'Retail arbitrage': How people are making money reselling clearance items on Amazon
With their two young kids in tow, Juston and Kristen Herbert drove to a Target near their home outside Scottsdale, Arizona. It was time to get to work.
The Herberts were on the hunt for all of the Contigo water bottles the store had in stock, and kept the camera rolling for their 6,400 YouTube subscribers. Within minutes, an employee pulled out 32 two-packs -- sold on clearance for $5 each -- from a back storage room. For two people who recently left their jobs in finance, the blue-and-black plastic bottles might as well have been made of gold. The Herberts would resell the two-packs on Amazon for $19.95. Subtracting some taxes and fees, they'd clear $6.16 in profit. All told, the Herbert's 10-minute Target run earned them $198.
Juston, 30, and Kristen, 28, estimate they can reel in $150,000 this year from their newest gig: retail arbitrage. The basic idea is to buy up a bunch of the same item -- from water bottles to vacuums to Monopoly boards -- and then resell them online for a handsome profit.
For some, this is just a lucrative side hustle -- perhaps to climb out of debt or save up for a Disney World vacation. For others, it has become their primary way of earning a living. And beyond that, the Herberts say, this work is helping them build up $50,000 so they can adopt a child.
"If we're showing that you can come up with big money for an adoption," Kristen said, "you can come up with big money to get yourself out of a hole, credit card debt or a house payment."
While the idea to buy something cheap and sell it at a higher price is age-old, the concept of retail arbitrage has emerged in the digital age.
Chris Green wrote one of the go-to how-to books on the topic, titled "Retail Arbitrage." And he's helped popularize the moniker.
The term seems to be having a moment. In December, according to Google Trends, searches for "retail arbitrage" spiked on YouTube, where aficionados post videos of their shopping and reselling sprees. (One reseller, who has more than 52,000 YouTube subscribers, filmed his 22-hour buying binge through 17 Walmarts. He filled his trunk with 182 Monopoly games and flipped most of them in one night for $2,500.)
In the early 2000s, resellers started flipping products on eBay. But Green's guide focused on the engine behind many of these small businesses: Fulfillment By Amazon, or FBA.
Through FBA, people can add their own products to Amazon's vast online catalog. Sellers package their products and ship them to Amazon warehouses, where they are stored until an order comes in. Amazon takes it from there -- pulling an item off the warehouse shelf and getting it to the customer's door.
Green, who's been dubbed the "godfather of retail arbitrage," used to be a sales representative for Bosch Power Tools. He started reselling power tools on eBay in the early 2000s.
Then, with the rise of Android and iPhone apps that can scan products and track down major sales, Green realized retail arbitrage could work for anyone, even those who didn't know the inner workings of an industry.
"I used to teach grandmas to do it," Green said.
For Mike "Reezy Resells" Rezendes, retail arbitrage has been a kind of salvation. Rezendes said he grew up in a troubled household and was married with a child by 16. As a teenager, he noticed commercials for eBay on TV and started selling whatever he could rummage around the house, like his Nintendo and its games and controllers.
Now, Rezendes, 34, has been reselling items online full-time for 14 years. His YouTube channel, "Reezy Resells," has more than 85,000 subscribers (Rezendes calls his followers "Reezy's ninjas.") He runs his company with his best friend from high school and oversees a small team who buy up goods from stores like Nike, Marshalls and Ross.
Last year, the company saw $800,000 in gross sales for about $240,000 in profit. In January, he got more than $8,000 in ad revenue from YouTube.
One day last month, Rezendes had more than 100 pairs of Nike shoes in his garage that he planned to ship to Amazon. He was working on a YouTube video breaking down how he bought 100 Nerf guns from Target.com and flipped them for $1,500.
Rezendes, who lives in Santa Cruz, California, said retail arbitrage has kept him from having to fill a 9-to-5 desk job. But he also knows online resellers and small-business owners like him are crucial to Amazon's model.
Amazon "needs people like me to fill all the holes in the marketplace," he said.
"We're literally flesh-and-blood robots for Amazon," Rezendes said.
The retail giant hasn't shied away from promoting its small businesses: In 2018, the number of small and medium-size businesses that passed $1 million in sales in Amazon stores worldwide grew by 20 percent. Third-party sales are growing at a faster rate than first-party sales online, the company said last month.
You'll find Shane Myers on YouTube as the "Rise N Grind Picker" -- with 15,000 YouTube subscribers.
Three years ago, with $20 in his savings account, Myers started reselling thrift store merchandise on eBay. He turned to Amazon in August. By September, Myers had churned out more than $2,000 selling used books alone. In his first three months back on retail arbitrage, he'd paid off all his credit card debt and car payments.
Myers, 31, pays $30 a month for an app called BrickSeek, which helps him find markdowns at big-box stores like Walmart and Target. A few weeks ago, Myers hit multiple Walmarts within a 150-mile radius and came home with 218 packages of light bulbs. He found them on clearance for $2 each. He marked up the price and netted $4 to $5 on each package.
The grand total: more than $1,100 in profit.
Myers hopes that within the next year and a half he can move to retail arbitrage full time and will have paid off his house. And he hopes he'll never miss his daughter's birthday again for work, like when he was clocking in at his old day job in retail.
"I see money everywhere," Myers said. "If I walk into a store, it's just like a dollar sign sitting on the shelf."