This round-up of killer product sourcing strategies will set your retail arbitrage on fire. From finding the right category to sourcing the right products and always staying on top of what will sell, this list of opportunities will get the creative juices flowing and help Amazon sellers build their e-commerce empire.
Begin With What You Know, Then Grow
Start at Home
Check your home first. If it’s never been used, it’s going on Amazon. How many of us have received gifts we’ve never used or freebie swag we stashed in a drawer? Your first round of inventory is at your fingertips and requires a zero-cash investment.
Pro Tip: “Retail arbitrage opportunity is everywhere: clearance aisles (big stores like Walmart, Costco, Wholesale Liquidators, Target, Kmart and more) grocery, thrift stores, garage & estate sales, wholesale flipping, (text)books, memberships.”
Graduate to Thrifting
Take that money from your first round of sales and invest, smartly, in thrifty choices. That’s right, thrift stores, yard sales, estate sales, auctions, eBay, Craigslist, the Facebook Marketplace, and used item sale apps such as Offerup or Letgo. All of these can be great ways to find profitable inventory. Buy low and sell high is a foundational retail arbitrage concept and these sources are always putting out new product, so you never run out of options. You may have to sift through quite a bit, but there are plenty of great finds to make it worthwhile. Sellbrite has a few ideas for thrifting, also called local sourcing. Even Nate Hirsch, CEO and Founder from Freeeup.com sourced most of his inventory for his college bookseller / textbook business with garage sale finds.
Clearance Racks & Sales
This is a great way to ensure you find multiple products across product categories. Seller scanning apps is key because you are looking for mismatches – items that you can buy low and sell high. This step is lighting up your retail arbitrage, and it’s satisfying because you can visibly see growth in your business with this step. Remember to seek out the same product across multiple online stores as well as the clearance aisles at Walmart, Target, Home Depot, Lowe’s, and K-Mart.
Product Sourcing Memberships
Yes, there are entire groups that can be organized by product category. They are devoted to finding and sharing the best product at the best price. A pretty good list is available here, but any online search will help connect you with groups that provide varying levels of service and quality at varying price points.
Pro Tip: “Holiday blowouts are a great opportunity. The items will be just as relevant in a year as long as you have storage.”
Liquidation & Surplus Stores
Discount stores such as Overstock can be a gold mine if you plan ahead and hit them at the right time. Get to know when they put items on sale and learn to identify tell-tale signs that they are conducting a blowout. For example, when Clairol discontinued a particular hair color, there was a buying frenzy. Women around the world who had relied on that color were trying to find it before it was completely gone and liquidation stores were selling the color in bundles. This is the perfect storm of retail arbitrage sourcing. Buy low in bundles and sell high on Amazon. Other sources to consider are liquidation.com, MyInventoryTeam, and Via Trading.
Drop shipping
Being able to sell items that will be shipped by the manufacturer, so you don’t have to carry inventory is great for startups. It saves money, time, and can be a great way to test products in multiple categories. Oberlo is a reliable resource for drop shipping and contains a list of the tools available. And for a list of some of the biggest and best drop shipping companies out there, Ecommerce Platforms has a nice list to get you started. Just make sure they are certified or have exceptional reviews, especially if you choose to go with a smaller, lesser known drop shipping company.
Wholesale & Bulk Orders from Manufacturers
If you’ve been sourcing strategically and carefully to this point, the bulk order will be within reach. It can take some serious detective work to find the best wholesalers that will work for you and your chosen product category, and this may not lead to the best margins at first, but you can make it work. It’s OK to buy the minimum quantity bulk order (1) until you have the cash you need to buy larger orders and (2) while you test the product popularity on Amazon. Don’t forget, if you haven’t already made the switch, this will be the time to use the FBA option.
Pro Tip: “Go Wide. Checkout a variety of opportunities and products through tools like Cyber Monkey from as many sources as possible until you find the right categories that will help your business be the most profitable.”
Private Label & Generics
We begin getting pretty advanced when we consider private labeling, but if the product sourcing ladder from home sourcing to bulk orders has led you here, you’re probably ready. Alibaba.com is a great example of a company that will act as your manufacturer by producing products with your label for sale on a private site or on Amazon. For a broad list of manufacturers that serve a variety of categories, this list of 166 Private Label Manufacturers can help. Also, don’t forget to listen to podcasts such as Private Label Movement to listen in on success stories and tips from some of the biggest names and stars in the FBA space. This will also be your biggest step toward your commitment to being an FBA seller.
Think Like the Customer
No matter how much effort you put into research and sourcing, the question that you should ask yourself at every stage is, “what will the customer want and at what price will they buy?” Amazon’s #1 priority is sales conversion, so sourcing in-demand products and offering them at the right price point is paramount. When you take this into account alongside all the other Amazon seller best practices, you’re not only ensuring sound decision-making regarding inventory, you’re on your way to Winning the Buy Box.
As you develop your retail arbitrage and other inventory sourcing strategies, cash flow can be a big limitation on growth. Payability is a finance technology company that helps ensure sellers get paid faster so you can focus on keeping inventory high, prices low, and all the other metrics within reach.
Call Payability at (646) 494-8675 or email sales@payability.com if you’d like to learn more about how you can get paid faster.
