One of the main reasons why eBay provides some great arbitrage opportunities is because many sellers don’t have a clue how to list their items properly!
By Jimmy Hubereans
Buying commodities low in one market, and then rapidly selling them again for a higher price in another market. Arbitrageurs take advantage of differences in price and demand in different markets to make money. On eBay, arbitrage involves buying hot items at lower than usual prices and then selling them for a profit—either on other auction sites or offline.
Generally, the most successful Arbitrageurs make money by buying and selling in specialized areas—areas they know something about. For instance, someone who is passionate about buying and selling cars will likely know other car enthusiasts. Thus, if they manage to buy a mint condition vintage car part at a bargain price, then it’s highly likely they’ll know exactly who would be interested in buying it off them. The key to successful arbitrage is being able to turn your items over quickly. While it’s not essential to be a specialist, you do need to know your market. Some arbitrageurs do very well simply by buying items that are selling for low prices just because they are not reaching the right audience. By re-marketing the item, they can attract a more interested audience and profit accordingly.
Think of vintage posters for instance. While there are collectors of vintage posters, there aren’t that many of them. However, there is a much larger market looking for home furnishings and art. So many people want to find something a bit “different” and interesting to hang on their walls. Targeting this audience might be much more lucrative.
Why do Arbitrage Opportunities Exist on eBay?
One of the main reasons why eBay provides some great arbitrage opportunities is because many sellers don’t have a clue how to list their items properly! Some items don’t get bids simply because no one can find them.
With thousands of listings in each category, most people find it too daunting a task to search by any other method other than a simple keyword search. The majority of users just perform one keyword search in order to find their item, rather than using more advanced techniques.
If the sort after item doesn’t include the correct keyword in the title, then the item won’t appear in the search results. These items essentially slip through the cracks, just waiting to be picked up by arbitrageurs!
Misspellings: One classic way in which valuable items disappear from view is when crucial keywords are misspelled in listing titles. There are two situations when this occurs:
- Unintentionally misspelled words—some sellers have poor English skills, and others don’t take time to spell check before submitting.
- Intentional misspellings—when sellers run out of space in the title, they sometimes shorten or abbreviate a keyword, unwittingly sending their item into the doldrums of eBay!
Poor Images: Another way that valuable items can remain without bids is when the image is very bad. Dull, grainy photographs don’t give any real indication of value, and they may put cautious sellers off.
Titles missing important keyword: The final way in which items disappear is when sellers neglect to include the most important keywords in their title. For example, a listing with the title “Gorgeous size 7 red heels” will not appear in search results for “women’s shoes” or even just “shoes”. Unless someone searches for “heels” or other keyword in the title, this item will not be found.
Find Hot Items
Before you can begin searching for arbitrage opportunities, you need to carry out some research and find popular items. These are items that sell for a decent amount of money—and that have good sell-through rates. A good sell-through rate means that 80% or more of the items listed at the optimum price sell. You can check out popular items—such as consumer electronics, cell phones, fashion items, or better still, research a niche area of your own.
At this point you may be wondering: It’s all very well for these valuable items to exist, but if other people can’t find them, how can you?
Strategy No. 1: Search Using Misspellings
Since we know that one of the main ways that items “disappear” is through misspelled keywords, then it follows that one of the best ways to find them is by performing searches using misspelled variations of the product name. An exceptionally helpful tool for this purpose is Searchspell. An alternative tool is AuctionSpeller, which performs the same task.
Strategy No. 2: Search Using Multiple Keywords
The way to get around this problem is to use eBay’s search capability to look for multiple keywords at once. Believe it or not, you can easily search for auctions that contain one keyword OR another keyword just by entering your keywords in parenthesis separated by commas (i.e. apple, pear, orange).
This means you can easily search for several misspellings at one time. The only difficulty here is that eBay has a maximum of 300 characters in the search box. In order to make your searches most efficient, you’ll need to divide misspellings up into a series of groups. E.g. (apple, appel, aple); (elppa, appel, appal); For items you mean to focus on, I recommend building a database of search terms to enable you to easily keep track of effective search combinations.
Or, you can use eBay’s Favorite Searches feature. Many sellers don’t even notice the Favorite Searches tool in eBay. Whenever you perform a successful search, just click the Favorite Searches button and eBay will email you whenever new items are listed that match your search. eBay will literally deliver arbitrage opportunities to your doorstep!
Strategy No. 3: Search the Description
Misspellings aren’t the only way to pick up on arbitrage opportunities. Some items may have incorrect spellings in the title—or in some cases, they may not have the important keywords at all—but you’ll often find that the keywords do appear correctly in the description.
eBay’s search default is to only check the titles of listings for keywords. However, you can opt to search both the title and the description of listings by using the Advanced Search. Just click on the Advanced search option on the eBay home page. Enter your search as normal and then check the box to search the title and description. You can also search the title and description after performing a search. The check box for searching the title and description appears on the search results page.
Strategy No. 4: Search for Poor Images
Unfortunately there are no shortcuts to finding valuable items with poor images. These tend to be few and far between. Just keep your eyes peeled when performing your other searches!
