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

arbitrage.




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

respective markets.




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

market.




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

getting.




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 

higher price.




Reason #1




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

month.




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.







Reason #2




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

worded description.




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.




Reason #3




The listing lacks the right keywords

that could get it more attention from

shoppers.




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

Kasper suits.




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.




Reason #4




The quantity in the lot is too large for

most people.




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

comic books.




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.




Reason #5




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

mind.




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

on eBay.




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.