Yes, You Can Make Money Online!

Thrifting/Flipping - Drop Shipping - Retail Arbitrage

Introduction

Yes, I know, there are hundreds or even thousands of "Make Money Online" scams running on the Internet these days. My spam mailbox is full of them everyday because I work online and my contact information is very visible. It's like a magnet for spam. No problem, that's just part of the game and you set up mechanisms to deal with that.

Currently, I am retired after over 35 years in the construction and mechanical trades. One might think that I'm not the ideal candidate for such "techie things" as working online. Don't make that assumption, about yourself or anyone else. Although many might consider me a "hand skills", blue-collar kind of guy, I'm also a Techie. I have been on the Internet since 1999, writing and blogging, mostly for fun.  At the same time, I was reading a lot and honing my skills. Around 2000 – 2001, I actually launched a computer sales and repair business. I had a great source that would custom build computers for me which I would then sell to my clients with very little markup and then provide after the sales service, program installation and training on an hourly basis. As a side job, it did quite well until the bottom fell out of the computer sales market. Even with my great source, I couldn't compete with the prices that people were able to get from offshore manufacturers. I close down the retail sales portion but continued to maintain the service and training side of the business to this day.

In 2012 I actually took the plunge and got my feet wet in the online business world of referral marketing. After a bit of a slow start, I was able to parlay this business opportunity into a $1000 a week proposition. I kept this up for many months and introduced hundreds of other people to the opportunity and train them how to do what I was doing. A lot of money was made by a lot of people. After about six months of working this business, I got bored. One might say I suffered from "Adult Onset ADD" LOL! 

It's sort of been my history to get involved in various enterprises, learn everything I could from the process and then move on to something new. Shiny object syndrome for sure! Not to say this wasn't beneficial or profitable, it was both. I've made a lot of mistakes and failed just like many others. I also made a lot of money along the way. The main difference is I learned from the mistakes and failures and did not repeat them. I also got back up and tried again if I failed. I knew it was doable and possible so I kept at it. I also carefully analyzed the various issues and problems that I had experienced. Ultimately, what eventually came to light was that I was just tired of constantly having to re-create it every day, all over again. When one is involved in an online business, one often finds that success is predicated on being able to "Sponsor" or recruit somebody else into the business and teach them how to do what you are doing.

This is workable but tiring as well as emotionally draining. It gets very old after a while, needing to drag the unwilling and frequently unqualified down the path to success. Frequently, it is not even possible. 
I needed to find something that I could do profitably that didn't require a huge upfront investment, sponsoring, product Auto-Ship programs (MLM's) and the resulting garage full of unusable and unsellable products. I needed a way that I could sell products to somebody that wanted them and then use the money they paid me to then purchase the product and send it to them. No inventory, no stock, no capital investment. Truly a "Shoestring Start up" business.

Recently, I found just such a program, it's called "Drop Shipping" and much to my surprise, it is a fairly common practice. I had just never come across it before. 

Drop Shipping...What is it?

Drop shipping is actually a pretty simple process. Typically when you purchase a product, you either go into the brick-and-mortar store, buy it and take it home with you or you order it online and have it shipped to you. These days, many people are extremely busy with all the various pursuits in their lives including their jobs, their families and other interests. They often find their schedule so full that it is inefficient or in some cases impossible to physically drive to a brick and mortar store to make purchases that they could just as easily make from the comfort of their own home on the computer or from just about anywhere on today's mobile smart devices. Mobile shopping is making huge inroads into the traditional shopping experience.

Platforms like eBay, Amazon, Etsy and dozens, if not hundreds of others have capitalized on this trend.  In the case of Amazon, they are striving for the goal of same-day delivery throughout the continental United States. They are getting very close to achieving this goal by constantly expanding their network of Fulfillment Centers throughout the United States and around the world. With the advent of Amazon Prime, Amazon has locked in a huge customer base of very loyal Amazon Prime shoppers that want what they want and want it quickly. Amazon Prime members qualify for free two-day shipping and that is a huge draw. It is been amply shown that Prime members are willing to pay more, sometimes much more for that fast, two-day shipping and the convenience of having just about anything they desire show up on their doorstep in a day or two.  It may sound counter intuitive to pay more for something but the statistics bear out this trend. Prime members are willing to pay the premium in exchange for the convenience.

So… Back to “What is Drop Shipping?”  Drop Shipping is simply the process of ordering something from an online vendor and having it shipped. But… not necessarily shipped directly to you but shipped instead directly to your customer!  Companies that participate in drop shipping programs will send your purchases anywhere you wish.  Amazon is one of them.  This is the key to one of my businesses. Another key is called "Arbitrage".
  
Definition: 
Arbitrage: Noun, In finance, the simultaneous purchase and sale of the same securities, commodities, or foreign exchange in different markets to profit from unequal prices.

In layman's terms, this means buying a product in one place at a lower price and selling that same product someplace else at a higher price. It's the purest form of "buy low – sell high". In today's vernacular, it is also called "Flipping".
  
