I love my wife. She’s a great woman who gives me all the support I need to run a business in a tough economy. She also takes care of the house, cares for our six month old, pays the bills, keeps us socially active with our friends, and… doesn’t have an entrepreneurial bone in her body. (Unless marrying a guy like me counts.) I call her a “rules sheriff.” She’s never been one day late on a bill. She chides me for shortcuts and despises when I say things like, “due on the 1st, late on the 15th means due on the 14th to me” or “I think that sign is more a guide than a rule” when I cut across lanes. So last night when I was writing about how to make money online, she kept making me go back and forth between these links in search of proof I was somehow breaking a rule again. I assured her I wasn’t; these opportunities just exist now.
What opportunities, you ask? If you are unemployed, a stay at home husband or wife, or simply have time to burn, there is no reason you can’t start a small business with nothing but a credit card with a $500 limit.
I call it retail arbitrage. Back in college, before the Internet was anything close to the force it is today, a friend of mine and I made $50,000 in a single summer using retail arbitrage. We did it by buying and selling some ugly shoes you couldn’t get everywhere, especially if you had extra large or extra small feet. This was the heyday before suppliers caught on and shrunk margins to try to eliminate or drastically reduce market inequalities. (For the most part they’ve accomplished this now, but not entirely.)
In ’99 when my friend said, “Dude, those shoes are like $150 on eBay” pointing at the ugly foam-sided basketball kicks selling in the local outlet store for $29.99, I said “Well let’s buy a pair and check it out.” Two days later, we had $175 plus shipping in our PayPal account, and the scheme was born. Almost without fail, we were picking up a pair of shoes at an outlet store for $29.99, posting them on eBay, and getting back $110 a pair—mostly from buyers overseas where there was no outlet mall to speak of. When we discovered the “market inconsistency,” we fueled up my Toyota pickup and hit the road to every outlet store in Oregon, maxing out our credit cards by buying every pair we could find. We developed what we called “The Magic Margin”—the shoes had to be marked down either 70%, or be a really odd size (super small or pretty large) and marked down 50%. We found you generally get 70% of full retail value at auction on popular brands. Minus eBay fees and processing fees, we would net about a 90% markup per item—and if it we had several pairs to auction at once, which we often did, we could post them all really fast and our hourly rate soared. It was literally a $50k summer.
I haven’t sold anything on eBay in probably a decade, but even today when I wind up at an outlet store, I find myself mentally scanning for the “magic margin” we came up with and I assure you, it still exists.
What I noticed last night is that now you can find retail arbitrage available online too. (Never mind needing a Toyota truck—you don’t even need to leave your house!) Look here
http://bit.ly/a144QM. This trench coat just sold on eBay for $69.99, plus a $2 markup in shipping. However, you can buy this exact jacket here for $49.50, plus shipping of $7 (and if you wait, the price sometimes drops to $39.50 with free shipping) http://bit.ly/clgP7L. Once you back out the fees, you can still net a quick $10-$15 for what might take 15 minutes. That’s $40 an hour for nothing other than filling a market need by connecting buyers and sellers. I found this example in less than 3 minutes, which would lead me to believe it exists 1000 times over online.
So set up your own retail arbitrage business! Write off your home office, your Internet connection, and gather travel reward points on your credit card. It’s fun and easy! If you are unemployed, bored, or just curious about whether you can actually make money online… why not give it a try?
Tell us about your cool retail arbitrage finds. Once you have taken advantage, of course.