What is retail arbitrage?
Laia Ordoñez
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Do you know what retail arbitrage is? We are talking about one of the most common business models both in eCommerce and marketplaces.
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When we start selling online, one of the first aspects to solve is the business and production model.Will we opt to produce our own goods? Will we search for a provider to facilitate us having our stock, managing an own stock? or may we bet on dropshipping?
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What is retail arbitrage?
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Retail arbitraje is the purchase policy according to which an online store or a marketplace seller uses retail sellers to be supplied with stock to sell, instead of makers or wholesale.Of course, to have a viable business is essential that purchases are always placed at a low enough price as to be able to charge a enough margin and get profit while being competitive in the market.
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Who is this model interesting for?
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Although it is clear that it is not one of the most profitable in the market, it may have certain advantages for some sellers in particular.Retail arbitrage is especially spred among those who do business through marketplaces As it does not require practically any structure beyond a small storehouse, it is fairly easy to find products with a certain demand and put them up on sale on these platforms. In fact, in cases like Amazon they even take care of logistics and storage in exchange for a monthly fee.It can also be an interesting option of those who want to validate a business idea or some market niches for eCommerce before starting with own production or searching for reliable providers.
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Where to find products for retail arbitrage?
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Anywhere you can get the product you want to sell at a good price, from one-time offers in malls to outlets, stock purchase due to business close down, or of course, on marketplaces like AliExpress or negotiating with sellers from other countries at lower production costs.
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And you, what do you think about retail arbitrage? Do you find it interesting? In your opinion, is it a valid formula for the kind of business you are working on? Share your thoughts with us!