One can "flip" almost anything if the pricing conditions are favorable. If I can find a product that is in demand (important aspect) at a favorable price that when sold, after all costs of the transaction are subtracted, I can still make an acceptable return on investment (ROI) I have a potential deal that will generate income for me.

Although simple in concept, there is potential risk in the purest form of arbitrage. If you do arbitrage correctly, per the definition above, you simultaneously by and sell. This means you already have a committed customer at a specified price before you actually buy the product. This is a pretty safe bet but still has some potential risk should the deal fall apart for some reason. 

There is also a variant of this process called "Retail Arbitrage" in which you search for and "source" various products that are on clearance or are significantly marked down at retail. If, after sufficient research to determine that there is actually an untapped market for this product at a favorable price you would purchase a large quantity of this product and then market it yourself to your own customer base. This customer base can be your own website store, or a platform like eBay or Amazon. This variant does require some investment, sometimes a substantial investment, which equals risk. The risk part comes in if your research is faulty or lacking. This is where experience enters the game and only seasoned Arbitrageurs should play. There are many reasons that this particular activity can fail, especially for those inexperienced in this market. 

Here's a real world example; I know a young guy that "discovered" this process/opportunity and decided to go all in without sufficient research. He happened to be a reseller on Amazon and that's where he thought he would sell this product he purchased. Unfortunately, being new to Amazon, he failed to realize that the products he purchased in bulk were restricted on Amazon or part of a category on Amazon that is "gated" and that one must be pre-qualified to list products in. Amazon is funny that way. They can be difficult to deal with and it's their game and you must play by their rules, no exceptions. Fortunately, he was able to offload his inventory on the wild West that is eBay. eBay is much less restrictive although it does still have certain restricted areas. Lesson learned.

The program I'm involved with eliminates even this risk. Your customer purchases the product from you, pays you for it and then, and only then do you actually a go out and purchase that product and have it Drop Shipped directly to them. Your personal money is not at risk. Sweet Deal!

Thrifting & Flipping

Are you a garage sale junkie like me? Do you haunt thrift shops in your area? If you do, "there is gold in them thar hills". 

I'm sure most of you have heard the stories about people finding immensely valuable items at a thrift store, tag sales, library book sales, rummage sales or garage sales for next to nothing. Although rare, it does happen. More commonly you will find arbitrage opportunities. The chance to find that someone's junk that they are happy to get rid of actually has value and a market. I make a lot of money doing exactly this. Saturday mornings are my "sourcing" days for stuff to flip. "Garage Sales for fun and profit".

Sometimes junk is just junk. Doing your research and knowing the junk from the gold is where the flipping opportunities come from.  If you have a careful eye and know your market there is much money to be made.

As a simple example, I came across 4 bankers boxes full of Mikasa China in three discontinued patterns. I bought it all for $25 and have been selling it off, one piece at a time on eBay for a significant markup. As of the time of this writing, I have made back four times my original purchase price and I've only sold about one quarter of the collection. Ultimately, I expect to achieve an ROI of at least 500% on this one garage sale find. 
I track everything I sell on both Amazon and eBay and my average ROI is 85% or better. For my flipping business, I tap into all the sources mentioned in the first paragraph. I love to dig through this old junk just for the fun of it. Now I do it for the fun and the PROFIT!

Pro Tip: Never pass over something just because YOU think it is junk. Do your research and you might be surprised. I certainly was!  Did you know that there is a healthy market for old VHS tapes? Neither did I until I looked. Now, I make a few bucks on every VHS tape that I buy for $.50. Sometimes a lot more than a few bucks. Sometimes it's $20-$50. It's a weird market but why not capitalize on it? One of my favorite finds (and one that confirms that cat people are crazy) was a VHS videotape that was produced strictly to entertain cats while their owners are away from home. Like most, that tape cost me $.50. What almost floored me was that the market price was almost $50!
As mentioned, if you actually want to do well at this game, you need some training.

As the saying goes "Wisdom is learning from OTHER people's mistakes." 

If you really want to know how well any training program is doing, just check out their retention numbers. How many new people remain with the program past the first month? You will find that the attrition rate is ridiculously high on 99% of the programs you will be exposed to. Something on the order of 3% to 4% are actually successful (depending on your definition of Success). A large percentage are just hanging in there and keep paying for the training in the hopes that it will somehow magically work for them but it never does because they are not putting the training into action often as not. The rest just give up and wander away, usually poisoned about ever making any money online. That is the truly unfortunate result of many programs. It's sad.

This is called the EOF / FOF syndrome; Experience of Failure – Fear of Failure.
If you talk to any successful entrepreneur, they will often tell you that when they get involved in something, if they are going to fail, they want to "fail fast", learn from the experience and move on to the next game. They do not, I repeat NOT let a failure knock them down for any length of time. They simply pull up their socks and get back in the game, having learned from the experience.


Dana