But, does it scale?

I’m back to report good news on the $5 Challenge: I sold the two Bodum glass containers for $40 each for a total of $80. After $18.32 in fees and an initial cost of $3.98, that’s a net profit of $57.70!

The next question you and everyone will ask is “Yes, but does it scale?” The answer is, of course, no — but it doesn’t matter. The thing about retail arbitrage is that while you may be able to get deals that you can buy more of than just 1 or 2, most of the time, those deals don’t even scale up a single degree of magnitude. When there are good deals on eBay, most are limited to 2-5 per purchaser. There are mystery buying limits at Best Buy, Staples, Saks, Macy’s and many other retailers. Even if there weren’t, you would soon hit other limits: credit limits, limits on how much time and space you have to repackage and send your inventory to FBA or customers, etc.

To be truly scalable, we would have to find items of ever increasing values with the same margins and that sell as frequently as our current items sell. After iPads at around $500, can you think of much else that consumers buy regularly? Anything that’s even 1 order of magnitude more expensive? No, not really.

When starting out, I wouldn’t worry about whether things scale or not. If you’re able to find items that will net you $50 of profit every time you step foot in a Goodwill, and you like going to Goodwill, don’t let the issue of non-scalability bother you. On the other hand, once you find a better place with more consistent (or bigger) profits, you will naturally prefer to do your sourcing there. But you have to start somewhere, so don’t be discouraged that whatever you’re doing doesn’t scale. Just keep your eyes open for other opportunities as well when you’re scouring those estate sales and Salvation Armys.

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