Dustin and Kris discuss what retail arbitrage is, how they both started their businesses with retail arbitrage, and why it is helpful to start with retail arbitrage on Amazon before launching your private label business.
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– Hey everybody and welcome to the second episode, of Two Amazon Sellers and a Microphone. I’m Dustin Kane on with me is Kris Gramlich. How you doing Kris?
– Good Dustin. Good to be back with you, excited to talk today.
– Absolutely, we are here again, we’re going live on Facebook while we’re recording this podcast. So, if you’re on Facebook right now, you’ll be able to see us, as we have our conversation. And today’s topic we’re gonna be talking about, if you’re starting your Amazon journey right now why you should do some sort of arbitrage, whether it’s retail arbitrage or online arbitrage, initially in the beginning just to get your feet wet with how the FBA system works. That’s something that both Kris and I did when we started. So we’re just gonna dive into a little bit about, what retail and online arbitrage are, as well as some drop shipping you can do as well. And why it’s important to do that. And then why you wanna quickly get out of that and get into private label. But I’m excited about this topic Kris because this brings me back to the beginning days of my journey when I was starting and getting my feet wet-
– This is a good path to go down, we would go to Target, go Walmart, and whatever my wife would go somewhere else. I’m like I’m gonna go check the clearance item real quick.
– What are you going there for? I’m like, I gotta go see what’s going on, on that aisle. And she’d be like okay, I come back with like some of these Knickknack Toys and like some weird little like garden gnomes and stuff. She’s like, what are we gonna do with these? I’m like, oh, well, I’m gonna try to flip my Amazon. So, and that’s how I like that… I think that’s the way to like start. I know I’m kind of jumping ahead here but like that’s retail arbitrage. Like you could download apps out… There’s apps out there or you could just get the seller app and just see how much the item sells for on Amazon. See how much it is in Clarence. And if there’s profit to be made, scoop up whatever you can and just relist them back on Amazon-
– Yeah absolutely… It is extremely simple. You’re buying low and selling high and there are a ton of apps out there. If anybody’s looking I’ve got a list here of some apps, you’ve got Spotify App, Profit Bandit, ScanPower, FBAScan. Those were the big ones out there. And essentially what you’re able to do. And just to dive in a little bit more about retail arbitrage is you can download one of these apps, walk into a store. I did a lot at CVS and Walgreens back when I started, they always had like ads seen on TV, products super discounted, they were clearing ’em out, especially like in January or something right after Christmas. And you could go on there and you could scan them with these apps and it will show you how much difference it is, in price on Amazon. And then it include all the fees as well as show you if it would be profitable for you to buy it and then send it in and sell it on Amazon. So, just like you, I would… My wife and I, we would take trips out and go to hit about four or five big box stores, the clearance section scan and I’d come home with just loads of stuff. And then we can talk later about why this is so important to do this. One is I mentioned in the last episode that I started my private label business with about $500, probably three or $400 of that came from my initial retail arbitrage. I almost funded my initial launch doing this. So it’s a win, win. You learn more about it. And then you also can possibly have some capital. So Kris, what’s the benefit of doing retail arbitrage when you know you’re gonna pivot and you’re gonna do private label, what do you learn through that process that’s invaluable when you’re doing it at scale on the private label side?
– Yeah, that’s a good question. The thing that you’re gonna get most out of it is the process that takes and a process you need to do to ship items. If you’re the one shipping items to FBA, this is a way to learn that. And after a couple of trips of, or after a couple of times of doing this, where you create shipments and you’re shipping items in, you’ll get the hang of it very quickly. ‘Cause, it’s rinse and repeat, you do one shipment and Amazon tells you where to ship it. You slap a label on a box, dropped up at UPS, and just keep constantly doing it over and over again. So, that’s like the easiest thing you’re gonna get from it. Other than that, you’re gonna learn how to source, sourcing products looking at margin. You’re gonna see all the FBA fees, that Amazon charges. I personally like to just do the private label game, but there are multiple sellers out there. Lots of sellers out there that do both retail arbitrage and online arbitrage which we’ll touch on here shortly, that are killing it. Like they have followings, they have Instagram followings. They go to Ross, they go to TJ Maxx, they go to Targets and that’s what they do on a daily basis. And they just flip stuff constantly. So, it’s all what you wanna spend your time doing. I personally just like to create a product for listing, get the inventory, and ship it out. And some people like to just turn and burn, either model works, but you’re gonna make some capital. You’re gonna make some money. And then you just rinse and repeat and reinvest inventory.
