The Pros and Cons of Retail Arbitrage

Are you on the lookout for savvy ways to generate new sales opportunities for your business? Many who are will eventually investigate retail arbitrage, strategically positioning themselves within the supply line to sell the products of other brands for a profit. However, arbitrage isn’t a slam dunk. The wrong approach can negatively impact your bottom line or your reputation.

Is retail arbitrage right for your business? We look at what this practice involves, as well as the benefits and drawbacks, so you can decide.

What is retail arbitrage?

Put plainly, retail arbitrage is when a person or business buys a product from one retailer and resells that product at a profit via another retailer. For example, maybe a retailer ordered too much inventory and it isn’t selling quickly enough, so they decide to markdown the price to move it off their shelves more quickly.

Or, perhaps a product has been discontinued by a manufacturer and put on clearance by the retailer, but there is still significant market demand for the product. With enough demand, the price for a discontinued product can quickly skyrocket, and a savvy third-party seller can take advantage of this to make a profit.

The Benefits of Retail Arbitrage

In general, retail arbitrage offers a quicker, simpler, and lower-risk option for setting up your barter trading, compared to launching your business with an unproven private label product. Because you are selling products from established and known brands, you don’t have to put as much time and money into convincing potential customers that they trust what you are selling.

It can also be much quicker to get your business up and running because you can start selling inventory as soon as you purchase it. Compare this with the much longer ramp-up times that come with selling a private label product. Even with the best-case scenario and quickest possible turnaround, selling a private label product means you won’t start making money nearly as quickly as you could with retail arbitrage.

Another perk of retail arbitrage is that you can establish your business on almost any budget, using smart business solutions. As long as the products you purchase to resell have significant profit margin potential, you can get your business going, even with minimal upfront investments.

The Risks of Retail Arbitrage

Any third-party seller who uses retail arbitrage knows that there are some risks and challenges that come along with the business model. The biggest overall risk is that your business can only be as successful as your ability to acquire inventory to resell. You are always limited by whatever inventory and deals are available to you for the initial purchase.

There is also a pretty significant time investment that comes along with retail arbitrage because it can take some serious hunting to track down great deals. Either you are visiting tons of local stores in your area, or you are scouring the internet for deals, but time is a big factor, either way you go about it.

The right network to support your arbitrage goals

Bartercard members have the option to purchase stock from other Bartercard suppliers at wholesale or retail rates, thus, in turn, adding a new product to their product line that they can on-sell in the cash and/or trade economy. This option opens a realm of possibilities for Bartercard members as they are no longer restricted to selling just their product but can sell other unrelated products.

Now that you have the information on the benefits and drawbacks of retail arbitrage, you can decide if it is right for your business! Become a Bartercard member today and tap into a network that could unleash the full potential of arbitrage for your business!


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