There are two types of arbitrage, the first is online arbitrage which is finding items for sale that have a spread which is a lower price on one website than relisting it on another site at a higher price. That spread is your potential profit. For example, buying a Black and Decker toaster on target.com for eight dollars, but seeing it for sale on Amazon.com for twenty dollars. So you relist it on Amazon for $19.90 so your price is the lowest and it sells, and you make $11.90 in profit. When someone buys the product you have listed, you drop ship the item to the customer. Drop shipping is when you sell the item, the item is then shipped directly from one website to the buyer from the other website. This saves you a lot of time and money as many people get Amazon Prime or other accounts that give you free shipping, which offers free shipping on all purchases. This technique is very easy, and it has made countless millionaires. When you buy something on the internet, it’s common for you to buy from one website and then receive the package from another website. This happens because you bought something that someone had found on one website and relisted on another, which can seem confusing if you don’t understand what’s going on. I had an issue with an item that was not the seller’s fault, but I needed to return the item. When I contacted the seller, I was surprised to find that there were several sellers in other countries, such as Brazil, India, and Egypt. These were folks relisting items they were finding on the internet that had a profitable spread. Then, when I purchased the product, it was drop shipped to me from a warehouse in the USA.
Some friends of mine started doing this when they were in Iraq and had lots of free time on base. When they came back to the States, they continued, and have made millions doing online arbitrage.
The second type is retail arbitrage, where you go into brick and mortar stores like Walmart, dollar stores, Target, or other major retailers and look for items they carry that have a favorable spread with an online retailer like eBay or Amazon. Amazon even has a smartphone application called Amazon Seller, that you can scan product barcodes while you're in the store, and it will give you the high and low price on Amazon, along with lots of information including how long it should take to sell the item. So you can figure out exactly how much money you would make and how long it would take you to make it. You can also comb Craigslist, thrift stores, or garage sales for things that could sell for more on eBay or Amazon.
I have been very successful with retail arbitrage, especially around Christmas time. I’ll comb the web for the hottest Christmas items, then search those items till I discover a spread in the prices. For example, one year a Tickle Me Elmo came out that was selling in stores for around forty dollars, but there was so much demand that the stores ran out of stock as everybody wanted this toy for their kids. Because it was the most sought-after toy that holiday, I was able to get over five hundred dollars for each Elmo and had a huge waiting list of people bidding the prices up even higher. I drove around and figured out delivery dates at Targets, Walmarts, and other big stores around me that were selling them. I’d make a calendar and I’d do my rounds to those stores buying as many as I could. Oftentimes, when there was such high demand, the stores would set a limit as to how many of the particular items you could buy. To get around the purchase limit, I would bring my parents, girlfriend, and friends, and I’d pay them a commission for helping me buy the items. Some of my friends have made over twenty thousand during some holiday seasons with retail arbitrage selling toys, game consoles, and whatever the other must-have items were that holiday.