It sounds like an impossible dream – turning £200 into £100k, but that is the challenge a civil servant from Brighton set himself in a bid to beat the cost of living.
Dez, 43, and a father of four, was frustrated that despite he and his wife having above average salaries, they were still struggling to pay for the occasional meal out or a family holiday so he decided to take on a second job.
Like many of us who have used Amazon, the world’s biggest shop, he decided to spend his spare time looking for bargains and then sell them for a profit on the site.
He’s coy about his figures but in an interview last October he admitted that since he started in September 2022, he’s made well over £17,000.
Calling himself goodbyepoor_hellorich he began charting his success on Tik Tok `and has more than 70,000 followers. Others have gone on to do the same and are calling it the “£200 to £100K challenge”. So how is he doing it and could you do the same?
Here’s MoneyMagpie’s guide to becoming an e-commerce entrepreneur.
Dez uses Amazon arbitrage, a selling method where you source products from different market places to sell on the site. For example finding a t-shirt for £10 in a local store that sells for £20 on Amazon. You buy the product, sell it on Amazon and keep the difference as profit, this is known as retail arbitrage.
The other method is online arbitrage, sourcing products from sites like marketplace, ebay and facebook.
The skill is in analysing demand and finding items for less than the Amazon price. The advantages, especially if it’s a second job, are that with online you can source products from home in your spare time. It’s a low cost way to sell. The items will arrive to you safely packaged and you can then re-use them to sell on to your Amazon buyer.
There are thousands of online retail stores where you can find profitable inventory and if you find a great deal online you may, if you have enough financial resources, be able to buy in larger quantities and potentially make greater profits.
You can use Fulfilment by Amazon (FBA) to handle packaging, shipping and customer service.
The downside of arbitrage is that there is a lot of competition with more resellers online than shopping at physical retail stores. It can be time-consuming and it can be hard to calculate profit.
For retail arbitrage there are Amazon seller scanner apps you can download to your smartphone to help find profitable products to resell. The Amazon seller app is free if you are a registered seller.
According to a JungleScout survey, in2021, 52% of sellers reported profit margins of between 16-50% which worked out at between £2000 – £5000, annually.
It is perfectly legal to resell a product as long as it is unchanged and sold in its new condition. However, some brands may prohibit you from selling their products on Amazon with online arbitrage – Nike and Lego do not allow third party sellers on the platform.
What other methods are there for retail arbitrage?
Private Label – this is when you create your own product label or brand, usually by modifying an existing product. It’s the most common method of selling on amazon and can be incredibly profitable but you need to really know your markets and experts suggest you need to be willing to risk up to £5,000 because you might not get it right first time.
Wholesale – Buying products in bulk directly from a brand or from distributors to sell on Amazon. this, like private labelling, requires start up money. As a business model it is more sustainable because you can replace orders every month and you aren’t searching masses of sites looking for products. But demand for products can change and you could be left with an investment that you can’t shift. There is also the matter of storage. Unless you have masses of spare space at home, you could find yourself over-run with boxes.
Dropshipping – In 2023, about 23% of all online sales were fulfilled via dropshipping and the figure looks set to grow because it is one of the easiest and quickest ways to start a business,
You list products on your site or storefront but don’t actually have them in your possession. You act as the middleman between the buyer and the supplier, which means you don’t have the headache of finding storage space and keeping on top of your inventory management.
The customer makes a purchase, you process the order and transfer it to a third-party supplier (either a wholesaler or manufacturer). The third party then prepares and ships the order on your behalf and the customer receives their order.
It’s easy to run, there are low start up and overhead costs, you have a flexible work location and there are multiple selling opportunities from setting up our own domain to opening a storefront on places like Amazon and Etsy.
To get started find a few products from an industry you know and position yourself as an expert in a specialised area. Do plenty of market research to gauge the competition, find a quality supplier with a good reputation, find out where your target audience is and choose your selling platform accordingly.
You may have to adapt your sales approach and never be afraid to change products that aren’t working.
It’s also important to remember that with low overheads and costs comes low returns. Experts suggest a profit margin of 15-20% is the absolute maximum you can achieve with dropshipping.
Dez admits he tried several things before opting for Amazon arbitrage, and has diversified along the way.
‘I started making videos about my progress and realised that people were relating to what I was doing. it isn’t a get rich quick scheme, you have to build it slowly’.
He also hopes that as he builds his media presence, he will get paid more by platforms like YouTube.
So if you fancy a side hustle in 2024, give it a go and let us know how you get on. Read our guide to other lucrative side hustles here.