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28-year-old makes millions buying from Walmart, selling on Amazon (msn.com)
392 points by kolbe 7 months ago | hide | past | web | favorite | 193 comments



He is doing $200K/mo. Assuming average sell price is $50, that would require shipping one item every 12 minutes assuming he never sleeps and works all of the 365 days. Just think about someone needs to stroll around Walmart and find all these 4000 items each month chosen meticulously, buy them, store them, package them and ship them. Then there is a classic and dreaded inventory problem. The items you bought from Walmart has no guarantee that they will get sold by same day, week or even a month. It's not hard to imagine that you will need 2X inventory and many of these items may go unsold in long tail easily wiping out significant profits. In fact odds are squarely not on his side because he is specifically buying items from clearance which probably means that Walmart had good confidence and insights that those items won't get sold easily. Remember that massive sales and trend data available to Walmart is not available to this guy so he needs to be extraordinarily lucky 4000 times a month or just plain genius.

So I see lot of problems in claims being made. Unfortunately this reporting smells more like advertising and mostly link bait as opposed to investigative journalism with evidence and good data source. It is likely that on can find blindspots from inefficiencies in some nitche and make small profits but doing this at scale seems highly unlikely. I'm more on cautious side because Internet is littered with videos of people like this making claims of how anyone can millions by doing this and that. Usually that video is prelude to something they want to sell like books or self-help course or just get free publicity to boost their prospects.


> that would require shipping one item every 12 minutes assuming he never sleeps and works all of the 365 days

He uses Fulfillment by Amazon, meaning after he buys the products he just ships them all to Amazon and Amazon will ship them to the customers when the orders go through. That saves 90% of the time required to operate a business like this. All he has to do is find and buy products where he can make a margin significant enough, send them to Amazon and list them in his store.


While I agree that there is some hyperbole in the article, I think it's worth pointing out that this is a fundamental (if not the fundamental) business concept: Buy/make a thing for price x and sell it for price x + profit.

$200K/mo is a little much for this kind of low-hanging-fruit but easy/easier money DOES exist. Your next startup doesn't have to be a blockchain AI distributed whatever whatever that's going to change the world.

If you can afford to use distribution centers (there are some that come ready made and will drop ship and do stuff for you), and can find a niche/gap in the markets and fill that niche/gap until it's no longer there.

That said, this is low hanging fruit (basically arbitrage), and difficult in practice, as logistics (storing, shipping, inventory, etc) is hard. If you can do it easily, odds that others can too, and more will enter the market, and reduce your profit margin.

I also don't need millions to feel like a success at such a startup -- If I were to make a setup like this (and I know people who have, though they focused on specific niches), and get away with 50K a year or 100K a year, I'd be very happy (assuming the logistics were little to no work after initial setup costs).


but blockchain AI ICO developer sounds more cool to my friends :(


"Blockchain ICO" is easy money. People give you real cash for magic internet tokens. Then you do nothing.

http://www.wired.co.uk/article/what-is-initial-coin-offering...


I'd say "I make $200,000/mo" sounds cooler.


>Remember that massive sales and trend data available to Walmart is not available to this guy [...]

True, but this guy and WalMart are not solving the same optimization problem. Supermarkets are dropping prices on particular items to lure customers into their stores expecting them to buy other stuff as well. They try to maximize the profits they make on all of their existing and potential customers, now and in the future. Customer loyalty is a big deal for them. This is a very difficult optimization problem.

When WalMart sells a particular item for a particular price, it is not a judgement on the real market value of that individual item. And I think that's what creates the sort of arbitrage opportunities that this guys is exploiting. He doesn't have to beat WalMart at their own optimization game only with less data as you suggest.


He takes the same item Walmart would discount in a localized area and makes it globally available. Someone browsing online doesn't know said item is on clearance in Backwater, Flyover State. Sure he has probably made some mistakes and bad purchases, but anyone worth their salt doesn't do it again. Take small risks and see if it sells. When you find a seasonal item or hot seller, you replicate it. This can wipe away any mistakes you made. This plus amazon fulfillment handling the inventory problem, might work well.


He has a team of 11 doing it. It's not just him. It's a small business.


Good for him, but I really wish for a better class of business journalism. He's been doing this 4 years, and never made more than $150k/year. So he definitely isn't somebody who "makes millions".


The article might be exaggerating but it did state that he had 'millions in profits' at first paragraph.

Salary is a different matter, CEOs of new companies dont earn from annual revenue but more from stock sales and gains.

Paying 150k is also before taxing and profits and is an expense in wages.

Taking a quick guess and say that this person has 1 million in profits, but most likely 1 million to 2 million in gross profits instead of net from what I can think is more likely and 150k in his salary as well as wages for 11 people and warehouse rent which likely reaches 700k to 1 million, he likely has around 3 to 3.5 million in revenue and net profits of likely 50k as thats your average web retailer net margin


So "28-year-old runs a small business that makes millions selling on amazon" would be more accurate than the actual title. But they probably get more clicks phrasing it more like a pyramid scheme ad ("Make 6 figures from home selling ____!")


