Nicola Kelly
January 4, 2024
Reading time: 4 minutes
It sounds like an impossible dream – turning £200 into £100k, but that’s the challenge set by a public servant from Brighton in a bid to beat the cost of living.
Dez, 43, a father of four, was frustrated that even though he and his wife earned above-average salaries, they still struggled to pay for the occasional meal out or family vacation, so he decided to take on a second job .
Like many of us who have used Amazon, the world’s largest store, he decided to spend his free time looking for bargains and then sell them for profit on the site.
He is coy about his figures but admitted in an interview last October that since he started in September 2022, he has earned more than £17,000.
Calling himself goodbyepoor_hellorich, he began documenting his success on Tik Tok “and has more than 70,000 followers. Others have gone on to do the same and call it the ‘£200 to £100K challenge’. So how does he do it, and could you do the same?
Here’s MoneyMagpie’s guide to becoming an eCommerce entrepreneur.
Dez uses Amazon arbitrage, a selling method where you source products from different parts of the market to sell on the site. For example, finding a t-shirt for £10 in a local shop selling 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 to analyze the demand and find items below the Amazon price. The advantages, especially if it is a second job, is that with the internet you can source products from home in your spare time. It is a low cost way of selling. The items will arrive safely packaged to you and you can then reuse them to sell to your Amazon buyer.
There are thousands of online retailers where you can find profitable inventory, and if you find a lot online, you can, if you have enough financial resources, be able to buy in larger quantities and potentially make larger profits.
You can use Fulfillment by Amazon (FBA) to handle packaging, shipping, and customer service.
The downside of arbitrage is that there is a lot of competition with more online resellers than there is for buying in physical retail stores. It can be time consuming and it can be difficult to calculate the profit.
For retail arbitrage, there are Amazon seller scanner apps you can download to your smartphone to help you find profitable products to resell. The Amazon seller app is free if you are a registered seller.
According to research by JungleScout, in 2021, 52% of sellers reported profit margins between 16-50% ranging between £2000-5000 per year.
It is perfectly legal to resell a product as long as it is unaltered and sold in its new condition. However, some brands may ban you from selling their products on Amazon with online arbitrage – Nike and Lego don’t allow third-party sellers on the platform.
What other methods are there for retail arbitrage?
Private label – this happens 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 have to really know your markets and experts suggest you should be willing to risk up to £5,000 because you might not get it right the first time.
wholesale – Buy bulk products directly from a brand or from distributors to sell on Amazon. This, like private labeling, requires seed money. As a business model it is more sustainable because you can replace orders every month and you are not searching through masses of websites looking for products. But demand for products can change and you could be left with an investment you can’t shift. There is also the issue of storage. If you don’t have plenty of free space at home, you could get carried away with boxes.
Drop shipping – In 2023, about 23% of all online sales were done through dropshipping and the number looks set to increase because it is one of the easiest and fastest ways to start a business,
You list products on your website or storefront, but you don’t actually own them. You act as a middleman between the buyer and the supplier, which means you don’t have the headache of finding storage space and maintaining your inventory management.
The customer makes a purchase, you process the order and transfer it to a third-party supplier (either a wholesaler or a manufacturer). The third party then prepares and ships the order on your behalf and the customer receives their order.
It’s easy to operate, there are low startup and overhead costs, you have a flexible work location, and there are plenty of selling opportunities from creating 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 niche 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 sales platform accordingly.
You may need to adjust your sales approach and never be afraid to change products that aren’t working.
It is also important to remember that with low overheads and costs come low returns. Experts suggest a 15-20% profit margin is the absolute maximum you can achieve with dropshipping.
Dez admits he tried many things before choosing Amazon arbitrage and has diversified along the way.
“I started making videos of my progress and realized that people were relating to what I was doing. it’s not 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 some company in 2024, give it a try and let us know how you get on. Read our guide to other profitable side effects here.