Verifying an Arbitrage Opportunity
Aha! You’ve located a couple of potential bargain items! What happens next?
1. Research the True Price of your Item
What you need to do now is find the average price that an item such as the one you have found generally sells for. This will give you an idea of what your maximum bid should be to ensure that you end up making money on this transaction. There are two stages to this process:
1. Search completed listings in eBay to see what the average selling price of used items similar to yours is.
2. Search online stores for new prices.
If you plan to sell on an auction site apart from eBay, or in a trade magazine or paper, you should research these also. Closed auctions will help you decide what your bid should be. They will also give you an indication of the true market price for your item.
To find closed auctions for the same item, try a number of searches using different keyword formulations—including negative keywords. In the example above, I can see that new Nikon Coolpix L4 digital cameras sell between $51 and $139, depending on the memory capacity. $139 represents the high end of the market, while $51 seems to be an aberration from the usual average selling price for these cameras and probably occurred because this item was listed as an auction, rather than a Buy It Now like the other similar listings. Don’t forget to search using serial numbers if necessary. Details such as serial numbers, vintage, and model number can all make an enormous difference to value.
2. Research The New Price Of The Item In eBay, Amazon, Price Grabber, And So On.
Consider how “used” your item is and how that would affect the price. In this case, it’s not particularly necessary for me to look at the new price as all the completed listings on eBay were for new items. However, if my arbitrage opportunity was new, or newer, than any of the completed listings on eBay for similar items, then this would be valuable research to help me price my item (and bid) accordingly. Once you have finished your research, make an informed judgment on the true value of your item and then work out your maximum bid price accordingly.
Remember to calculate shipping costs into your final price. Email and ask for shipping price if it is not included. Some sellers will try to make money on the shipping and this could ruin your profit margin.
Bidding to Win and Other Secrets
If the item doesn’t have any other bids, then it is essential that you place one straight away. The reason for this is that if the seller suddenly realizes that the title is misspelled—or decides to replace the photo with a better one, or re-write the title—then they are at liberty to make these changes while the item is without bids. And wham, you miss your arbitrage opportunity!
To avoid giving the seller the opportunity to make changes, you need to place a bid right away if there aren’t any others. Just bid the minimum amount to secure the auction. If someone else has already placed a bid, then you don’t have to worry. Once you have placed a bid, set a reminder to come back to the auction a few minutes before it closes.
Sniping is the act of placing a bid during the last few seconds of the auction. Bids placed before the last 20 seconds will put the auction on auto-extend mode enabling competing bidders the time to place a higher bid. A sniping tool can time bids very precisely. Bids placed in the last few seconds of the auction mean that the auction expires before the previous bidder has time to respond. Some good Sniping tools include: eSnipe; AuctionStealer; AuctionBlitz; Bidnapper.
Sniping tools are easy to use. Just enter the auction number, your maximum bid and the time before the end of the auction that you want your bid to be placed. As a general rule, leave 6 seconds before the end of the auction to place your bid. Once you’ve set up your sniping tool, it’s important not to think about the auction again until it ends. Successful arbitrageurs must remain detached from items they are bidding on. It’s essential that you are not tempted to increase your maximum bid. If you lose an auction, just move onto the next one.
Find Your Own Niche Market
Often niche markets can stem from your own interests. Are you passionate about collecting pre-1900 money boxes? Chances are others will be too. Another way of finding a niche market is by repositioning an item to target a different market.
Sometimes, all it takes is listing the item in a different category and altering the keywords to attract a new audience of bidders. For example, by placing an antique toy in the Baby category (rather than Collectibles or Toys/Hobbies), you could attract a whole new audience of mothers decorating baby rooms.
Avoid Items With Deliberately Misspelled Words
Some canny sellers are making money from putting the correct spelling and common misspellings into their title. This means that their items could potentially appear in your misspellings searches. To avoid getting these listings in your misspellings search, add the correct spelling to your search as a negative keyword. E.g. (camra, camara) -camera.
Where To Sell Your Arbitrage Items
There are plenty of places to sell your arbitrage items and make a profit:
- eBay itself (known as cross-eBay arbitrage)
- International eBay sites
- Through your own contacts
- Collectors magazines
- Other auction sites
eBay Plan of Attack
1. Research eBay and find a hot, high demand product with a high sell through rate.
2. Determine minimum price point for this product—the price above which the item will sell 90% of the time.
3. Find common misspellings.
4. Search for items using misspellings.
5. When you locate a good prospect, determine what your maximum bid price will be for the item.
6. Place an opening bid if there isn’t one already.
7. Use a sniping tool.
8. If you get outbid, don’t go back. Just forget about it.
Arbitrage is one of the most successful ways to make money quickly on the Internet. With a bit of research and the right tools, you can use Arbitrage to make a very good profit. HBM
Jimmy Huber is Community Manager for online global product sourcing directory, SaleHoo. SaleHoo caters to eBay sellers and businesses, offering more than 8,000 verified sources of wholesale and drop ship products. Huber’s background as an eBay powerseller and business owner makes him the perfect mentor to the site’s thriving community of 50,000. For more information, and free tips on eBay selling and dealing with suppliers, visit http://www.salehoo.com
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