He also says he's doing $200k/month in one spot, then $8M/year in another. Smells funny.


They are currently doing $200k in sales but "Since he started selling on Amazon, Grant says the business is on track to top $8 million in total sales by the end of this year."

$8 million is sales since starting.


The math still doesn't work. He's been at it 4 years, and he notes that it wasn't huge the first year.


He's doing $200k in sales per month now.... Black Friday and Christmas are just around the corner and are probably 80% of their business (just my guess). Either way retail sales are not linear.


Revenue is revenue. Profits are profits. In this case, I'm guessing, it was revenue over $1m.


His high salary was $150k. You can still make millions without taking it out in the form of a salary. If he owns the company and the value of his equity increases into the millions, then he’s making millions. It sounded like he was reinvesting the money back into the business too. It’s probably a smarter use of profits if he has predictable margins that scale.


No recurring revenue, no actual customers, no secret sauce. Maybe some proprietary data models, but doesn't really sound like it.

So what would it be that someone was hypothetically paying for if they were to buy him out?

The blog following and sales classes probably are the key IP worth paying for.


He’s pretty honest about that in the article, anyone can do it; he wants them to; and he’s spending his personal time trying to convince others to.

The reinvestment is for something better than a juiced up valuation. He’s likely parlaying his profit into more inventory or scaling the team that he will profit from. Reinvestment isn’t always about selling the company.


Agree the large reinvestment is necessary for any growing business. But if you want that equity to be worth much there has to be something there to buy.


>No recurring revenue, no actual customers, no secret sauce. Maybe some proprietary data models, but doesn't really sound like it.

So exactly like most of the 100s-of-millions valued internet startups?

(But in this case, actually making a profit)


I agree. The article is intentionally vague. Millions of dollars in revenue is relatively easy vs. millions in net profit.

That said, presumably the value of the entity could be a multiple of the revenue. Either way the article fails to shed enough light on it.


And it is written also "...his business is making seven-figure profits..."


The level of hate towards someone who is successfully working for himself, making $150k a year, no being beholden to meetings, stand-ups, managers that don't understand how special the posters are while shaking as a leafs in November being afraid that they won't be able to afford the next rent increase in Silly Valley or that as they turn forty is just amazing.


Huh. Not sure who you're talking to, but I opened with "good for him", and I meant it.


It was directed at the general posture of comments disassembling and not believing his business model, saying that he cannot be as good as Walmart at predicting demand and hence should go out of business, etc.


Amazing, right? This guy is living the dream.


You're confusing the salary he pays himself with the success of the business.


There's this: "Grant says the business is on track to top $8 million in total sales by the end of this year"

But, the actual net margin is unclear. At least $150k, since he paid himself that. But it's not clear that it's millions.


the article says "his business is making seven-figure profits"


Hmm. Seems unlikely given the manual nature of shopping at WalMart, shipping costs, returns, etc, on an $8M revenue base.

Edit: He contradicts himself..."four years later, we're a team of 11 and we're doing well over $200,000 in sales per month"

$200k/month isn't even close to $8M/year. And you aren't netting 7 figures with $200k/month and 11 employees. Now I'm thinking this is just a puff piece for his get-rich-quick lecture series. Too bad, as it's probably still a decent story with the actual figures. Just not a rags to riches one.

I'm also having trouble visualizing 11 people buying $8M (retail) worth of stuff from WalMart in shopping carts. That's $2k per day, per employee, every day.


This is exactly spot on.

The article is just content marketing for him to sell his "get rich with an FBA business" course.


> $200k/month isn't even close to $8M/year.

It doesn't say $8M/year, it says $8M total sales by the end of this year. So from the founding of his company, to the end of this year.


This "company" may be doing something else, additionally to these flipping schemes. Seminars are mentioned. Consulting may be something else. Or some other form of ecommerce.


"Seminars are mentioned"

Ahh, yes, of course.


So, if you knew how to make money doing x and genuinely wanted to share that info, how would you do so effectively without being perceived as a scam artist?


Here's his landing page: https://ose.teachable.com/p/how-to-make-your-first-1-000-sel...

Your call on whether it's a genuine desire to share his success.


That in no way answers my question.


Do it for free, perhaps


I am trying to do exactly that. One establishment would not post the flyer "because it might be a pyramid scheme." So simply being free seems insufficient.

But, thank you.


Well and of course free sometimes begs "so what's the catch"

In which case very cheap sometimes works. Like, "I'm not looking to make money but help me cover gas and venue rental"


Not in this case. I live in a town with a high unemployment rate and lots of homeless. I am newly off the street and would like to help people in dire straights. They don't have money to spare.


Hire them into your business. Teach them the ropes. Then turn them loose with some seed money.


I work for a service called Textbroker. Unlike Upwork, it is not a race to the bottom. You can start off making very little and grow your income, potentially to a middle class level. It helped me get off the street.

I sometimes recommended them to online friends who had just lost a job or whatever, but they didn't get it. They didn't see what I saw.

