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I must be missing something about arbitage.

Discussion in 'Dropshipping & Wholesale Hookups' started by april6e, Jan 30, 2012.

  1. april6e

    april6e Junior Member

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    I have no idea what I'm doing but I'm thinking about testing out arbitage on Amazon since I've heard it has the least amount of fees.

    Reading up on topics here, the basic premise seems to be to offer a product and when you sell something, find someone else on Amazon or somewhere else with the same product, buy it and send it to the address of the person who purchased from you.

    For some reason though, I have the feeling it can't be that easy. I have a few questions.

    1. I see alot of topics here asking for wholesellers. Is it hard to find someone else selling your item or something?

    2. What is the risk I'm taking on? What happens if they return the item?

    3. How do I get prospective buyers as a new amazon seller (thus having no credibility, no seller status)? I don't have the money to buy from myself to increase it like people recommend.

    4. Is there any other aspects of drop selling I'm neglecting? Did I capture the gist of it? Do I need to buy anything on Amazon as a requirement to do well as a seller (pro accounts, anything)?

    5. Lets say I have a magical situation where I have lots of buyers. How do I keep up with all these orders?

    6. I only have about... maybe $80-100 to start with. If someone did purchase from me, how would I afford to buy the product I'm trying to arbitage? (until the payments come in and my business is up and running)?

    7. Can I sell anything or do I need permission to sell a company's product?
     
    Last edited: Jan 30, 2012
  2. april6e

    april6e Junior Member

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    anyone?
     
  3. Design Superstars

    Design Superstars Registered Member

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    I'm confused as to what exactly "arbitage" is...
     
  4. smallgiant

    smallgiant Regular Member

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    I was under the assumption this was a very heavily saturated market. EBay dropshipping would be much more profitable if you could find a good niche and supplier.

    However, there are large inherent risks.with this business model.

    Profit margin isn't worth it in my opinion especially with such a small investment. Better off with a mns or something similar to build up funds.
     
  5. tigerjim14

    tigerjim14 Newbie

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    I know arbitrage...but not on Amazon. Not sure it is a reliable business model.
     
  6. april6e

    april6e Junior Member

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    Then explain it on ebay or whatever platform you feel more attuned with.

    Those risks being....?
     
    Last edited: Jan 31, 2012
  7. smallgiant

    smallgiant Regular Member

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    Well with arbitrage in general, your money is always tied up in products. Profit margins are small. Any shipping delays or problems will become your problem. You will get all the bad reviews if whoever you order from does not provide.

    Dropshipping has similar inherent risks, but they are possibly more damaging. In general this would be done through ebay, and PayPal. Shipping times will always be slow, and you have to trust your drop shipper will not just screw you at the end. Basically you will be taking orders for product you do not actually have, you then transfer the portion your dropshipper requires, and hope he sends the product. All bad products, slow shipping, and other problems will be brought down on you.

    Also, if like me you had a successful dropshipping business on eBay and then your dropshipper just decides to not ship one day, your entire business can come crashing down.
     
  8. april6e

    april6e Junior Member

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    But there is no way, even if everything gets messed up, that I'll end up having to pay money to cover the product I didn't deliver, right?

    I just cancel their order and they get really pissed off and ruin my feedback and sales.

    But I won't magically get into debt, right?
     
  9. bargainsuk

    bargainsuk Newbie

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    If you've paid for the item or items to be sent and the dropshipper doesn't send it or return your money, then when you cancel the order or multiple orders you'll receive potential bad feedback depending how you handle your customer and need to refund your customer back in full.

    So if you're down 5 items (5 customers) of £25 per item and you paid the dropshipper £15 x 5 (example only), then you're down £75 out of your own pocket in order to refund your customers.

    Imagine if the items cost more and you've got more than 5 items on order (when you're running lots of auctions), then the potential is to be out of pocket by 100's.

    On a positive note, start small and make sure you build a relationship with your supplier and keep some of your profits to one side as backup.

    Dropshipping does and can work for many people, I've made a decent profit from it in the past when I had a decent dropshipper as I use methods to bring in lots of visitors to my auctions rather than relying on natural flow of visitors to eBay.

    Research and don't get ahead of yourself and you should be okay, lots of people doing it, so when they tell you it doesn't work its usually because they don't want more competitors.

    Good luck in your ventures.