My foray into retail arbitrage

Retail arbitrage is one of my favorite ways to earn points and miles these days. Things have changed significantly since the heyday of my gift card-churning adventures: Liquidating Visa gift cards isn’t as easy as it used to be. Plus, earning points via gift card churning involves some out-of-pocket costs. Retail arbitrage, on the other hand, can actually be profitable.

As a result, I’ve focused more on retail arbitrage to earn points, miles, and a bit of cash back. It’s been fun, at times stressful, but generally rewarding.

I’m far from an expert on retail arbitrage, but I figured you might enjoy hearing about my experiences so far. Maybe I’ll make this a weekly post – we’ll see how far this goes! In the meantime, here’s a look at my recent foray into retail arbitrage:

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How I got into retail arbitrage

My friend Jon from No Mas Coach sparked my interest in retail arbitrage. He’s had success selling a popular product on Amazon FBA, inspiring me to find my own. I will say, Amazon FBA is incredibly confusing to set up and challenging to work with. It took me a minute to get up and running.

Furthermore, my Amazon seller account got banned about a decade ago. This little problem created an obvious barrier to entry. But seeing how lucrative retail arbitrage could be, I emailed Amazon, plead my case, and got my account unblocked.

The next step was to find a product I could resell. I didn’t want to step on Jon’s toes, so I searched for a different product. I followed a tip from Flip4Miles: head to the Nordstrom Rack website, find a product on clearance, and use the SellerAmp tool to determine if it’s a good FBA flip. Sure enough, I found a popular product at a significant discount. I bought ten units and got ungated to sell the brand.

“Ungated” means you’ve been approved to sell a brand product through Amazon FBA. Certain brand products are “gated” to prevent counterfeit product sales. Sellers can get approved to sell these products by proving they’re able to procure them from reputable sources.

My products arrived a few days after I placed my order, and I subsequently shipped them to Amazon for processing. After a few weeks, Amazon confirmed receipt and soon after, the entire batch sold out. I earned $500 profit and around 2,800 points. It was time to scale up.

Note: As a SellerAmp affiliate, I may get a commission if you sign up with my link.

How I scaled up

My main objective was finding a product that would earn lots of shopping portal rewards. I started with the AAdvantage Shopping site because it offers both redeemable miles and Loyalty Points, which count towards AAdvantage elite status.

I headed to the “Top Stores” section of the shopping portal to find retailers offering the highest rewards. I found one offering 12 points per $1 spent. The same retail was also running a 70% off sale, making it the perfect place to find products for retail arbitrage. I found a few products, checked their popularity on SellerAmp and Poshmark, and placed an order.

After clicking through the AAdvantage shopping portal, I paid with my World of Hyatt Card. The total was $1,667. I made sure not to order more than I could comfortably pay off or “float.” You won’t always sell products right away but you don’t want to carry a balance on your credit card. So try to order only as much as you’re able to cover in case the product doesn’t sell before your credit card is due.

Next, I checked Nordstrom Rack to see if I could replenish my stock of the original items I purchased, which had sold quickly on FBA. While they no longer had them in stock, I found a good alternative. I placed a $1,000 order using Nordstrom gift cards purchased from Staples with my Ink Business Cash® Credit Card (earning 5X points). Rakuten offered 2X points at Nordstrom Rack, helping me earn 7X points on this order.

Note: If you use my Rakuten referral link to join and spend $30 within 30 days, you’ll get an extra $30 plus 10% cash back during the first seven days. I’ll also get a $30 bonus. You can convert your Rakuten cash back account to one that earns Amex Membership Rewards instead.

How many points I earned

In total, I earned 28,667 points from spending around $2,667 on retail arbitrage products. That’s a solid return, considering I’ll also earn a 25-30% profit and make progress towards AAdvantage and Hyatt elite status. In the long run, I’ll get more value from the hotel and Airline elite status perks than from the points. Because let’s face it: With constant devaluations and limited award inventory, booking premium cabin flights is getting more difficult.

At least with elite status, I can occasionally qualify for an upgrade (without having to redeem more miles for the privilege). Here’s a breakdown of my retail arbitrage haul:

• 13,362 AAdvantage miles and Loyalty Points
• 5,000 Chase Ultimate Rewards points
• 2,000 Amex Membership Rewards points
• 1,667 Hyatt points

How I’m unloading the merchandise

I listed the retail arbitrage products on Poshmark and they’ve been selling great so far. In a couple of weeks, I should be able to recoup what I spent. I opted out of Amazon FBA this time because I had an issue with my last shipment. I sent them around $1,000 worth of products and they claimed one of the boxes was empty and the other contained just one item.

I’ve filed an insurance claim, so hopefully I can recoup my losses soon. But I want you to know that issues like this can happen when you use Amazon FBA. I recommend taking photos of the boxes before shipping. Purchasing additional insurance is also a good idea if you’re selling high-value items. From now on, I will probably just use Poshmark to unload products for retail arbitrage, since I can sell everything faster.

Amazon takes weeks to process FBA shipments, meaning your first sale might be a long way off. I also get to keep a bigger piece of the retail arbitrage pie when selling via Poshmark.

Bottom line

Problems aside, I’m enjoying retail arbitrage for earning points and miles. It’s fun to search for the right products, determine their sales potential and find ways to earn more rewards from those purchases. While Amazon FBA was convenient because I only had to make one UPS store run, the disappearing merchandise was not fun to deal with.

Thus, I’m happy to sell my remaining inventory on Poshmark. I can list and get paid much faster than I ever did with FBA.

Have you guys dabbled in retail arbitrage? What are some tips you’re willing to share with newbies?