So, I started a blog to try to explain how to make it work for you:

http://writepay.blogspot.com

I also have a longstanding homeless site:

http://sandiegohomelesssurvivalguide.blogspot.com

I created flyers:

http://sandiegohomelesssurvivalguide.blogspot.com/2017/10/sp...

A couple of people I know socially are interested and have given me some useful feedback. I updated the flyers and one website because of the feedback I got.

I think I need to make local contacts and establish trust. Maybe do some volunteer work. I am not sure.

I would like to start here, but also actively encourage people to get into things like Etsy. There is good internet service in this town. But, I think they just need to get the word that it can be done. Remote work and gig work seems to be kind of big city, cosmopolitan culture. This is an area that historically did a lot of logging and fishing.

There is interest in, for example, IT related meetups. But nothing seems to actually be happening.


Maybe present it as a barter deal?


Well, at the moment, I am just trying to direct people to a couple of websites. I have created flyers and I am looking for bulletin boards to post them. I would be willing to do meet-ups or something.

Maybe if I were representing some religious organization, people might buy that I am just well meaning. But, I don't do religion.

:/


If you were associated with a nonprofit / charity that seems like it would go a long way to convincing people you are on the level.


>$200k/month isn't even close to $8M/year.

He said $8M total (over 4 years), not $8M a year.

If one is going to discredit the article, at least they could read it carefully.


Not only that but, I don't know about Walmart specifically, but retailers tend to ban high volume resellers.


exactly, lets say he really does make 200k in sales per month. and lets say he happens to enjoy 100% profit margin (very impossible) thats 200k-100k-50k (amazon fees) leaves him with 50k profit per month. 10 employees excluding him is 25-35k range, and 1.5-2k rent for warhouse and 1k for all utilities and shipping supplies. that leaves the guy making around 10k a month before taxes. very far from ‘millions’


"generates millions" would have been better wording in the headline


How many startups would love to make this much a year??


My friend does exactly this between IKEA and Ebay.

Here in Australia, IKEA does not ship (not sure if they do else where) so she buys a heap of items at the Ikea stores and flips them online. She's been doing it for years and does pretty well at it.

Here in Australia, IKEA stores are few and far between so her arbitrage is a huge value add for a lot of her customers since IKEA cannot (won't?) ship and traveling X KM's to pickup an item isn't an option for most. Personally, I'd rather buy X item from another retailer that has a product similar to the Ikea equivalent rather than use a middle man but. People really want to buy IKEA goods rather than the alternative.

I can't see how this gentleman's equivalent will stand up in the long run but till then since Walmart's goods are less unique and more importantly, much more accessible. But still he's exploiting an OK market for now.

The self help angle he's now peddling makes me suspicious that his income hasn't scaled as well as he would like now his business has grown.

He's now got 11 employee's and a much larger footprint. His business overheads would have significantly increased and dropping from $150k to $60k a year for his salary would indicate his business Net has either diminished or hasn't grown as expected.

Hence, peddling self help to generate additional income and exposure for his business.


I used to think IKEA was insane for running such a "20th Century" business model for shipping their products. The fact that you cannot purchase anything from IKEA's website and have it delivered without incurring a $129 delivery fee is crazy when taken at face value.

However, I've come to understand why they have limited their delivery service. Their flat pack products are their profit centers and the packaging that makes them so efficient to store in their storefront warehouses is simply not suited for shipping via 3rd parties (UPS, FedEx, etc). As an extreme example, consider their cardboard honeycomb + laminate furniture (the Hemnes stuff). It takes almost nothing to punch through the flat surfaces of those products if the force is concentrated on a small area and the box offers zero protection (padding) to prevent this. Even the higher end products are packaged as tightly as possible with sensitive surfaces directly touching the box they're packed in. While it's insane to charge $129 for get a pack of their excellently priced "ancillary" products shipped (kitchen utensils, cheap LED lightbulbs), those products are priced desirably in order to get you in the store. If IKEA sold those online with a modern shipping model, they'd forgo the chance of getting you to buy something that is actually profitable. IKEA can't redesign the packaging for their flat pack products without impacting the efficiency of their in-store inventory and they can't ship their existing packages without ironclad damage-free guarantees from the big logistics companies.

Even if they get a guarantee that the logistics company eats the cost of any damaged good, it would still negatively impact customer satisfaction when, for example, the bed they ordered for their new house shows up damaged and needs to be returned/reordered. Every time I've bought IKEA furniture, it's been for an immediate need, and I'm not going to be happy when I have nowhere to sit for 2-5 days because UPS crushed my package.


That sounds about right, and I doubt that their warehouse people are fully equipped to package IKEA goods properly for shipping. When I have had orders shipped from IKEA online they have typically been poorly packaged, with pieces close to falling out of the boxes.


Every time I needed anything delivered from Ikea it was actually far cheaper to rent a Hertz van(they always have a rental place at every ikea over here) for 2-4 hours and just deliver everything myself. The total cost of the van rental was less than the delivery charge, and I didn't have to wait 1-2 weeks just to get a delivery time slot.


Unsure why you're being down voted. Your comment seems pretty accurate to me. Having broken and damaged flat packed goods I've bought from IKEA personally. I would guess another provider with this be UPS or Australia Post could be even less trusted than I.


