“How to make money” or “How to make extra money” is probably one of the top things that is searched on the internet. I searched for those topics early on when I first started to realize that my paycheck wasn’t the only source of income I wanted to rely on. Financial literacy is often marked by our understanding financial terms, so there is a word I’d like to introduce you to if you’re not already familiar with it: Arbitrage.
Merriam Webster defines “arbitrage” as, “the nearly simultaneous purchase and sale of securities or foreign exchange in different markets in order to profit from price discrepancies.”
Sounds complicated, right? That tends to be the case with a lot of financial definitions. The truth of arbitrage is that you have probably done this at some point in your life and didn’t even realize it. Ever buy tickets to a hot event and then re-sold them at a higher price? Now in some jurisdictions, that might be called scalping. In terms of better helping you understand the financial dynamic, this is called retail arbitrage.
I still have a day job, but I constantly work on generating extra cash flow online for investment opportunities. The first way I ever I made a cent online was through eBay. I realized that I wanted to generate some extra income and I had a lot of things lying around that I no longer needed. I heard from multiple friends how they had sold things on eBay and their experiences were mostly very positive.
My first few items were things like college textbooks and random items I had accumulated, but had no purpose for. Some items were still in original packaging and other items were used. When I got my first sale and positive feedback, I was pretty excited. I decided that I needed to find more things to sell on eBay. In my town, there was a “take it or leave it” section at the local dump. Items that were in good working condition, but weren’t wanted were left in a fairly large wooden shed. My World War II veteran neighbor loved perusing this and brought me one time. I brought back a couple books and some tea cups that looked pretty high-end.
To my surprise, the tea-cups I brought back were highly sought after on the internet. As I discovered, people often have tea sets with lost pieces and they turn to the internet to replace the missing cups or saucers. I ended up selling such a cup for $15 after shipping charges. I don’t recall what eBay’s fee was, but suffice to say that when your investment is $0, your return-on-investment (ROI) is quite good.
I kind of grew tired of eBay after a while. I just wasn’t a big fan of the platform. Eventually a random conversation with a work colleague who was selling items on Amazon led me to selling on that platform. I was greatly impressed and decided I needed to find a steady stream of products to sell. I turned to Craigslist for this. I found someone who was willing to sell a bulk lot of 200 vinyl record albums for $30. When I went to pick up the items, I was surprised to find some very old records in near mint condition. For the next year, I sold and shipped these items all over the country for a substantial profit.
Eventually I found merchant fulfillment to be very time consuming and working with vinyl record albums to be especially hard. These items had a tendency to get damaged in shipping or to not meet buyer expectations in terms of quality. I eventually discovered that I could buy retail items at a substantial discount locally and re-sell them on Amazon at a large mark-up (i.e. retail arbitrage). My return on investment is often 80% or better after all associated costs. To my great delight, I also discovered that I could get Amazon to store these items in their warehouse and ship them upon sale. This program is called “fulfilled by Amazon” or as it is better known among retail arbitrage enthusiasts, “FBA”.
I tell you all this to demonstrate how simple it can be to make extra money online starting today. I challenge you to find one or two items in your house that you don’t want. If they are used, I’d recommend taking them to eBay. If they are new, I’d recommend using Amazon. Sign up for and learn whichever platform you are going to use. Follow through with this and you will have generated some extra money with very little effort. Repeat the process continually and you just discovered an extra source of income that you can use to either pay off your high-interest debt, reinvest in your new arbitrage business, or to buy the cash flowing investment of your choice. The key is to use new found cash flow to make more money in one fashion or another.
The formula for generating extra cash flow is pretty simple. The commitment to do so and the ability to delay gratification is the hard part. Now get out there and make your financial dreams a reality.
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