also do this buying from www.aliexpress.com all day long! I was amazed at first that people would buy things on ebay without even knowing that the same product could be obtained far more cheaply via smaller outlets – but it makes sense: Visibility is King. There are 1.5 billion websites and people tend to consume whatever is in front of them. Because such a high proportion of online shoppers simply head for either eBay or Amazon, there is great opportunity in buying from other sites that most people do not know about (or are too lazy to research) and then selling it on one of the major portals. Hint hint! There are price differentials all over the world: I think it best to do you own research and to find your own secret winners – and you’ll learn more that way too. Using simple online research tools you can do all the research you need to do in order to make it work.

Something to be aware of: Sales Tax If you are selling items online to buyers in your own state, you may need to collect and pay sales tax. If you are in the UK, depending on your annual turnover, you may be required to register for VAT. Also, you may need business licensing. Always be sure to check and make sure your business is above board.

Where The Money Is Made

As an arbitrageur, your goal will be to find the products which have the highest profit potential. There is a well-known saying “The money is made on the buy, not the sell” – and this absolutely applies here. Very often the maximum selling price of an item will be dictated by the market and the arbitrageur must obey the market or fail to sell: The buying price is where the money is made and it’s therefore essential to have a strong grasp of what the market will tolerate before you buy.

Seek items which are priced below market value or which have a greater value in another market, that have high demand and can be sold rapidly. Learn to develop a keen eye for things that are underpriced. It might be good to focus on one category of products, one in which you develop intimate knowledge of the items, the likely obstacles, etc.

The other thing to bear in mind is that because it is competitive, someone else out there wants to undercut you. Don’t buy a huge stock of something only to be undercut by a competitor and not be able to sell it at a profit. It’s a fluid business, one where profitable niches and products are often in flux. What is valuable and profitable one month may not be the next.

As well as the concept of the money being made on the buy, not the sell, of equal or perhaps greater importance is to consider the less-commonly understood idea that the money is made on the logistics. This is a real “pro secret”.

One key factor I learned about arbitrage is that very often, it is somewhere in the “devilish details” that the money is made. The real profit comes in running a tight ship. Margins can be slim. All the little expenses – shipping, packing materials, transportation, seller fees and other overheads… these are truly the things that can make or break your bottom line. So efficiency and the art of shaving the overheads down, is what will often make you competitive. How else will you be able to maintain a better price than the competition? You need a competitive advantage!

Very often, in the arbitrage game, other traders have access to the same deals that you do, and the same market. To be able to undercut the competition and still be profitable, your competitive advantage often needs to be in the area of logistics: Shipping costs. Labour costs. Transportation costs. Storage costs. Time management.

This takes exactitude in calculation, a clear head and an ability to shave off on costs wherever possible – for example on shipping by knowing the best shipping method to use.

It hardly needs to be said that a good ability with numbers and mental arithmetic will be your friend here. Being able to perform fast, accurate calculations on the fly is one of the skills of the winners.

A really sharp arbitrageur will have a “complete picture” of every detail of the operation. They will create a spreadsheet or other document which lists all the logistics of the enterprise, perhaps doing a “test” buy-and-sell of a small amount in order to apprehend fully the actual specifics of the deal. Ask yourself the following questions:

How great is the demand?
How reliable is the demand?
How great is the supply?
How reliable is the supply?
How much competition is there?
Does the competition have advantages that I cannot compete with? (i.e. better distribution deals, lower operating overheads, more efficient logistics, location, bulk purchasing power.)
Do I have advantages that the competition cannot compete with? (i.e. better distribution deals, lower operating overheads, more efficient logistics, location, bulk purchasing power.)
What are my shipping costs?
What are my transport costs?
What are my storage costs?
What are my advertising / listing costs?
What are the economies of scale?
How often are products returned and how much does this cost me?
Can I streamline my logistics so as to save money on each buy/sell, thus being able to offer a price that my competition truly cannot beat?
What is the profit margin?
How long will this opportunity last?
What is the shelf life of the product? Is there a risk I will not be able to sell it all in time? Are there other “problems” associated with the product (fragility, perishability, high rate of failure or customer complaint)?
How will the competition react when they see that I am trying to outdo them… will they outgun me?

You can quickly see that while the greatest advantage of this method is the potential to find a “golden product” that provides an easy revenue stream for a while, the greatest challenge is that the marketplace is very fluid – and that the revenue is typically fairly short-lived before another profitable venture will be required.

Summary:

Arbitrage, ultimately, is a concept rather than a method. It can be applied to almost anything of value. All over the world, there are things people have that they do not want, want to sell cheaply or even get rid of free – and there are people in other places are prepared to pay more for them. The arbitrageur is ultimately a master of logistics – and makes profits by joining the dots in either new ways or more efficient ways. By creating elegant and efficient business models, then hiring staff to do the work, the arbitrageur can also make automated income.

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