Ok, folks. I’m giving away a secret here… and I’m not just saying that. This is a method I’ve been using for a few months now to make some decent passive income selling goods on eBay without ever even seeing the items in person. Wait, what? Yes, you’ve read correctly. No packaging. No tape. No holding inventory. No risk (seriously).
No, this will not make you rich overnight. But remember, financial freedom is not a sprint; it’s a marathon. Making passive income (for me at least) is not about generating large amounts of money from one or two places. It’s about making little bits of money through many different avenues. Talk to any stockbroker out there; long-term money is made through diversification. Here I will include a specific example one of my most reliable money makers.
This is arbitrage 101, but it is so simple most people don’t even consider it. I’m talking about finding items on Amazon and listing them on eBay at a premium. I know what you’re thinking, “People wouldn’t possibly buy things on eBay that they could get at a discount on Amazon.” Well, they do. The core concept of arbitrage is discrepancy of information between markets. Put simply, most buyers in any given marketplace are not omniscient. They don’t know all the prices for all the goods they want in all the markets that contain them. For us, that means if we can find something on Amazon that is cheaper than what it can be sold for on eBay, and the buyer doesn’t know, we scoop up the difference.
Basically, it goes like this:
- Find an item on Amazon.
- Check the sale price on eBay.
- After all costs, if the sale price is greater on eBay than it is on Amazon, list it.
- When the item sells on eBay simply go on Amazon, find the item, enter all the buyers shipping information, purchase.
I’ve been selling this particular product on eBay for some time now: Aztec Secrets: Indian Healing Bentonite Clay, 2 lbs
It’s a pretty simple product that retails for $11.00 today. (Prices on Amazon can fluctuate daily.) I sell it on eBay for $13.95. How did I come to that price? Pricing on eBay in general is a constantly evolving process, and understanding your market will take some trial and error. I’ve sold this item for more in the past, but as competitors faze in and out I’m always adjusting my prices. Making money does actually take some work!
Again, you’re probably thinking, “That’s a margin of $2.95. After eBay fees and shipping, how does he possibly make any money?” You’re right, that is a slim margin. When selling on eBay it’s best to factor out about .30 cents fixed + 13% of final sale value from your profit for fees. With shipping costs included (probably around $3-4 per unit at best) I would be losing money. But, I don’t pay for shipping. How is that possible?
Answer: Amazon Prime. If you’re a heavy Amazon user like me and you don’t have Amazon Prime, you should get it. It’s $99 for the year, or $49 if you have a .edu email address. Prime is the only reason I make money flipping on eBay with this method… and it has loads of other added benefits.
With an Amazon Prime account you get:
- Free 2-day shipping on all items fulfilled by Amazon (just about everything now)
- Unlimited access to all of Amazon’s Prime-eligible movies instantly (very quickly becoming a major competitor to Netflix)-
- Prime Music:
- Over a million songs to stream instantly
- Hundreds of playlists
- No ads or playback restrictions
- One borrowed Kindle e-book a month (again, an amazing selection here)
- Amazon Mom, which gives you:
- 20% off diapers with a Subscribe & Save subscription.
- A 15% baby registry completion discount.
- Access to Amazon Mom exclusive discounts and deals.
I’m not even including all the benefits here, but you get the picture. It’s a great service. Amazon offers fairly generous free trial periods that you can access here to see if it’s something you want to invest in: http://www.amazon.com/gp/prime/signup/videos?tag=amazonprimetrial03-20
Ok… so after eBay/ PayPal fees and free 2-day shipping we’re at about a $2.26 profit margin per unit sold. Considering I typically average about one sale a day for this particular item, that’s really not too shabby for the amount of work involved; and there is still more money to be made. If you’re not fully utilizing cash back on your credit cards, you’re doing it wrong. When purchasing through Amazon I get 5% back in store credit on all items bought with my Discover card. That amounts to another .55 cents on top of my already solid margin for every sale! That’s tops us off at $2.81 profit per unit for about 2 minutes of work a day. Find ten more products like that (and believe me, they’re out there) you’re looking at around $30 a day for little to no work. Once you get it going, this stuff is too easy!
The answer remains, then. Why am I telling the world about it? There are seemingly unlimited possibilities to make money off of this model, with plenty of room for everyone. Don’t get me wrong, it does take a bit of time to research your market and toy with pricing. But once you hit the sweet spot, it’s all $$$ from there. Try it out yourself and let me know how it’s going or if you have any questions in the comments below!
Also, here is a great tool I use daily when finding new products for this method: www.camelcamelcamel.com
It’s completely free and allows you to set price tracking on Amazon products, see what goods have dropped heavily in price, filter by percentage decrease (or increase), etc. I usually like to see what items Amazon has dropped in price at any given time and compare that with current sale prices on eBay. I’ve found some real gems this way. Happy selling!
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