Profiting From eBay ArbitrageArbitrage: (noun) the purchase of a commodity in one market for the purpose of immediately selling it at a higher price in another market.
I think the best way to explain eBay arbitrage is to give you a few examples. Each example illustrates a different method of eBay arbitrage.
9 Ways of Doing eBay ArbitrageeBay Arbitrage Method 1
Every few days, I go through my bookmarked searches and see what is new. A few months ago, I found an auction with a pile of Lionel Trains from the 1920s and 30s containing a pair of cars I wanted for my collection. Also included in the auction were a few other cars and a locomotive. The pictures were terrible.
I save bad eBay images to my drive and then enhance them to see what the seller has. It takes a few minutes to clean up an image, but it is worth the effort. After I had cleaned up the images the stuff looked really clean. So I figured up what it was worth and set up a snipe. I bid $425. for the group of trains and bought them for $87.91.
This big difference between what I bid, and what I ended up paying was due to the poor pictures and because the auction was listed in the wrong category.
After I got the items in the mail, I pulled the two cars I wanted out for my collection and listed the rest on eBay. I ended up selling everything except the two cars I wanted for $480.00.
I put a pair of cars worth about $350 into my collection and made $375. Not bad for a half hour of work.eBay Arbitrage Method 2
Here's another example of eBay Arbitrage. I won't tell you what the item is because I don't want the competition. There is an item that will bring about $10 when listed in one category on eBay. In another category the same item will bring $100-150.
Luckily for me, the majority of people who list this item on eBay, list it in the cheaper category. As an aside, eBay's category suggestion tool shows the cheaper category as the best one.
I have a search set up on eBay for the item ONLY when it's listed in the first category. This is called a category specific search.
Even better, eBay is helpful and sends me an email when a new one is listed so I only have to do the search once. Every 4-6 months one shows up on eBay and I get an email with a direct link to the auction.
For the past 5 years I have bought every one of them listed in the cheaper category. The cheapest one was $8.00, the most expensive was $16. including shipping and handling.
When I get the item in the mail, I write a new auction and list it in the category where higher prices are realized. The cheapest one was in poor shape and sold for only $83, while the most expensive one went for $215.eBay Arbitrage Method 3
Note: As I wrote this, I realized there is a way to find items to buy on eBay that I can resell for a profit that I hadn't seen before.
That is to check the eBay category suggestion tool. If it gives you a category you know is a poor one, you might want to see if items are listed in that category.
For example, the majority of times eBay will suggest the books category when you use the word book in your title. However most of the time if there is a second category dealing with the subject, you'll do better listing your item there.
A book about Lionel trains will always bring more money in the Toys and Hobbies >> Lionel category than in the Books > Nonfiction category.
I just searched the books category for the word "Lionel" and found 2203 results. That's too many, so I'll have to set up a search that excludes common author names like Lionel Trilling, Lionel Barrymore and Lionel Edwards.
Just a quick glance at the search results without exclusions showed some Lionel Train catalogs. Catalogs from before 1942 and ones printed for foreign markets will bring at least $30 with the earlier examples bring hundreds of dollars so this is a search worth setting up.
Because of the number of listings, I cannot set the search up for email notices - I don't want one every day with 40 or more to look through. I'll check it every few days for a while online, and if I don't find anything worth buying, I'll stop looking or try to tighten the search better by adding date ranges.eBay Arbitrage Method 4
I started buying trains out of England on eBay and then sell them locally. This is the true definition of arbitrage. Taking advantage of geographic price differences.
When I am looking for items in England, I look for really clean boxed items in groups. I need to get 5 or more items at a time because the shipping cost eats into my profits. I buy common items in England for up to 10 pounds each (An English pound is about $1.60 so that's about 16 dollars each.) Here in the US I can get 30-50 dollars a car at the local shows.
eBay Arbitrage is Profitable
It's a no brainer. For every dollar I spend, I get at least two dollars back. Sometimes I get much more.eBay Arbitrage Method 5
There are also foreign language sites like the German ebay.de. I can't speak German, but do know the manufacturer's names and model numbers for the items I want. When I find something interesting on the German site I check to see if the seller will ship to US - the site is laid out the same way as the English site we are familiar with look for the word "Weltweit" which means worldwide.