Here in US people are doing that with IKEA. The closest IKEA is about 2.5 hours way and you can put in a order through them and they make a weekly trip to buy your item and you can pickup it up locally.


There is a service like that in Charleston, SC as well. I have often wondered if these businesses are actually associated with IKEA in some way. It seems to be a strange business to be independently run, especially when there are quite a few of them out there.


Ah, thank you for the comment. I'm guessing IKEA don't ship any where in that case and that isn't specific to just Australia.

Paying some one else for the luxury and buying it through an online medium like eBay is a pretty decent alternative to a 2.5 hour drive.


Ikea has started delivery in Australia as well.

http://www.ikea.com/ms/en_AU/customer_service/ikea_services/...


Their home delivery option still requires you to go in store, take the item(s) you want off the shelves, pay for it, take it over to the delivery counter and then negotiate with them on delivery availability.

You can't do it online or over the phone, and even in-store they won't tell you availability of slots or reserve you a slot while you go pick up the stuff.

Their customer service in this aspect is dreadful.

It's only marginally better than when they partnered with a local delivery company (Kings, at the Rhodes store) who were even worse - not delivering on the day I'd paid (extra) for, and then having the nerve to try and charge me for storage when I said they'd have to deliver it the next weekend.


Ikea in several European countries delivers.

Britain for example, since it's in English: http://www.ikea.com/gb/en/customer-service/faq/dispatch-and-...


IKEA in Bulgaria deliver and it's extremely affordable. Given that we've only had stuff delivered twice I can't vouch for how well they do it, but we haven't had any issues.

Edit: They deliver to the whole country, but if you're not in Sofia you're gonna pay more. Given that Bulgaria is like a small state in the US that'd probably be the scale I'd expect in the US, but I'd bet that you have more IKEA stores in your average US state than Bulgaria has country-wide.


> I'm guessing IKEA don't ship any where in that case

They do ship, but only within a small radius of their stores.


It delivers in Canada. Both small items by post, and large items (furniture) for $100 flat.


At least in Southern Ontario, it's $100 if you pick all of the items yourself. It's $20 for them to pick it.

Both well worth it when you're furnishing a new place and purchasing 4-digits worth of stuff.

Ikea does "show-rooming" right.


>Here in Australia, IKEA does not ship (not sure if they do else where)

They definitely have a delivery service in the US.

http://www.ikea.com/ms/en_US/service-offer/delivery/


IKEA are stepping up their home delivery game in Australia, hope your friend knows about this.

https://www.smartcompany.com.au/industries/retail/ikea-onlin...

Online shopping is already available in Tasmania, the Northern Territory, Queensland and the Australian Capital Territory.


Oh nice, thank you for the heads up. I'll let her know. I was unaware, she may be across it though.

I gave the impression that she exclusively deals with IKEA products but from what I understand it's more diversified than that but, I'd suggest it's still her bread and butter.


Looks like online ordering / home delivery is available in Western Australia and South Australia too (which apparently are not part of the eastern coast IKEA network). Delivery cost is $19.75, which is still crazy if you just want one $5 USB powered lamp... but less crazy if you're ordering several items at once.

Not that I checked eBay and noticed a lot of people selling IKEA USB lamps or anything ;)

Looks like there's no IKEA in New Zealand though. Hopefully your friend can still make her fortune selling across the Tasman and providing a great service to Kiwis!


Ikea here in singapore just started doing delivery 2 months ago.


Given that nobody in Singapore has a car, how exactly did people get their furniture home previously?


Was TaskRabbit popular in Singapore for that kind of delivery (and assembly)? I know IKEA bought TaskRabbit a month ago:

https://www.recode.net/2017/9/28/16377528/ikea-acquisition-t...


IKEA in china has always done delivery and even assembly. They wouldn’t sell much of anything otherwise as many don’t have cars and there is only so much you can do with a taxi. Surprised Singapore isn’t similar.


Sorry I should have being more specific. Delivery via the website.

If you purchase in store hey do delivery, but the queues can be an hour on the weekends.

They have services like GoGoVan to get some bulky items home cheaper.


This is cool. It reminds me of another three person team I’m familiar with that works on Amazon Prime arbitrage full time. They have a warehouse and an employee responsible for overseeing shipments in and shipments out. The entire business revolves around algorithmically identifying non-Prime merchandise that is undersold because it lacks the Prime label, purchasing the inventory, then reselling it under the Prime label with delivery and tracking guarantees.

They found out pretty quickly that many customers preferentially buy Prime listed items over non-Prime items, and specifically purchase items they can quickly resell for a profit.


How do they identify those products?


Most likely using Amazon Product Advertising API http://docs.aws.amazon.com/AWSECommerceService/latest/DG/CHA...


Parts of this are legit, but google "retail arbitrage amazon" to see a bunch of the strategies and pain points people run into. There's a reason this guy is selling seminars instead of just scaling what he does.

