Episode #4 - Online Arbitrage, product research from your couch.

Hey, how you doing? It's Ollie here. Welcome to the E Commerce Freedom Podcast. Welcome to the E Commerce Freedom Podcast with your host, Oliver Denier. Learn the practical steps you need to take to build a business you can run on your own terms. Escape the 9 to 5 and work from anywhere in the world. Now, in today's episode, we're going to be talking all about the ins and outs of how to do online arbitrage. Now, in the previous episode, we were talking about retail arbitrage. And to be honest with you, if you're working with a tight budget, if you haven't got that much money and you really want to start to scale up, really, trust me when I say that retail arbitrage is the best way to get the most bang for your buck. Okay? So you're going to get the biggest return on investments with retail arbitrage. The time you spend looking for deals is probably going to give you better profits and you're going to make money quicker. So if you're broke, if you haven't got hardly any cash right now, retail arbitrage is what you should be focusing on. Okay? Now, when a store needs to clear their shelves of products to make room for new stuff, if it's the end of the season, if the stuff just isn't selling in that store, then they're going to reduce it heavily. And, you know, that's when we come in and we grab all of that awesome cheap stock and sell it on our account. Okay? So retail arbor is the place to go if you are really broke or you just want to see bigger return on investment. Okay? However, online arbitrage is a whole different animal. Okay, so let me just explain to you briefly what it is. So you already know, retail arbitrage is basically the process of going to brick and mortar stores, supermarkets, high street stores, anywhere you can actually walk through the door. And it's like a physical shop plot, right? You go in there and you scan stuff on the shelves using like a scanning app, and you see if it's going to make you a profit to sell on Amazon. Okay, you buy it cheap and then you sell it on your account for a profit. Well, online arbitrage is basically the same thing. Although instead of going into actual shops, you don't need to leave your house. You can actually just do everything online and shop e commerce stores looking for cheap products, comparing them online with how much they're selling for on Amazon, doing a little bit of analysis and actually buying and selling that way. So there's a few really really awesome things about online arbitrage. And actually, if you want to start really scaling up your business selling through fba, and you don't want to be doing any other strategies like private labels or dropshipping, then online arbitrage is really, really awesome strategy. And one of the main reasons it's so awesome is because you can actually do it all remotely. You could actually just spend an afternoon sourcing products sitting on your sofa, or you could be at a coffee shop doing it, or you could even be on holiday sourcing products. And in another episode, we're gonna actually talk about how we can do this entire process without ever touching any stock. Okay? But today we're just gonna go through why online arbitrage is so cool and how to do it. Okay? So another reason why it's so awesome is because actually you can get to the point where you can actually start outsourcing a lot of the product research. Okay? So you could have a virtual assistant or a VA working for you full time. And we're going to talk about how to hire vas in a later episode as well, and how to get them cheap ethically. And you can actually hire a virtual assistant to research products for you round the clock. Okay? They could be giving you an entire database full of all the opportunities online for you to buy stock cheap. And then you just go into that database for 10 minutes, 20 minutes each day, hand picking all of the best opportunities on there, the best products that look like they're going to be a great fit for your business and ordering them and sending them into the FBA warehouse. Okay? So that's. I mean, that's really, really powerful. If you get a few VA's constantly scouring the Internet for the best deals, you get to actually leverage their time. Okay? You just pay them, you know, a few dollars an hour, and they will literally constantly source products for you. And you can spend the rest of your time doing things you actually enjoy and making big tweaks to your business that make really, really big results. Right? I mean, you don't have to be putting all of the labor into your business at this point. If you can start outsourcing things, then you could literally get the business systemized so you're only working couple hours a day. You're kind of more of a CEO rather than somebody on the ground, on the shop floor doing all the hard work. So this is really just so powerful. Once you actually get to this stage, you've got a little bit of extra capital and you can afford to hire people in your business, that's when things really start to kick off. And that's exactly what happened to me when I was able to build up a team of VAs to do various talks in my business. That's when things really started, started to take off. Because there's only so many hours in the day when you can work, right? I mean, even if you work, say like a 12 hour day or a 13 hour day, not only would you be exhausted and probably miserable, but it's never going to be as good as hiring five people to do eight hour days each. Think how much more work you can get done. And what will happen is you'll find that your staff actually begin to pay for themselves because they're finding you all of these profitable items. And after a few days of researching, they would have paid their wage for the month. So this is really, really awesome and something that actually is going to help you scale your business even more when you get to that