What’s the Difference Compared to Online Arbitrage?
Online arbitrage is, quite frankly, cheating. It’s a reselling practice that most people wouldn’t think you can make a full-time living from. Buying from retail sites and selling those same things for a profit elsewhere might work sometimes, but you wouldn’t expect to be able to do it on a significant scale. I was sceptical at first, but it’s been one of my biggest income streams for the past two years.
Online retail is meant to be done by purchasing from wholesalers and then selling on for a profit, surely? Well to the people that have been doing exactly as I have, it’s almost an alien concept. It seems too difficult to do, and there’s a perception that it requires a completely different skillset.
Unlike when you’re just buying from online shops, wholesale sourcing:
- Requires more start up capital
- May require references
- Has high minimum order quantities
- Generally has more barriers to entry
While that may be the case, the rewards for having access to those suppliers is massive. I dabbled with wholesaler distributors when I needed to get ungated in a few Amazon categories, but this year it’s become a more vital part of my business.
Stock Supplies are More Consistent
Something like 80% of the stock I’ve bought to resell on Amazon has been a one-off deal that I haven’t come across again. While I can set up searches to grab them if they ever resurface, most of them just aren’t coming back. I know what products I want, but getting them at a profitable price is a myth.
Wholesale sourcing is completely different. Although they obviously do phase out some of their stock, you’re generally going to be able to order and reorder products at the same price consistently. It’s a completely different way of working and can mean that you’re able to reduce your SKU quantity. After all, would you rather try to keep on top of restocking the same 50 products or same 100?
It’s Good to Have Online Arbitrage Experience First
What’s great for online arbitrage sellers is that they’ve would have already gained so many of the skills necessary to excel with wholesale sourcing. The chances are that they already have a substantial list of products that they need to restock on; they just need to know where to find it at the right price. Wholesale sources may hold the key to finding those goods.
I use Tactical Arbitrage in essentially the same way for wholesale as I do with any other website. The only difference is that the distributors supply CSVs full of products, rather than having to go through pages of their website (which is why it’s essential to get the Excel skills up). I find that it’s much quicker to go through all of the products I’m not interested in this way and get right to the ones that are going to sell quickly and bring the profit in.
If you use software like Tactical Arbitrage or something similar, you’ll be well used to masses of data and finding efficient ways to navigate through it. To those that outsource their sourcing to VAs, you may also find it easier to create processes for others to source with wholesale suppliers, as there are few fewer moving parts.
As mentioned before, some wholesalers actually ask you for references in order to buy from them. If you haven’t got that, your online arbitrage experience might make up for it. If you’ve got a proven track record for driving revenue, these suppliers are more likely to consider you for a wholesale account. If you come in with no evidence that you can sell the stock, they may ignore your request.
How Do You Find Wholesale Suppliers?
The first time around with wholesalers, I was tricked into thinking good wholesalers are essentially like online stores. The ones that I used to get ungated had fully functioning ecommerce sites. They required a few checks before they allowed me to create an account, but it was no different to online arbitrage. When I fell into using wholesalers this year, they’re completely different. For example, the one that I buy most of my stock from has no online presence whatsoever. How do you find a supplier like that?
Honestly, all of my wholesale suppliers fell into my lap accidentally. That one came when an eBay seller quit and gave me a price for their wholesale supplier’s details. I doubt I would ever have found them otherwise. There are lots of ways to find wholesale supplier details, but they all require effort on your part. You can get them from trade shows, networking, finding wholesale lots online, trade publications. Now it’s down to you to graft and get your first taste of wholesale sourcing.