– Yeah, retail arbitrage is for sure a job. I think both you and I got into the Amazon world and private label business mostly because of the appeal of passive income. When we launched a private label we’re able to order thousands and thousands of units, have it shipped directly to Amazon. And then essentially sit back and watch the sales come in the middle. Obviously, it’s more work than that, but you’re not physically having to go to the stores, touch every product, ship it in, to scale that model the retail arbitrage model would just take a lot of work and potentially people working for you in that model. So, I think both of us realized real quick when we’re doing it, look this is not what we wanna do long-term, but I learned so many things doing retail arbitrage that helped me. When you first get… Let’s say you go to the store and you get 20 products and then you come home and you input all those products into Amazon. And then it gives you the sheet of labels. You’ve got to print and then actually stick on over the barcode.
– Oh, yeah forgot about that part.
– You have to print it, ship, stick ’em on. Then you gotta put ’em on the cartons. And then you find out that Amazon actually wants you to have these six in the certain carton and the other one’s in a different carton, going to a different FBA, you gotta unpack the box. There’s so many things that you learned through the process, that when you go to private label and you go to scale, I was able to, on my first order private label actually have my manufacturer, put the barcodes for me on my products. If I hadn’t done the retail arbitrage method I would have probably had a thousand units shipped to my house with no-
– Yeah. You learned it, you learned it right there. Like that’s what you-
– And that was invaluable. And even me telling somebody right now, like on this podcast, that that’s what you should do, that you need to make sure your manufacturer puts labels on, et cetera, et cetera. You still don’t quite understand it unless you’ve done it. I still think everyone should start with some sort of retail arbitrage to get it going. Now, you hear these terms all the time retail arbitrage and online arbitrage. What’s the difference between the two?
– The main is just, you’re doing the same type of concept, but you’re just doing it online. Like say, you’re going to websites other than Amazon. And try to find, or looking to find products, that are selling for less on those platforms. And there’s two different theories here. You could either… One is probably not the one I would do, but you could just drop-ship it from that supplier, that website you found, I would be careful with that. What I would do is probably just order it, from that website and then just send it back into Amazon FBA and just list it at a higher price. But that’s online arbitrage. You can cover more space obviously or you can cover more products and there’s tools out there, that can help with that, one that comes to mind is called Tactical Arbitrage. Dustin and I are not affiliated with any of these tools. We’re just mentioning them, those are tools that you can get and they will scan multiple websites. You can put parameters in there and they will kinda give you back a list of products that are lower on other sites than they are on Amazon. And you just buy those products at those sites, come to your house, sticker ’em. You’re gonna put labels on ’em and then ship them back into FBA. So, that’s online. I’ve done both. I still do a little bit of retail, just to kind of play around. I hate going to Target and I hate going to all these stores. So when I have to go, where I’m told to go, I find myself looking at the clearance aisles around the ends of the clearance aisle, just to kind of make the time go by. ‘Cause, it’s fun. And sometimes you find something that’s like ah, that’s a good steal there, but yeah, it’s fun. It’s not something I would scale up personally. You can do that. But I think the better play is creating a brand, doing private label.
– Absolutely, the ones that scale, they end up basically buying overstock trailer loads, Target clear it out and they’re selling a semi-truck full of stuff-
– Yeah, you can do that.
– Absolutely, you can do it. You’re gonna have to label them. You’re gonna have to just do a lot of bulk file uploads to Amazon and absolutely you can for sure do that method, but for the purposes of what we’re talking here, you’re doing this so that you can move on to the next step so that you can learn. You’ll find out real quick just about the different categories, about listings. Like this is the one that we didn’t talk about. The one thing with retail arbitrage or online arbitrage is you don’t have to create any listings on Amazon. You are listing your product on the listing that already exists because most likely that product has already been sold on Amazon. So there’s something there and you can start to see the different quality of listings and what works and what doesn’t work, et cetera. You also learn a lot about the Buy Box which typically is not something that you’re concerned about and the private label, but the Buy Box is where, if there’s multiple sellers on a listing. So I buy, whatever Disney Frozen DVD, and I wanna sell it on that listing. And then there’s 500 sellers of on there. Amazon will rotate who gets that Buy Box. And it’s typically it’s based on price. So, you can get burned on retail arbitrage, where you buy a product in it, when you bought it, it was lower priced than on Amazon. And then by the time it gets in there, there’s a whole bunch of people that are selling it and the price has dropped to what below what you bought it. So you can lose. Certainly, it’s happened to me. That when you have a clearance, a lot of times at a store, a lot of times that clearance is across the board-
– Have you ever been… You ever been like gated or you need permission or have you ever had an experience where you get like a trademark infringement, has that ever happened to you with some of these items?