Long story short - for clearanced items, Amazon's new gating policy is making it more and more difficult to grey market (legit, new, but not manufacturer authorized) products. Amazon's set up a system for vendors to police their excess, and they keep internal metrics on how many items are being sold through third party vendors... and once that number/dollar is high enough, they outreach to the vendors themselves and do a sales pitch so vendors can be active on their platform.

For new items being arbitraged by a third party between like this Walmart->Amazon thing, Amazon basically sits on the sideline until the product accumulates enough sales, then outreaches to the vendor themselves. Basically the arbitrageur is doing market discovery for Amazon, and at the point where it's a particularly profitable item Amazon does their bizdev direct with the manufacturer to bring efficiency into their own marketplace. Really clever and virtuous system, to be honest.

Most arbitrageurs now go for the private label option (buy unbranded items and rebrand with their own trademark) to avoid this, but once their product is popular enough to warrant it, Amazon responds by having their buyers clone an AmazonBasics version of them item. (See prior discussion: https://news.ycombinator.com/item?id=11533973)


There are definitely quite a few people out there doing this. This guy is neither the first nor the last to be doing this type of product channel arbitrage. There is an acquaintance of mine who lives no more than 8 minutes from me who does this as a side-job and it brings him in an extra couple hundred to a couple grand a month. He obviously spends time as shown in this video going to WalMart, buying certain items, and then listing those items as being for sale through Amazon. His margin takes a slight hit sometimes when uses Amazon Fulfillment services to keep the item in Amazon's stock but he also spends time shipping items from his own basement. I imagine his fingers get a bit dry and cracked after handling so many cardboard boxes after awhile.

Additionally, he does use price tracking and discovery tools to try and find the deals with bigger amounts of arbitrage between Amazon and WalMart. Because pricing is so dynamic and changing all the time, occasionally an item just barely breaks even as Amazon will sometimes magically update prices for its own goods to match or beat what might have been available at WalMart in their store. But it all depends and varies a lot.


Interestingly enough it seems that public mentions of this don't destroy business. Here is a Planet Money podcast from 2015 http://www.npr.org/sections/money/2017/07/26/539552579/episo.... I thought at this time the days for arbitrage like this would be counted. Apparently not.


The exploitation of the strategy can be limited by two factors: "labor" and "capital". It sounds like labor is the more limiting factor, though.

Also, some of these prices aren't set at maximum profit per item, but there are other factors involved. For example clearing warehouses or attracting customers.

In many cases, I suppose Walmart should be coming up with a way to sell direct to Amazon, but that may not be what they want, strategically speaking.


I wonder if Walmart simply can't afford to play arbitrage with clearance stock at the size of their organization. The amount of manpower and shipping time they would have to add to localized stock management might end up eating away at any additional profits.

From their perspective Ryan is probably helping them out by emptying their clearance stock faster. If the local manager was smart he'd keep his number on speed dial.


My experience, from shopping in Walmart quite frequently, is that they are highly disorganized and un-nimble. I guess this affords the opportunity for persistent arbitrages. For example, my local Walmart supercenter routinely runs out of certain products (not usually the same products). Sometimes it feels like GUM (An iconic USSR department store in Moscow). I gone shopping and found them missing any kind nutcracker ( a basic utensil), grapefruit juice, landscaping mulch, etc (many more examples). At the beginning of August the garden center had already moved out all its mulch for the year and filled the shelves with de-icing salt lol. The people who run the place do not seem to understand opportunity costs: they lost a sale in me and I am pretty sure nearly no-one is buying de-icing salt at the beginning of August. This is a northern USA store but where I live the weather is in the 60-70 through October: grass still grows, gardens still can be mulched. The stores are overstaffed with floor people (seemingly wandering around Lord of the Flies style) but not only 3-4 of 20 checkout lanes are open at a given time. Nearly every single canned good is dented or has a dirty lid. Their self checkout POS run on Windows 7 (lol) and update firmware automatically when they reboot which is hardly ever but for a power outage. If there are intermittent power outages in a storm a POS could reboot on the first outage and be bricked on the second one while updating firmware. There are so many opportunities for improvement with Walmart but the capital cost of a competitor entering the industry is so high. I am not sure if Amazon can be a real competitor (I think they largely serve different sets of customers).


There was a line in the article like “anyone can do it if they put in the work”. It’s still work with some risk, so I don’t think articles like this hurt the biz too much.


I think the reason is that it's a local arbitrage, and it's limited in sypply. He is buying from his local stores, who probably have limited amount of such products on sale. So there's probably room for more doing the same strategy.


Back few years ago I was able to make extra $10,000 on Amazon by selling $200 packs of $2 for around $240 + shipping, because everyone thinks they are super-unique. Meanwhile a mere trip to a bank is required with request for a "$200 BRICK". I takes about 10 business days for BEP to ship it to your bank and you can order multiple times, no problem. My best month was December of course with I believe $18,000 in one month because everyone want to have a pack to give out as a x-mas gift. The work took my friend that I outsources about 3 hours a day. I only checked on her on the weekend and if she has any issues (merely). I remember how upset she was at me cause she knew the business but she couldn't afford to get Bricks from Bank herself.

Eventually Amazon banned me for selling currency instruments, but it least 10 months.


That you Woz?


