Amazon enabling a resale renaissance
Raiding clearance aisles, selling wares online proves profitable
With their two young kids in tow, Juston and Kristen Herbert drove to a Target near their home outside Scottsdale, Ariz. It was time to get to work.
The Herberts were on the hunt for all of the Contigo water bottles the store had in stock, and kept the camera rolling for their 6,400 YouTube subscribers. Within minutes, an employee pulled out 32 two-packs — sold on clearance for $5 (U.S.) each — from a back storage room. For two people who recently left their jobs in finance, the blue-and-black plastic bottles might as well have been made of gold. The Herberts would resell the two-packs on Amazon for $19.95. Subtracting some taxes and fees, they’d clear $6.16 in profit. All told, the Herbert’s10-minute Target run earned them $198.
Juston, 30, and Kristen, 28, estimate they can reel in $150,000 this year from their newest gig: retail arbitrage. The idea is to buy a bunch of the same item — from water bottles to vacuums to Monopoly boards — and resell them online for a profit. For some, this is just a lucrative side hustle — perhaps to climb out of debt or save up for a vacation. For others, it’s their main way of earning a living. And beyond that, the Herberts say, this is helping them build up $50,000 so they can adopt a child.
“If we’re showing that you can come up with big money for an adoption,” Kristen said, “you can come up with big money to get yourself out of a hole, credit card debt or a house payment.”
While the idea to buy something cheap and sell it at a higher price is age-old, the concept of retail arbitrage has emerged in the digital age. Chris Green wrote one of the go-to how-to books on the topic, titled “Retail Arbitrage.” And he’s helped popularize the moniker. The term seems to be having a moment. In December, according to Google Trends, searches for “retail arbitrage” spiked on YouTube, where aficionados post videos of their shopping and reselling sprees. (One reseller, who has more than 52,000 YouTube subscribers, filmed his 22hour buying binge through 17 Walmarts).
In the early 2000s, resellers started flipping products on eBay. But Green’s guide focused on the engine behind many of these small businesses: Fulfillment By Amazon, or FBA.
Through FBA, people can add their own products to Amazon’s vast online catalogue. Sellers package their products and ship them to Amazon warehouses, where they are stored until an order comes in. Amazon takes it from there.
Green, who’s been dubbed the “godfather of retail arbitrage,” used to be a sales representative for Bosch Power Tools.
Then, with the rise of Android and iPhone apps that can scan products and track down major sales, Green realized retail arbitrage could work for anyone, even those who didn’t know the inner workings of an industry.
“I used to teach grandmas to do it,” Green said.
ARBITRAGE from B1