– Not on the retail arbitrage I’ve done. I never ran into that. Have you had that happen?
– Yeah, yeah it’s not fun. You buy an item and next thing you know, it’s gated or you have to have approval to get it, to sell that item. I’ve done that where I bought an item thinking I would be able to sell it and you’ve come to find out that its needing approval from the brand. I’ve also dealt where I’ve found an item at a thrift store and listed it. And there was only one other seller or maybe two other sellers but there was a reason there was only that many sellers because that brand was then filing infringement claims, once they saw you hijack the listing and quote and quote, you get an infringement claim from Amazon. So there’s things you’ve gotta be careful about. Like if there’s only one or two sellers and the thing is selling like crazy there’s a reason there’s not other sellers on that listing. That brand or that whoever owns that listing, whoever created a listing is watching it like crazy and they’re kicking people off left and right. That can make your account in jeopardy and then… You wanna make sure you’re approved to, like scan the items, scan UPC code, and make sure it’s something that you can actually cancel. Now, if you can’t sell it, you have to pivot, throw it up on eBay, marketplace on Facebook, something, but just gotta get rid of it somewhere.
– Absolutely. And you mentioned also drop shipping as a strategy. And so essentially that is a little bit more risky, but you can avoid shelling out the money upfront so you could create a listing or you could… If you find something let’s say on walmart.com that is selling for cheaper than it is on Amazon, you could go Amazon and list it as for sale by merchant. And then if you get an order, then you can go directly to Walmart, place the order with the money you just got from Amazon and have it shipped to the customer. There’s a lot of people that do this model as well. There’s a lot of dangers in that though, in terms of, how would you feel as a customer if you bought something on Amazon and then you get it in a Walmart box with a receipt for a lot cheaper than what you paid, you might be leaving some bad feedback on that. So there’s ways to do around that as well. A lot of people will order on Walmart as a gift, like a gift option where there’s no receipt or there’s a gift receipt put in there, instead of that. So I wouldn’t necessarily recommend that, also I wouldn’t recommend that just because that doesn’t get you the training in terms of labeling and shipping things in yourself to Amazon. But those are strategies for learning how to sell on Amazon at the same time as potentially building a little capital to start your business. I’m certainly glad that I did it. I would highly recommend everyone else to do that as well.
– Yeah, I think that’s good. I think we touched pretty much on everything. I think it’s pretty clear what the differences are. They both can help you raise some capital and then you just turn that capital and invested in a product that you find on Amazon. And just continue to learn how to do this FBA private label build a brand process. It’s gonna take time. This is not a quick rich thing. A lot of people get this mistaken for that. This is a long-term play and doing things like retail arbitrage, online arbitrage is just helping you learn, how to do FBA private label in the long run.
– Absolutely. Now, if you guys are out there and you are currently selling private label on Amazon both Kris and I work for Sellozo and we will mention this on every episode that we’re account executives at Sellozo and Sellozo is a tool that helps automate and optimize your advertising on Amazon. So Amazon has pay-per-click advertising as a big part of their platform and our tool will help optimize your ads on Amazon. So if you’d like to talk to Kris or I, about anything Amazon, or how Sellozo could potentially help your business, we’d love to talk to you. Also, we have a deal for anybody out there. Who’d like to go ahead and get started with Sellozo? We have 20% off of your first month, after a 14 day free trial for Sellozo and you can use code podcast 20 to get that discount. So that’s 20% off your first month and a 14-day free trial. The discount code is podcast 20. So just head on over to sellozo.com. If you’re looking to sign up and get going, Kris, that was fun. And I look forward to on future episodes, just really diving in now, to just all the nuances and all of the strategies involved in selling on Amazon. I’m excited to learn. Learn from you, learn from guests on there. It’s gonna be a lot of fun.
– Yeah, you guys listening. Go check us out on Facebook. Follow Sellozo, S-E-L-L-O-Z-O. Follow us on Facebook, we’ll take Q&A, live Q&A. So, if you hop on there and you need a question answered, we’ll just add this right on in. So, don’t hesitate. I promise you, you’ll get some value.
– Absolutely. You’ll find us everywhere. We’re all over the place on LinkedIn, YouTube everywhere. So, hit us up anywhere. But again, I’m excited for this journey for us and this podcast journey and for what we’re gonna be talking about in future episodes. So everyone out there have a great day. If you haven’t already done something to move the needle on your business, get out there, go to a store right now, buy something and sell it on Amazon. You will not be sorry. That’ll be the first step in the journey. And we look forward to seeing you grow your business. Kris have a great day man. And, we’ll be back at this again probably tomorrow.
– Right, tomorrow. See yah man.
– See yah.