Retail arbitrage entails buying a product for a lower, or slightly discounted, price and then selling the same product at a higher price, basically flipping it for a profit.
While this may sound like regular retail, it’s not. The primary difference is that unlike regular retailing, the seller does not purchase their products and stock from wholesale suppliers or manufacturers, but rather, buys the products from other retailers or sellers.
For instance, if you walk into a store and see that certain products are on sale, whether due to seasonal discounts or because the store’s clearing old stock, you may see that the price of a certain product used to be $30 but now, on sale, it costs $15.
So, you invest an initial sum and buy about 50 units of the product and then list the product on eBay, Amazon or another e-commerce online marketplace, for a dollar or two less that the retail selling price – such as $29 or $28 rather than the original $30. You still make a profit on an item that you bought on sale – all without ever having to deal with the manufacturers, wholesalers or suppliers.