Once I make sure the seller will ship to me, I translate the page by copying and pasting it into the text translation tool at Dictionary.com
Many Germans speak English, and those who do not will be able to pull your address out of the translated messages, so you won't have a problem communicating. Use the Dictionary.com site to convert your emails from English to German.
Four More Forms of eBay ArbitrageThere are more forms of eBay arbitrage I need to mention. I have been buying and selling trains for almost 30 years, and have a good reputation and following. I know lots of collectors who do not buy trains on eBay. Either they are too busy, or they do not want to risk getting ripped off. eBay Arbitrage Method 6
Because they will not buy items on eBay, I can make money off them. When I see something that will interest them I bid on it and when I buy something I offer it to these local collectors. Probably the best example is a few years ago, I bought a train set on eBay for $581 including postage. When the trains came in I made one call and sold them for 1600 dollars. I made over a thousand dollars for an hour of work. Even better, the seller took credit cards so I paid with my Visa card, and sold the stuff for cash before the credit card bill came in.
This might seem like free money, but it is really a result of knowing what the stuff is and where to sell it. Arbitrage requires knowledge.eBay Arbitrage Method 7
Another form of auction arbitrage has to do with location again. I also buy large steel pedal cars and wagons. I look for desirable ones in areas where I can pick them up.
Last year I bought one out of Southern California for $85.00. I had a friend pick it up from the seller, and another friend bring it back to Arizona. I cleaned it up and got $750 for it. A profit of $665!eBay Arbitrage Method 8
The final and last form of eBay arbitrage is searching local auctions. This is not as profitable as the other forms, but every now and then it pays off.
I look for local auctions where people are selling all their trains in one lot. If they have an insane reserve that is even better. I contact the sellers through eBay and then call them to try to go over and see the stuff personally. It is almost impossible to buy trains from these greedy sellers, but I am more interested in getting into their homes.
You see these sellers have "researched" their trains, but not the toy car sitting on a shelf in the garage, or the guns in the closet, and the bicycles in the back yard.
Have you figured out what I am doing here? I am going into these people's homes with a pocket full of cash and buying other items. The a great recent example of this is a small toy car I paid $35 for then sold on eBay for $335.00. I also do pretty well with dishes and vases.eBay Arbitrage Method 9
Some eBay sellers are poor spellers. The first time I tried out a misspelled auction search, I bought a Lionel 1935 Mickey Mouse figure for $10. It was part of Lionel's Mickey Mouse Circus Set, and my set was missing the figure. I wasn't willing to pay $300 for the missing figure when I saw them at shows, but was willing to $10 plus $5.50 for shipping.
There are a number of sites that allow you to search for variations of words. I have one, but the code needs updating. Until I get it fixed you can search on Google for misspelled auction search.
Final Auction Arbitrage Advice
I'll wrap this up now with a few last pieces of advice. In order to do this successfully you MUST use two different eBay accounts. I have my main selling account with the high feedback that everybody knows about. I also have other eBay accounts I buy with. I use these buying accounts until I get 30 - 40 feedbacks or until people figure out it is me, then move on to another account.
Never buy something for resale using your selling account. Keep your buying account private, and do not become attached to it.
In order to successfully benefit from eBay Arbitrage you also need a good knowledge of the collectibles you concentrate on, and a list of local buyers is quite helpful.
PS. When I wrote this article for my newsletter subscribers in 2003, I coined the phrase eBay Arbitrage. (Don't worry about these techniques being old, they still work, and I've even added a few new ones.) Today there are people selling ebooks explaining how they do specific types of auction arbitrage. I've reviewed two of them here on IWantCollectibles.com. Here's links:
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