I am surprised that there is so much margin. Is this because:

1. Amazon product delivery is so convenient that users don't mind paying little extra or

2. Walmart discounts products valuing their warehouse space more. Thus not realizing there was demand for the product elsewhere or at a different time.

Seems like it would be simple for Walmart to figure out this arbitrage and shelve products for longer time. Any thoughts ?


I will occasionally search Amazon for things whose prices I know, like Trader Joe's items or something I bought at a local store. Sometimes Amazon sells it themselves, in which case the prices are reasonable. But often, somebody random will be selling it at a large markup.

My theory is that plenty of people are not particularly price sensitive and just want the thing to appear. I'm stubborn enough (or cheap enough) that I'm very reluctant to reward the arbitrageurs. But I'm sure many aren't.


Amazon spent decades of building the brand of "if it's on Amazon it must be a good deal" and now Amazon marketplace allows third party sellers to exploit that image to the occasional buyer who does not really understand what Amazon marketplace is.


I have a similar feeling when I look at houses to buy online.

If I see the house was bought for 40%+ less just a few years ago, I refuse to give an offer. Even if the price seemed reasonable and it interests me. I refuse to reward people who bought low and want to flip it for much higher (if it increased reasonably, fine)


So, either they put in a bunch of work to make the house more attractive or the overall market price rose 40%. In either case you just want to exclude the house because you don't want someone to make a profit?


I am ok with someone making a profit but not a 40% in a few years.

Yes that is probably irrational "caveman" thinking. Never said it was logical.


Better to find the cheapest house that fits your want list regardless of past ownership.

The house I bought doubled for the last owner during his 6 years here. It doubled for me in half of the time since. The past owner wasn't greedy the market moved on its own.


How do you know they didn't invest a significant amount to fix issues? What they paid for it isn't a useful measure if you don't know the condition it was in.

Comparable sales prices for recently sold similar homes would seem a better measure.


I have been looking at houses as well, and I do this too. My main reasoning though is that there is generally a lot less value left to capture in these houses because as the house trades hands, most of the 'low hanging' remodels/improvements get picked. And of course the other risk, is that there is some 'hidden' issue that is driving the turnover (noisy neighbors, under a common airplane flight path, or something like that).


Certainly those increases in price are because the person put significant time and money into improving the property. It's not any more of a "reward" than your salary is "reward".


Not certainly - it's very common for a neighborhood to shoot up in value (because of something that individual homeowners don't do, like a major employer moving in or getting successful, or a train station being built, or a nearby neighborhood getting full), and so the market value of the same home at the same condition can increase dramatically just because the neighborhood has more demand.


40% in 2-3 years is pretty unlikely, even in the hottest markets. But even still, does that mean you discontinue shopping in the neighborhood altogether? Because all the surrounding homes would have seen the same increase?


40% in 2-3 years is unlikely, but still happens. Small town + business taking off can quickly dry up all available housing.

I suspect if you look around say the Tesla Gigafactory, local housing prices had a massive spike at some point.


Yes, I said unlikely and I meant it?


Sorry, I mean yes it's uncommon, however it's also predictable. Iif you know where a new factory is going ahead of time that drastically alters the probabilities.


We bought our house, lived in it for two years, moved and rented it out for a few years, then sold it for a 40% markup. Didn't do anything special.


Or they just dont care. Walmart sets a price to move X amount of merchandise. This guy sells to a small fraction in comparison. Lets say 1% (as an example).

If Walmart increases the price, they could easily lose more than 1% of their other customers by attempting to capture this guys profits.


The margins can be big! I've compared Walmart or Target products on Amazon vs. in the store. Sometimes they are 200% higher, however it tends to be on low priced products.

A bottle of vitamins on Amazon might be $9, but you can order them right now and get them delivered to your door. In the store it's $5. A LOT of people are willing to buy from Amazon evening knowing it's more.


I follow this company and guy... they have a bunch of partnerships with distributors and manufacturers directly which result in higher margins. Saying they buy at Walmart and sell on Amazon is only part of the business.


Shelf space is valuable, and customers like full shelves. Walmart warehouses as little as possible — everything gets pushed out to the stores. So you’ll have regional and seasonal variations where a store will overstock to push more product.

When that season ends, it’s more useful for the store to unload the inventory for cash quickly and switchover to the next thing.

You can always spot a struggling general retailer when you see “holes” in the aisles or low-density merchandising... it’s a sign that the vendors are tightening credit terms.

Amazon has a less competitive market position because people are buying stuff for convenience and there’s a high transaction cost due to shipping. Every major retailer is launching subscribe and save programs to nip at those Amazon convenience shoppers. Amazon needs the job-lot people because they are the only folks who can get a tube of toothpaste for 1/3 the retail cost. It’s a great strategy, until some psycho tampers with product by putting poison in toothpaste or acid in shampoo.


3. When buying things from Amazon, if I don't meet the $25/$35 limit or whatever, I will sometimes, stupidly, search for something else I need from the store and will pay up to $5 more for it through Amazon. Things like folder separators, a pack of staples, etc.. You can get these things for $1 or $2 at Walmart, but on Amazon, maybe $4, $5.