stage. Also, one really cool thing about online arbitrage, you can actually make it relatively cost effective, right? I mean, if you're ordering, say five or ten products from, you know, an online store like Asda or Tesco's or Walmart or wherever you are in the world, wherever the e commerce stores are, you can usually actually leverage their shipping. Okay? So I mean you could order 5, 10 units and usually if you order say over a certain amount, they'll actually give you free shipping. So you're getting this stuff delivered to your door for free. You don't have to drive to stores to do retail arbitrage and spend money on petrol or train tickets, as I used to do. I used to get a train to a town to do the retail arbitrage. You get to save money on all that stuff. So there's a lot to be said about how powerful online arbitrage actually is. However, it does actually include, like any strategy in any business, a certain number of challenges, right? There's a few things in arbitrage, online arbitrage, that make it slightly tricky. Okay, so number one is that there's more competition. Okay, let's say you're doing a bit of retail arbitrage. You go into one store in your town to clean the shelves and take home all of the products to sell on your account. Okay? Only the people who sell on Amazon around the area of that particular store will also have access to that stock, unless other stores around the country are selling it for the same price. But generally you will have unique opportunities at every single store you enter. However, if you're sourcing products online for online arbitrage. Everybody else who has access to the Internet could potentially buy those same deals. So you'll find there's a lot more competition for, you know, anything that's on sale at really popular online e commerce stores. Because a lot of Amazon sellers do this strategy, right? And they might have VA's scraping the Internet looking for cheap deals. And you might find that one product is a really good opportunity. A load of other FBA sellers jump on the opportunity and end up buying it and selling it on their account. So there's a little bit more scope for competition with online arbitrage. However, it doesn't really matter. It just means that you have to make sure you're buying lots of different products. So you don't just spend all your capital on one product. And you know, if you get competition coming in undercutting you, it doesn't tank your entire business. And also you can find corners of the Internet where people aren't searching, right? You'll always be able to find websites where they're selling things where people just aren't looking. And you'll have your own unique opportunities. But competition is definitely, you know, it's something to take into consideration. Also, you'll find you'll get less return on investment with online arbitrage. Okay, you'll spend, say £30 and sometimes only make five or ten pounds profit. Whereas with retail arbitrage you can spend a pound and sometimes make £20 profit. It's just the nature of the strategy. But again, because it's more leverageable, the less amounts of retail, the less amounts of return on investment generally mean that it doesn't matter as much because you can get more volume through your account. So if it's less return on investment, then another thing you need to take into account is that you're going to need more capital to make the same amount of profit. Okay, so let's say if you're making a 20% return on investment with online arbitrage, to make a thousand pounds profit, you're going to need to be selling £5,000 worth of stock. Whereas let's say you're making a 50% return on investment with retail arbitrage, which isn't too unrealistic, that's actually quite conservative really. If you're making a 50% ROI, then you only need to spend £2,000 on stock to get that £1,000 in profit. So you do need a little bit more capital to start building up decent income using online arbitrage. But that just means you start with retail arbitrage and put as much time as you can into that. Go do retail arbitrage in the weekends, maybe in the evenings after your work or on your days off, and keep reinvesting all your profits, keep buying things cheap, selling them for more expensive, and then all the money you make, spend it on stock and reinvest and grow your business. When you get to the point where you've got a couple thousand pounds in liquid capital, then you can just start to use online arbitrage. And you'll find that, yes, your ROI is less, but you don't have to keep traveling around. You can just use your laptop to do all this stuff and you'll get to the point where you can start outsourcing and leveraging a lot quicker. Another challenge is like any strategy, like retail arbitrage, like anything you do involving arbitrage, the research process takes time. Okay? Don't expect this to just be, you know, I'm searching for half an hour and I found a couple of things that are definitely profitable. You're going to have days where you really don't find anything, right? You're going to spend a couple hours some days, and for some reason it's like pulling teeth. You can't find any decent products. However, some days you're going to just constantly keep finding stuff, right? There's going to be loads and loads of opportunities cropping up. So like anything in life, you have to be consistent with this stuff. Okay? Especially with E commerce, right? We're making small amounts of profit on each sale. Therefore, we need to churn out loads and loads and loads of sales to actually make sure we get in our decent income coming in, right? So you have to be consistent. Put in a few hours a day to online arbitrage. You'll build up a load of products in your inventory and that are selling well and therefore you'll get consistent sales. Okay? But just remember, this stuff does take time. So now hopefully I've given you like a balanced view of how online