Retail Arbitrage Tips & Tricks
While I don’t often write about reselling here at Miles to Memories, I do think it can be a great way for many to rack up miles & points. Don’t get me wrong, it is a business and not some basic form of MS, but if you are willing to deal with some of the headaches, then the rewards can be nice.
I have spoken about the basics of retail arbitrage before. For example, last year I talked about walking into Staples, finding a radio and basically doubling my money. That was what I would call incidental arbitrage. I was already in Staples and decided to browse the clearance aisle. I didn’t make a special trip to Staples just to look for stuff to buy and sell.
Hardcore Retail Arbitrage
That type of arbitrage is probably good for the casual reseller. After all, it doesn’t take much more time to simply browse and scan if you are already going to be in a store. But what if you want to grow your profits? Sure you could find more deals online, but you can also do what I call hardcore retail arbitrage. Go to a store and begin scanning!
I’m sure that sounds painful and it sort of is. I don’t like to randomly walk into stores to look for things to resell, because I don’t know what I will find. Instead, I wait until there are special sales or I learn of opportunities. Such a case came up yesterday, so I decided to go visit a national retailer to focus on a few types of items.
Breaking Down the Math
When performing online arbitrage I can easily spend thousands of dollars on items that give me a 20-40% return on investment. Some resellers would say that return is too low, but on items that sell fast and have low return rates I am happy to take it. The side benefit of this is that I also rack up thousands of miles & points. I already talked about my perfect travel trifecta which includes the Citi AT&T card. Online arbitrage means a lot of 3X.
On the flip side, retail arbitrage often involves lower dollar items with a much higher return. For example, during my trip yesterday I spent about $450 on various items. I expect to profit anywhere from $350-$400 on those purchases. So the actual spend is much lower, but the return on investment is higher. For example, I found a pair of sandals that I bought for $8. I will net about $18 after selling them on Amazon. Not a huge spend, but a huge profit percentage wise.
Tips for Putting It All Together
While this is still a very basic introduction to retail arbitrage, here are a few tips for getting started:
- Look for special sales or events that certain brands have throughout the year.
- Try to focus on certain items or item types instead of looking through the whole store. This will help keep you from getting overwhelmed.
- Focus on your specialties. If you know kitchen items well, then look for those. If you do find an item that you aren’t sure about, it’s alright to buy one for a test. We all have items like this. With the bad items, you’ll be happy you didn’t buy 10.
- Look for items that are not on national clearance. You can still do quite well on national clearance items, but finding something that is only on clearance locally could mean you get to corner the market pricewise.
- Don’t forget to look for in-store coupons to bring the cost down.
- Make sure to sign-up for any rewards program that the merchant has.
- Discounted gift cards are your friends. I tend to purchase the gift cards from my phone after I know how much I will need. I have had luck getting cards delivered almost immediately, but YMMV.
Conclusion
As many of you move past casual reselling and into operating a reselling business, you will no doubt begin to do some sort of retail arbitrage. While going into a store and scanning is not my favorite thing in the world to do, when opportunities present themselves I am willing to do it. Not often, but once in a while. For me, online arbitrage is still my go to since I get higher spend, more rewards and I can do it in from the comfort of home.
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I much prefer doing my arbitrating in my underwear which limits me to OA, Wal-marts and some places I can stock up on my Sexual Wellness items (for resale of course!). I hear margins are much higher in RA, but I still prefer OA. With all the stacking capabilities when all is said in done I keep my ROI closer to 100% which is fine by me. Maybe when there is more time in the day, I’ll put on some pants and do some scanning, but until then OA is the way I’ll go.
Yes I do prefer OA too and rarely find the time to go scan through a store. 100% ROI is nice any way you look at it.
Not my thing but fascinating nonetheless. Thanks. It’s always fun to know how things work.
It’s interesting, but for me churning lead to MS, which lead to flipping/reselling. At first it was just to meet minimum spend. I didn’t care if I broke even. But now I find that there is a lot of ways to make 20% margin very easily.
Yeah I agree that reselling is too much work just to break even.