How to generate extra income from retail arbitrage

Sourcing products for those who don’t have the time or knowledge to find them directly is a business idea that’s existed for centuries. And the internet has made it easier for buyers and sellers to connect through dedicated marketplaces, which means you can get started in minutes once you’ve found a suitable item to sell. 

Without the overheads of shop rental or staff, you can keep any profit or reinvest it (subject to tax, of course). And one of the big benefits of retail arbitrage is that you can start small in your spare time, and test an idea to see if it’s capable of growing into a worthwhile income stream. 

Products for resale can come from anywhere, while retail arbitrage tends to focus on new products which are underpriced by retailers or in high demand. Common examples include rare or limited-edition sneakers, toys, sports memorabilia, or video games.  

It suits anyone who loves bargain hunting, and especially if you also have an interest in specific hobbies or brands. But there are also a variety of free and paid tools to help you spot opportunities, including the Amazon Seller App, or looking at previously completed and sold listings on eBay. 

You could also potentially grow and monetise an audience by documenting the process on Youtube, with popular channels attracting thousands of subscribers. Many also offer paid guides to starting or improving your sales through the various marketplaces, which is another income stream you can add once you’ve established yourself. 

And if you notice a demand for products which are in short supply, there’s always the potential to move into selling your own versions in the future.  

Selling your first items for a profit can be incredibly exciting, but to build a sustainable business you’ll need to understand how many sales are required each month, where your stock is coming from, and how much you’re making from each transaction. 

Looking at your previous sales and researching competitors will help you understand what is most likely to sell, and which marketplaces tend to be the best for reaching the right customers and prices. Even a small premium can quickly add up when you scale the number of sales you’re making each month, and the same is true of reduced listing fees.  

Operating as a business also means you need to track your revenue, expenses, and profit for tax purposes. And to ensure that you’re making a worthwhile return on your time. Making an extra few pounds after hours of work might be an enjoyable hobby, but it’s not an effective way to increase your income. 

Setting out a basic business plan will help you identify potential problems, and also allow you to plan for success. If you don’t want to switch to a full-time self-employed career as a reseller, then you may need to look at how you can streamline and automate the tasks involved. Or plan your pricing and profit margin to allow for part-time staff in the future. 

You can also use it to plan future marketing and promotional activity, tracking which is the most successful and effective for your business. If you’re intending to build a brand to make most of your sales through your own website in the future, you may want to list items on marketplaces for the first 12 or 24 months to bring in revenue while you develop your site.  

Once you understand the products which result in sales and profit, you can then choose the most appropriate options for marketing your self-employed business.  But if you’re not planning, tracking, and measuring, then you won’t know what is actually working for you. 

Any self-employed business can potentially benefit from IPSE membership, particularly when you get access to tax and legal helplines to prevent you from potentially making mistakes with Self-Assessment, or if you’re subject to a tax investigation.