Who doesn’t want to make a quick buck? Retail arbitrage makes it possible for enterprising folks to buy discounted products from retailers and quickly resell them at a profit. Many entrepreneurs get into arbitrage because of the promises of fast profits, but this neverending hustle gets old pretty quickly.
If you want to build a multi-million dollar business, you have to join the big leagues: private label dropshipping. You’re already putting hours of work into retail arbitrage, so why not invest that work into a brand that will last?
Let’s dig into how retail arbitrage works, why it isn’t scalable in the long run, and why domestic dropshipping is a better alternative to arbitrage.
Retail arbitrage happens when you buy items—usually in bulk or at a discount—from a retailer. For example, if you find a rack of shirts on clearance at Walmart for $5, you can turn around and sell them on Amazon for $20 apiece. Resellers usually go for out-of-season or discounted products so they can jack up the price and resell it elsewhere for the highest margin possible (without scaring away shoppers, that is).
And yes, retail arbitrage is 100% legal. It’s allowed on platforms like Amazon and eBay, although there are some requirements that limit which product categories you can do arbitrage for.
Plenty of motivated entrepreneurs go for arbitrage to dip their toes into the world of eCommerce. Done well, arbitrage is beneficial because:
The thing is, as attractive as arbitrage can be in the beginning, it’s a constant grind. If you ever want to retire or take a day off, arbitrage just isn’t the right game for you.
Arbitrage just isn’t a long-term, scalable business model because:
If you’re only here to make quick profits, arbitrage could be a good way to do it in the short term. But if you’re looking for a clever way to master eCommerce sales, you need to step away from arbitrage and embrace domestic dropshipping.
Instead of sourcing products from the Walmart sale rack, you can partner with a dropship supplier right here in the US. The supplier gives you access to a robust catalog of high-quality products that you can slap your logo onto and resell for a much higher profit. Since suppliers give you access to lower prices, you’ll see much higher profit margins with dropshipping than you would with arbitrage.
And no, there’s no need to manufacture, store, or ship your products when you go the dropshipping route. The barrier to entry is even lower than retail arbitrage because you only pay your dropshipping supplier whenever you make a sale.
Instead of spending hours a week sourcing products for reselling, you can choose a trusted domestic dropshipping supplier to handle a lot of the hassle for you. Plus, with solutions like Spark Shipping available to manage inventory, tracking updates, and more, it’s never been easier to go all-in on dropshipping.
Retail arbitrage can be a fun and profitable hobby, but it isn’t a scalable business model. If you love the thrill of arbitrage but crave higher earnings for less hassle, go the domestic dropshipping route instead. It will give you more control over your business, take time-consuming to-dos off your plate, and substantially increase your revenue.
But we know that dropshipping isn’t easy if you’re new to the game. Spark Shipping makes it much easier to move away from arbitrage with our dropshipping automation platform. Get a demo now to see how Spark Shipping simplifies domestic dropshipping.