Arbitrage is defined as the practice of taking advantage of a price difference between two or more markets. These type of opportunities can be seen literally EVERYWHERE- from currency markets, to commodities and even to renting an apartment and then listing that space on Airbnb. People will continue to value items differently on different platforms and markets meaning there will always be opportunities to take advantage of.
This idea of arbitrage is present at its most basic form in ‘flipping’- buying items from Craigslist, garage sales, street corners or Facebook Marketplace and reselling them on eBay or Amazon. Buy low, sell high: It’s a concept most people understand. I first learned about this arbitrage opportunity from Gary Vee’s #FlipChallenge. It’s sometimes hard to believe when someone as popular as Gary Vee is doing it.
So, I decided to share a real-life example of one of my recent flips. This whole transaction netted me nearly $30 for less than 15 minutes of work. Furthermore, I never left my house to pickup the item and all the ‘work’ was done from my phone or computer.
Step 1: Search Facebook Marketplace for Undervalued Items
FB Marketplace is NOT the only source to find items to flip. Craigslist, garage sales, thrift stores, auctions, eBay, Alibaba and even your cluttered garage. It’s all about finding items from one source that will sell higher on another platform.
I like to search for items that I’m already familiar with so that I don’t have to do too much external research of selling prices. Below is an example of a used Red iPod Shuffle 4th Generation that I found listed for $20. I know these are kind-of rare so on eBay they sell for around $60. Some quick math described a profit of about $30. I’ll do some more detailed research will in the next step but for now this iPod looks very good.
2. Double-Check Sale Prices on eBay
Open up eBay and simply type in the item you found on FB marketplace, craigslist or wherever you found it. Try to put as much detail as possible in the search box to get a list of the most similar items.
Scroll down about half-way down the page and hit “Sold Items”. The page will reload and you’ll have to uncheck “Completed Items” as we do not want to see the items that ended but did not sell (aka completed items).
This step is ESSENTIAL. Make sure you uncheck “Completed Items” as this will show you items where the listing ended but did not actually sell. This could potentially skew your estimates when deciding how much it can sell for.
3. Run the Numbers
Some basic math is all you need to see if you can make a profit on your item. An example of my math on the iPod is included below.
I don’t have a car so picking items up via FB marketplace is a difficult for me. For this reason, I have people ship me items. I build this into my projections and am able to still easily net a great profits. It also makes this a whole heck of a lot easier for me.
4. Buy it
.Once you know that you’ll be able to sell the item for more than buy it for, connect with the seller and show your intent to buy. Make sure to ask or confirm the details of the item versus what was listed in the description (condition, model, color, price etc.). This is also where you’re going to confirm that the seller is willing to ship it to you.
I usually will try to negotiate down a little bit which ends up working out. People listing items on FB marketplace generally just want to get rid of items and aren’t worried about getting their actual marketvalue.
With PayPal, it’s super easy to send money both independently through PayPal or even through Facebook Messenger. If you’re comfortable with paying before you receive the item, most sellers are willing to ship the item to you. I’ve not had any problems with not receiving the item I bought yet (“knock on wood”).
5. List it
I also use a ton of the descriptions from a similar recently sold item or the actual product’s website. Recently sold item’s descriptions are great to use because you know they work. I also really like to use the product’s website to add in features, pictures and any other product specific information I can find. The more the better!
6. Collect your MONEY!
Once the iPod sold on eBay, I was immediately notified that I was paid via PayPal. The iPod sold for $58 ($7 off from my projection!) and I also was paid $4.44 for shipping. In total, I got paid $62.44.
7. Ship it out
This part’s pretty easy. eBay provides and in-house service where you can easily print your shipping labels right from the website. Just input the box or package dimensions and weight, and off you go! Package it up, slap on the shipping label and drop it off at your nearest post office.
All in all, this was a super easy, not time intensive flip that netted my about $30. I’m still learning and making mistakes, and I forsee myself continuing this trend. But, nonetheless, I’m having fun and making money doing it!
Despite the sale price we agreed on ($25: $20 + $5 to ship it to me) I paid the seller $30 via PayPal. I still was able to profit handsomely but I missed out on $5 here because of my lack of attention to detail. Definitely a good lesson!
I’d love to hear about your recent flips or any other arbitrage opportunities you’ve discovered!