> Things like folder separators, a pack of staples, etc.. You can get these things for $1 or $2 at Walmart, but on Amazon, maybe $4, $5.

In germany buying stuff in bulk sometimes requires to travel like 50km, I've seen people plenty of times make bulk buys over amazon, because it is more convenient.


Exactly both - this is a temporary sort of arbitrage but is great for both these entrepreneurs and the end consumer in the short term. I will be surprised if they survive in the long term, since most of their business model is designed around the lack of Walmart and Amazon talking to each other. I think it would take a relatively simple collaboration between the two (though that might never happen) to completely destroy this business.


Or Walmart could just dump the stuff back into their own fulfillment system.

I doubt it amounts to enough merchandise for them to care about though, regardless of the margin. They make money on low costs and volume.


Indeed, which is why it has probably skated under the radar for this long. I imagine this company’s success will eventually be its downfall in that the second when Walmart and Amazon see how much money is being made over this kind of arbitrage and that kind of money becomes significant they will quash it like a fly on the wall.


I think pricing trends monitoring aka camelcamelcamel.com would be enough for Walmart to figure this out. They don't need to actually talk to each other IMO


Likely. They’ll probably stick some ML or data science person on it at Walmart Labs who ends up doing better at it than CamelCamelCamel because it’s his/her full time job and because they have a PhD in statistics or some similar field. Also because Walmart has near unlimited money to throw at these kinds of problems.


> relatively simple collaboration between the two

Wouldn't this fall foul to some kind of anti-collusion laws?


Maybe, I’m guessing it depends on the flavor-of-the-year government they would deal with when attempting such.


I’m part of group one. I have two kids. Putting them in the car to go bargain shopping sounds awful.

Being able to order online and have it magically show up later that day or the next is worth the markup.


The article mentions him buying clearance items.


Many brands are "gating" their products on Amazon so only select resellers can sell them on Amazon. For example, the article mentions LEGO--restricted. You need to show Amazon proof that you purchased your products from a credible distributor in order to list your LEGO products. Receipts from Walmart are not enough.


Lego is gated? Since when? I sell Lego on Amazon. It's been a few months since I sold any though.


Huh. That's curious. Maybe you got grandfathered in. It's definitely restricted for new sellers. Anything Disney, which it turns out is a lot of stuff these days, is all restricted too.


Do you have a source for this? I've never had trouble selling Legos on Amazon.


https://thesellingfamily.com/the-known-brands-that-are-not-a...

Also, my Amazon seller app. But I'm a new seller. From what I understand, some of these restrictions may not apply to sellers who have been around awhile and sold certain brands or categories before they became restricted.

The deal about Walmart receipts not being valid I read in a forum post.

When it comes to "retail arbitrage", it seems dealing with Amazon FBA is kind of like dealing with the IRS. You can walk on as thin of ice as you want, but Amazon can ban your account at any time. Some argue that items purchased retail should not be listed as "new" because they will have shelf wear. Some sellers laugh at this notion.


Title should read: 28 year old used to make millions buying from Walmart, selling on Amazon; because he certainly will have to live with competition and reduced margins from now on.


Not really. The company I work for has a similar setup; we bid on wholesale lots from the same places that Big Lots and other wholesale-to-retail outfits buy from. We flip those items both in our storefront and on eBay and Amazon. We don't do FBA but that's because we have a huge warehouse and competent shipping staff at our disposal. We clear enough for 10 competitive salaries and a comfortable income for the owners, and the rest is reinvested into the company.

The company has been around for nearly 20 years (I've been with them off and on for seven of those years), and was one of the earliest online closeouts retailers back in the 90s. This is nothing new.


Lol, good luck is all I have to say to you. Invest well=)

If you honestly think this is sustainable, you are mistaken.

You are lucky to have done well all these years, but as more people get smarter, bye bye margins.( Same thing in every business.)

More and more people will get into this space.

Sure, you may be able to survive because you geta volume discount on shipping, but that's all dependent on you sourcing the product that these new people will be doing because all it takes is a smartphone and dream....


People buying random clearance items from Walmart to sell on Amazon has zero impact on our business. We buy wholesale lots for thousands of dollars at a time, stock them in a huge warehouse, and employ a team of workers to sort, evaluate, list, and ship the items. A single person working from their basement can't even touch that.

It's been sustainable for the nearly 20 years the owners have been doing it, and the rise of Amazon and eBay has caused an explosion of growth over the majority of that time.

As for myself, my role there is multifaceted (mainly IT and website management, and helping out everywhere else as needed). I'm paid better than I was in government work, and I'm enjoying it a lot more.


all dependent on you sourcing the product that these new people will be doing because all it takes is a smartphone and dream

And capital for up-front costs, and a willingness to take the risk to buy stock you might not sell, and space to store the stock before it ships, and people to do fulfilment, and knowledge of how to sell through Amazon (or any other site)...

If it was that easy then everyone would be doing it already. You can build a sustainable, profitable business doing reselling (thousands of people do) but it's hard, and risky, and that puts most people off.