arbitrage is like whether it's good, whether it's bad, whether it's for you or not, more precisely. And so now what I want to do is give you an example of how and why this stuff actually works. Okay? So what I want you to do, if you're on a computer right now, or if you're on a phone or something, or maybe when you get home later, if you're out and about right now, then I want you to go to a website called idealo.co.uk okay, and I'm going to put this in the show notes, okay? If you go to ecommercefreedom.com 4 you'll see the show notes and it's called idelo.co.uk. now on this website, the awesome thing about it is it's a really, really good example of how products are priced differently on every single ecommerce website that you stumble across. Okay? This website is a price comparison website. It's good for finding deals, right? So anybody who's looking to save money will go on this website and they'll see prices of loads of different e commerce websites, the same product across a load of different websites. So what you can actually do is have a look on this website for opportunities where Amazon is one of the more expensive prices, right? So you might have Argos, which is the cheapest for say 9.99. You have Asda selling the same product at 15.99 and Amazon selling someone selling it for 24.99, right? That is basically an opportunity. So what I want you to do is have a look on idlo.co.uk. spell I D E A L o.co.uk and just look for yourself. You'll see loads and loads of opportunities where things are different prices online. Now what you will find is when Amazon themselves are selling things, usually they'll be the cheapest, okay? So when Amazon themselves have got the buy box, they're selling the product themselves as opposed to an individual seller. Sell the product on Amazon, they will be the cheapest. Okay? So you're going to find that a lot. But occasionally you'll find opportunities now where you're going to slot yourself in. And also sometimes you'll see Amazon isn't even selling the product. And then again you have an opportunity to come in and make some profit with it. But what I want you to do is just have a look on that website because you'll see that things are priced all differently all over different ecommerce websites. Sometimes you've got opportunities to sell things on Amazon for a profit if the price on Amazon is higher than you can get it for for from other place. And it's just a great way of explaining how online arbitrage is actually a viable business model. Now one thing you could do is maybe hire a VA to actually go through and scrape IDO.co.uk and actually try and find all of the bargains on there. I'm sure that could be a relatively viable option for you, but it's Definitely a place to start. And to be honest with you, when I'm doing online arbitrage, I don't use Idealo. I actually just go through different source websites, anywhere where you can buy products online and where they have good clearance sales. And I'll just go through the clearance and I'll just have a look on there and just do A and B comparisons between the price on that site and the price on Amazon. Okay, So I don't really use Idealo right now. I do glance at it occasionally. There's some opportunities on there, but it's just a great way to get a feel for how things are priced differently everywhere. So I want to just talk you through now a little bit about more in depth about how you can actually begin to do some online arbitrage. Okay. So like we discussed in the previous episodes, there's two things which make up a product that's going to be good to sell on your Amazon account. Okay? There's always two qualities that products gonna have. Number one, it's gonna sell for a profit. Okay? So after Amazon's fees, after shipping, after everything else, it's going to be making you a profit. Right? And number two is that basically it's going to sell in a timely manner. Right? This thing isn't going to sit around in the warehouse for years and never sell. It's not going to be there for months. Ideally, you want it to sell as quickly as possible. So before we make any buying decision, even if it looks really, really good at face value, like it's really cheap, it's selling for loads on Amazon, then we want to do a little bit of deeper analysis. Okay? We want to make sure that this money that we're investing on stock, it's going to give us a return and it's going to give us a return quickly. Right? So there's two tools we can actually use to make sure this is the case. Tool number one is called the FBA calculator. And basically what it is, it's a tool that Amazon have provided us with. And what it does is it gives you a breakdown of all of Amazon's fees that you will use if you sell the product through fulfillment by Amazon. Okay? So if you just type in Fulfillment by Amazon Calculator or FBA Calculator UK or FBA to FBA Calculator us if you're in the US into Google and you'll find the FBA calculator. And from there what you can actually do is search on this tool and it will give you the breakdown of how much Amazon is going to charge you for all of their fees, the FBA fees, their referral fees, which is the, the fee for actually selling on their platform. And at the bottom they'll give you how much money in your pocket you'll get after all these deductions. Okay? So you can actually use this amount to see whether you're going to make any profit after the cost of the item that you're going to buy from the E commerce store, right? So if you're buying a Barbie doll for $9.99 from Some Kind of E commerce store like Toys R Us, you go to the FBA calculator and after fees you're going to get £15 in your pocket. Then you've got £5 clean profit. Okay? So that's how we calculate whether things are going to make us a profit. Very, very, very simple. Point number two to consider was whether it's going to sell quickly. Now, as I mentioned in the previous episodes about retail