When considering the best business model for purchasing inventory, there are many components to consider. When you purchase inventory for your reselling business, you are investing in a product that you hope turns into a profit.
Thrifting vs. Retail Arbitrage: The Difference, and What You Need to Know Before Sourcing Inventory.
Thrifting:
Definition: To go shopping at a thrift store, garage sale, or flea market where you’ll find gently used items at discounted prices.
Sells used, like-new, or new items.
Typically a place looking to get rid of various items at deeply discounted prices, with varying conditions and selections.
Examples: Goodwill, St. Vincent De Paul, Value Village, Thred Up, Salvation Army, etc…
Retail Arbitrage:
Definition: The act of buying products from one retailer and re-selling them, often on another marketplace like eBay, Amazon, etc.
Sells new or “as-is” items.
Typically a place that sells discounted goods that they themselves OR larger retailers could not sell at MSRP prices.
Examples: T.J. Maxx, Marshall’s, Ross: Dress for Less, Walmart, Target, etc…
They are both similar in that:
Have items that are new/like-new and perfect for resale.
Have a plethora of various items to pick from.
My favorite:
Have amazing items to offer to consumers to not be thrown away and wasted!
And now some advice from a reseller with 4+ years of experience:
Thrift Stores: What to Know Before Sourcing for Resale:
You will have a variety of items to select from, including each item’s condition, style, materials, and costs to consider! Make sure to purchase items that are in-style or that you know for a fact someone would purchase!
There will be other resellers to compete with, even if they don’t reveal themselves right away! Be kind and courteous, and stay focused on what you came to the store to do!
Please, please, please, MAKE SURE THE CONDITION OF YOUR ITEMS IS PERFECT OR NEAR-PERFECT BEFORE PURCHASE! You don’t know how many times I’ve picked up an item that needed TLC that I hadn’t realized before, DO NOT MAKE THE SAME MISTAKES! It may seem tedious and time-consuming, but DOUBLE-CHECK EVERY ITEM FOR FLAWS, FUNCTION, AND MISSING PIECES!
Don’t waste your time and gas going to the same thrift store(s)every day, because there is a 99% chance they don’t have very many new items out compared to yesterday. I’d consider a trip once-a-week MAXIMUM.
Make sure to ask/signup/use reward programs! Some stores, like Goodwill, have regional rewards programs that you can sign up for, for FREE! They’ll typically discount your purchase after you reach a price threshold, which is a life-saver when it comes to buying multiple items!
Check out their discount schedule during your visit, so you know when the deepest price cuts will be! Example: Senior Tuesdays, Color of the Week, 50% off Sundays, etc…
Some trips may be #instagramworthy and some you may be leaving the store #emptyhanded, any-and-all are perfectly normal! If you are thrifting correctly, you probably won’t “strike gold” everytime you go, and that’s part of it! The unpredictability is the fun part!!
Retail Arbitrage: What to Know Before Sourcing for Resale:
Shop the clearance section! This is where you’ll find the deepest in-store discounts. My general rule-of-thumb for all RA (retail arbitrage) stores: $10 or under is safe, anything above stays!
If you have found an item that has the original manufacturing sales tags, your reselling value just went up! Having items with the original packing or sales tags makes them truly-new in the eyes of buyers, so finding pieces that are NWT (new with tags) are the equivalent to reselling gold!
Before zooming to the checkout counter, take some time to check each and every item to make sure the price is something you are truly willing to invest into the piece. This is where you’d double-check comps (comparables), condition, trends/styles, and quality.
You might even be able to purchase in-bulk of a specific kind of item, which is strongly encouraged. But, make sure it’s an item that is trendy/in-style/popular in order to sell quickly!
If you qualify, make sure to sign up for any rewards program that they offer! I know that getting multiple credit-cards can be scary, but here’s what I do when correlating it with reselling:
- Sign up for the card. (some may not be eligible.) (does not hurt your credit to apply)
- You’ll likely receive a discount on the first purchase you make when signing up. (I spent $200+, and got 20% off just for signing up and using my card! Better than no discount!)
- Reserve the same amount that you spent on your card in your normal way of payment, and make sure to pay the bill in-full when the statement is ready to be paid! (No interest, plus boosts your credit score!)
- Repeat the using of the credit-card when necessary, but continue to use the mind-set of: “If I don’t have the balance in my debit/savings/current reserve at time of purchase, I do not need to spend that much.”
- You’ll receive discounts and coupons with time, and make sure to use them IF AND WHEN! NOT “just because”!
Remember, the most important part is to pay your bill on-time, and in-full as much as possible. Check with each retailer and ask if they accept in-store credit-card payments to eliminate the debt as soon as you make a purchase!
Same as above, you shouldn’t visit these kinds of stores everyday. Big chain stores are likely to have weekly & monthly markdowns, so don’t waste your time looking at the same stuff and go once-a-week!
Be on the lookout for retail arbitrage opportunities online! There are many companies that are selling inventory boxes and unclaimed/returned packages that have some seriously good finds online! I have yet to try any yet, but there are plenty of other resellers that could recommend their favorites!
Which is the best?
There is no true winner of retail arbitrage versus the thrift, because they each offer such a different experience!
To thrift, is to find unexpected goodies at great prices that may or may not have the qualifications to resell.
To RA , is to find some great new items with a high resale value that may cost you more than it’s worth.
Knowing what your market is, along with your budget is super essential when shopping to resell. To have the judgement on what will work and what won’t, is completely up to each individual reseller.
For me, I rely mostly on the thrift because I know a great place near my home with quality items. But I still do RA occasionally because I want to have the NWT items and newer styles available in my reselling business. It’s all about balance, and what YOU want for your business!
Either way, try each source out for yourself and find out which you prefer! Please keep in mind all of the great tips shared above before you cough-up the cash at any establishment, it’ll save you money and countless hours of frustration!
Have your own thoughts or opinions on Thrift VS. RA? Leave them down in the comments below for others to learn!
Pingback: T.J. Maxx Yellow Tag Clearance: Everything You Need to Know as a Reseller in 2021 - Revive Me Shop - The Blog