Arbitrage is the process of
purchasing a commodity that is
priced lower in one market
than at the market
which you will be selling it at.
For example, let's say that in New York
designer dresses are wholesaled at
$25.00 each, and the wholesale price of
those same dresses is
$50.00 in South Africa.
The opportunity for arbitrage exists in
this situation since you can purchase
the wholesale dresses in New York at
$25.00 each and you can wholesale them
for up to $50.00 each in South Africa.
The same concept applies in retail arbitrage,
and can be done online as well.
As a matter of fact, when retailers
come from as far as Africa, the Caribbean,
and the Middle East, to my closeout warehouse,
they are practicing a form of wholesale/retail
They are purchasing merchandise at a lower
wholesale price than they could in their
own markets, assuming the products
are even available from local wholesalers
in their countries, and then reselling the
merchandise at a higher price in their
Often you can even conduct arbitrage in
the same market due to the
inherent characteristics of the market.
For example, a market might not provide
all participants with equal access,
either due to financial barriers
or due to inherent issues, such as the
layout or composition of the
A local wholesaler might
be selling wholesale products exclusively
to a few retailers, and will not
sell his products to another retailer.
If a retailer finds another wholesale source
for those products at a lower price, he can in effect
set up an arbitrage business model.
eBay, the giant online auction marketplace,
is an excellent place to explore arbitrage.
For starters, sellers that are willing to
pay for premium options have an advantage
over sellers that do not or cannot. In other
words there will be sellers getting more attention
for the same items than other sellers will be
That lack of attention can mean
that certain sellers will be selling the same
items for less than other sellers will be.
Your goal will be to explore eBay for
opportunities to purchase merchandise
which you can then resell right back on eBay
at a higher price.
You might decide to purchase merchandise
on eBay and sell it elsewhere, but for now
let's focus on on why
you can purchase merchandise at
one price, and then resell it
on the auction platform for a
As I mentioned earlier, eBay gives
sellers paid options to promote their items,
which means that two sellers
that are selling the same Calvin Klein
dresses will not necessarily receive the
same number of views for their auctions.
The seller that uses one of the paid promotion
options can get more views and
a higher sales price for his auctions
as compared to the seller that only
uses the basic listing and auction options.
You might be able to buy the same Calvin Klein
dresses that regularly go for $60 on eBay for
only $40 from the seller that did not promote
her auction listing.
You could in theory purchase the
Calvin Klein dress for $40, promote the
listing, and then resell it through an eBay
auction for $60.
$20 is a decent profit, especially
if you do a few hundred auctions a
There will be extra fees associated
with the enhanced listing and marketing
options, but you should still be
able to come out ahead if your
gross profit is big enough.
A seller might not describe her items
in an attractive way. If you purchase
her items and then put up
a beautifully worded auction description,
you might be able to get a lot more
for those items.
For example, a seller puts up an
auction for a woman's suit,
and simply calls it an office suit.
People that are looking for suits
might not even see the listing,
and even if they do there is no
compelling reason for them to
be interested in it.
There is a good chance that the listing will
attract few if any bidders.
If you were to bid a very low
price, and then win the auction,
you could turn around and list
the woman's suit with a beautifully
Instead of just calling it
an office suit, you can call it
an elegant and sophisticated high
quality suit for professional women.
A great description can catch the attention
of shoppers and end up encouraging them
to bid a high amount for the suit.
The listing lacks the right keywords
that could get it more attention from
Let's say there is a brand name woman's
suit up for auction. But the seller forgets
to mention that it's a Kasper suit. The
auction will realistically be overlooked
by those who are searching specifically for
You can purchase the suit, then write
a description that includes the relevant
and important keywords that were missing
in the prior auction description.
Your auction listing can now attract the attention
of shoppers that are specifically looking
for Kasper suits.
The quantity in the lot is too large for
Have you ever seen an auction for an item
you were interested in, but the quantity was
more than you could possibly use?
I use to look for auctions of comic book collections
on eBay. I would
see lots with comic books that were
really desirable by the standards of collectors.
But often the auctions received few or no bids.
I believe that while collectors wanted those
comic books, they just weren't in a position to
purchase lots that contained thousands of
A savvy arbitrageur could have purchased those
lots, and then broken them down into smaller lots
which she could then list on eBay.
Since collectors might be more willing to
purchase a lot of 100 comic books
versus a lot of 10,000 comic books, the
arbitrageur should be able to get a higher
price per comic for the smaller lots
than she paid per comic when she
purchased the large comic book lot.
The quality of photographs used for the
auctions were not great to say the least.
I sometimes see an item on eBay that
I might be interested in, but when I see
the picture of the item I simply change my
I probably should know better, but it's hard to
consider an item seriously when the picture is
not clear or professional looking.
The opportunity for the arbitrageur would be
to purchase an item that has received no
bids due to a low quality picture,
then take professional looking pictures
and use them when he relists the item
Since eBay is an evolving marketplace you
might discover new opportunities for
buying low and selling high as you
explore the site.
Remember, the key to success often comes down
to putting in that extra effort.