You may have heard about flipping or retail arbitrage regarding hot side hustles.
Both flipping and retail arbitrage mean the same thing, buying items at a target price where you can resell them elsewhere and make a profit. That’s the goal, at least.
But is it as easy to succeed as ads and videos might promote?
“Time to do some sketchy shit, do da, do da. Hope I get away with it, Oh da do da day.”Damon Day from Video
We’ve learned some early lessons and made a profit on some items you will see in this video. But, not to ruin the surprise, don’t do what you see Damon do in this video, except maybe buying the cookies.
Is Amazon FBA Retail Arbitrage the Ticket?
There is so much to learn before you see something on sale and rush to buy it to resell it and make an easy profit.
Don’t believe the hype surrounding retail arbitrage Amazon opportunities. Damon learned it could be a money trap on his initial Walmart shopping trip.
Fulfillment by Amazon
Amazon has an option to sell items where you send the item to an Amazon warehouse, and it is sold on the Amazon website and shipped to the buyer by Prime delivery. This program is called Fulfillment by Amazon (FBA).
If you don’t want to be a total newbie, you’ve got to learn the vocabulary, and FBA is one of those shorthand terms people who play in this sandbox use.
You could get a product listing on Amazon and ship the item yourself, but you are battling human nature, buyer expectations, and the hassle of shipping.
Seller Fulfilled Prime
You could also participate in the Amazon Seller Fulfilled Prime (SFP) program and have to deliver items within two days. From a newbie’s point of view, SFP might seem attractive but wait.
If you have never had the joy of filling orders from home, it can give you a buzz when you start, but it will occupy your life with busy work.
Dropping off your first sold items and watching them go is a thrill, but always being available to ship, managing the costs of guaranteed two-day delivery, and dedicating space to shipping supplies and item storage can quickly lose the luster.
Fulfilled by Merchant
This Amazon shipping method is known as FBM. It has fewer demands on you as the seller, but human nature for Amazon buyers is expecting next-day or two-day delivery. In fact, the box that has the Buy Now button in it is known as the “Buy Box” and will often feature an FBA item that is more expensive than an FBM item.
Amazon has done a brilliant job of training millions of people to search for Prime items, and if you want to shoot for making a profit, that is probably going to be the route you will take.
On Sale or Clearance Does Not Make for a Good Deal to Flip
In Damon’s video, we see his doing some impulse buying with limited information and experience. Thankfully he went to Walmart for the misadventure, so the mistakes can be returned for a refund. But, not to spoil the surprise, most of the crap in his cart will be returned soon.
The Early Days on eBay Have Been Horrible
The first step Damon took after buying a load of primarily crap retail arbitrage wishful products was to list them on eBay for sale.
He quickly learned that listing and actual selling prices are very different numbers. Most items he later learned to research using the eBay app were selling for just about what he paid on clearance. Once you factor in eBay fees and shipping expenses, you’d be losing money.
Plus, you will have to get into the shipping business with eBay. It is nice that you can purchase shipping directly through eBay at a discount.
Don’t get me wrong; I’ve had a fair amount of success selling items on eBay, from cars to motorcycles, trucks, paintings, and collectible items. But those have been specialized items and things not readily available.
Why Shipping is Such a Colossal Pain in the Ass
As you explore getting your sold items to your buyers, you will quickly learn that shipping is a financial pothole.
There are so many hurdles to hit as you learn, and those experiences will lose you money.
For example, you should use the smallest box when shipping items for the lowest cost. The cubic size of the package can raise the price of shipping. The bigger the cubic inches of the box, the more you will pay to ship and pack.
A box with a lot of empty space will cost more in shipping and now requires the addition of more protective package material, so the box does not get crushed in transit. Unfortunately, that is a lesson I learned the hard way.
When Amazon ships an item, not only are the pros at shipping (most of the time), but they’ve also got your back as a seller. The Amazon FBA policy is shown below.
“If an item you send to us as part of the Fulfillment by Amazon (FBA) service is lost or damaged at a facility or by a carrier operated by Amazon or on behalf of Amazon, we will replace that item with a new item of the same FNSKU or we will reimburse you for it.”Amazon Supreme Ruler
When you ship items, you also have to have the right boxes and shipping supplies on hand, but you also have to get the things to the shipper by the cutoff time.
If you thought being a busy parent and managing extracurricular activity schedules was tough, try incorporating shipping prep and cutoff times into a busy day. Not fun.
UPS will charge you to pick up boxes, the United States Post Office (USPS) does not charge for pickup.
In my experience, the downside of shipping with USPS is they lose shit, and the process for claims is not fun. The claims process is also very inconsistent.
I had so many items lost when I shipped by USPS that if I have to sell and ship something myself from one of my online stores, I only use UPS. Even for international deliveries, UPS gets the job done.
I’m sure I’ll do a future post on lessons learned from shipping, but this is an excellent overview to start with.
Don’t Be a Dumbass. Know Your Likely Profit Before You Buy.
When it comes to any side hustle, you always have the potential to lose money. So the goal is to minimize those profit potholes and set yourself up for success.
Let’s use this product as an example. It normally lists for $7.99 and is on sale for $2.79. Seems like a good deal, right?
If you want to flip items on eBay, they have a feature in the app that allows you to search for sold listings. This will show you precisely what actual buyers thought the thing was worth. It will also give you an idea if shipping costs are included in those prices. You can watch this in action in this video.
Amazon has a great tool that allows you to see your potential profit for any item when you opt for FBM or SFP.
Let’s look at this example of an item that normally costs $7.99 and is on sale for $2.79. Seems like a good deal, right? But let’s look at the facts.
Evaluating an item you think is a good deal before you buy it is critical to not buying stuff that is not likely to make a profit. And making a profit is the key to earning side hustle money.
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By The Way…Oops
While I was researching this post, I accidentally found some pretty good items to flip. Not every product is a dud, but you must learn to be careful.
More posts to come.