arbitrage, we want to be paying attention to any products best seller rating, okay? And Amazon Bestseller rating is basically quite a complicated algorithm goes into place to calculate what a best seller rating is. But every single category has its own rankings chart. Okay? Number one, best seller is obviously the best seller in that category, okay? Rather than getting too deep and complicated into what this actually all means, just remember that the lower the best seller rating, the faster this product sells, okay? Generally, just to get you started, anything under 30,000 BSR bestseller rating going to be a relatively decent seller, okay? So anything that you find that has a best seller rating of under 30,000, it's going to sell relatively quickly, right? So if the things making you a profit, if you know it's going to sell quick because it's got a best seller rating of less than 30k, you've done enough analysis for now. You know that this product is probably going to get be a great fit for your business. You can buy a couple of them, send them into your account, and you will most likely make sales and make profit. And what you got to do is just rinse and repeat. Be creative. Think of all the places online that actually sell products. Where are the clearance sales? Is there any buy one, get one free or two for three sales that you can actually get products for cheaper and then sell them on Amazon for a profit. Are there any corners of the Internet where other Amazon sellers won't be looking, where you can actually find decent products to sell on your account? You just have to be creative, have a look around, be consistent. Spend a couple of hours a day looking for products to sell using the online arbitrage strategy. And then once you built up enough capital, if you've got two or three hundred pounds spare, you can actually hire a virtual assistant to do this research for you on your behalf. And this is where things get really, really exciting. This is where you actually get more freedom. That's what we're all about. We actually get to free up more time in our day so we can go on and do the things we want to do. Right now, my business, I've got five or six VAs. We're just hiring a number six at the moment and they're doing most of the work for me. I think about 50 or 60 hours go into my business every day and I only do 20 or 30 minutes of those hours each day because everything is systemized. Each VA knows their job and knows what they need to be doing to ensure that my business keeps churning out sales. Right. It's just like if you go into a coffee shop, you've got someone making the coffee, someone on the cash register, someone sweeping the floor, someone cleaning the toilet, someone doing payroll, you've got a manager. And then behind all that, you've got a shareholder and a CEO and all the other people who oversee the business. You want to be one of those people. Eventually you want to be the CEO or the shareholder or someone who just steps back from all the hard labor and just oversees the business, makes all the big tweaks that actually make all the difference, the 20%, the, that creates the 80% in change. So actually starting to hire and implement this online arbitrage strategy is the way to get into that position and it's the way to get more freedom in your life and allow the business to create you more free time. So I really hope you're going to go out there and have a look for a few deals with online arbitrage. I mean, even if you don't have too much cash right now, there's going to be something out there. You can afford to just test it. Have a look on Idealo, have a look at some sites in your country. If you can see any awesome deals that you can buy for cheap and sell for more on Amazon, why not buy a couple and send them into your account and make yourself a little bit of profit? I want you again, if you haven't had a look at it yet, if you go to the Show Notes for this episode, if you go to ecommercefreedom.com 4, that's the number 4. Then you'll see a link to my Fast Start guide. If you just click on that, give me your email and then I'll send you my Fast Start guide. And this is a four part video series which teaches you how to get your account set up, how to search for products online and in stores, retail, online arbitrage. It teaches you how to analyze products in a little bit more depth. And I show you actually in the video how to use these tools I'm talking about. And it shows you how to make a shipment and send stuff into Amazon's warehouse so they can fulfill the orders for you. This is a really, really great resource. If you haven't grabbed it yet, make sure you go to ecommercefreedom.com free4. That's the number four. And you'll be able to download it and watch these videos over and over again, understand the processes in and out and actually start generating some cash for yourself. Okay, this is not the kind of strategy that you're going to be using forever. I want you guys to use the stuff in the Fast Start guide, Build up a decent amount of cash flow. Could be a side income, could be your main income, your only income. That's what it was for me in the beginning. But once you get to a certain point, then you can start moving on to better strategies like private labels and things like that and start building a serious income and creating serious freedom for yourself. I'm on your side. I really want to help you create a better life for yourself, create more income. Because there is so much scope to do this within the e commerce industry and that's why I've made this podcast. So go to ecommercefreedom.com for check out the show notes. There's going to be some resources in there, few links to a few things I want you to use and also a link to my Fast Start guide. And I can't wait to share this awesome stuff with you. Thank you so much for listening. And guys, whatever you do, keep believing. I'll see you in the next episode.