What's the name of the company you work for?


I recently bought something from eBay (didn't search on amazon for some odd reason), and I received it from Amazon. Turns out the seller has an Amazon prime account, and all he does is provide the ebay-buyer's address on checkout.

He netted $2 on a $12 product, and I found it amusing.


That’s a common thing, but amazon soon cancels the prime account for TOS violations. (Google “amazon to eBay arbitrage”)


There's even software that will do it for you.

I've seen Ebay sellers with tens of thousands of items posted, all from Amazon.


I do a similar thing on Ebay:

Canada Post has been taking 5 or 6 weeks to deliver items from China that are shipped with free shipping.

So, I'll buy 10x what I need from China when I need a part, then sell the rest on Ebay. Paying attention to things that I can ship cheaply (i.e. < 2cm thick)

Lots of buyer will pay extra to get their spare part in 3-5 days instead of 3-5 weeks.

Christmas time will be especially good to me :)


Do you not worry about unfit-for-sale goods? Getting a replacement means waiting those 5-6 weeks and often incurs return expense. Unless your margin is high enough that you can afford to buy extras for that purpose?


Nice to know that 28 is still considered a noteworthy age for things like this. It must be getting pretty close to the cutoff though. You don't often hear titles like "32 year old creates successful business"


Maybe the older ones keep their ideas to themselves?


Haha yes, that could also be true. It doesn't seem like a great idea to share your formula and encourage lots of other people to start doing it.


There's practically unlimited money to be made in the "I'll teach you to be rich" industry. It's much less work and much more lucrative than retail arbitrage.


Is it possible this is just a bit of PR spin by Wallmart to position themselves as being cheaper than Amazon or have I been working in marketing for too long?


More likely a PR piece by Amazon- hey, go do sale arbitrage for us and we can both make money.

Remember, FBA charges you money to use it beyond the cut Amazon seller already pay to sell in the platform.

(Neat thing: a friend of mine was one of the devs on the Amazon FBA seller app that lets you scan barcodes at other stores and see how much you'll make selling it on Amazon)


I read this article as a PR placement by Amazon. Amazon finds the guy (because they have the data on his sales) and connects him to the journalist, because Amazon wants to grow its Seller marketplace in the face of competition from Ebay and Alibaba/Taobao.


I'm wondering if he's working with Gary V? The other day a friend shared one of his "hustle" videos on Social Media where Gary is hawking this and I'm wondering if it was actually "embedded marketing" for this guy.


Very hard to believe, you'd have to be very naive to reveal your arbitrage like this.


It seems he is already moving on by entering the self help/motivational speaker industry.

> As his business is increasingly run by his team, Grant has reduced his salary down to $60,000 a year and now dedicates much of his time to getting that message out. He consults and teaches e-commerce classes through the same blog he has been using to track his performance.


In other words, his business isn't working out very well and he has a lot of inventory risk. So he's "pivoting" to self-help.


It may have been working fine, and he simply chose to pivot careers rather than scale what he had.


Back in the 80's, it was practical to buy software packages in the US and resell them in Europe at a substantial markup. After a while, more and more businessmen started doing this until the price differential disappeared. Classic arbitrage.


My father did this. Also he imported stuff from Taiwan and crudely ported the software for European market for a 200% markup. Literally unpack, throw a floppy disk in it, pack, sell.


Retail arbitrage is already very popular on Amazon. It might not have much of a future though with Amazon heading towards not accepting those invoices when reviewing an account.

I think the opportunity is probably too small and time consuming for big business to come in and destroy the opportunity. Similar to how small eBay sellers are able to import stuff straight off alibaba and make a profit.


This is just a feel good story, I don't know why people analyzing it to death. He's basically no different than ab ebay power seller. But instead of buying wholesale, he buys clearance items.


I did the numbers on some items, ikea on Amazon has a 50-75% margin increase on home/kitchen items.


Problem is, I don't want to work with repacking stuff, or managing others repacking stuff.

I want to build amazing software, and for that I need a larger company who can market my inventions and talk about it on conferences and road shows.

I will earn less, but I will be happy.


I don't think this story is about you.


Very curious on his profit margins here.

Considering an even 10% markup, you could easily do $5M+ and only clear 500k profit. Curious what the numbers that matter are like.


There's a pure software arbitrage play as well, take for example, simple green which you can't buy from amazon direct but you can from a 3rd party reseller which ends up being a direct arbitrage from walmart.com.


He shouldn't share this arbitrage strategy because if others do it, its profitability will decrease -- like all arbitrage strategies.


He shouldn't share it so long as it's more profitable than what he can get paid to share it by running seminars, selling e-books, minus expenses such as getting this article "published". There's not much in the article to suggest that is the case.


"What's your religion? Arbitrage."


It's an interesting story, but isn't it far more efficient to find a single product that has good selling potential and just put your effort into sourcing that product? Instead of spending $1000 on 10 different categories of product, spend $10,000 on one product, thereby leveraging economies of scale.


Maybe, but this is pretty basic portfolio theory here. Diversification means you have less effect on the price of any one good (consider that you need buyers for your goods) as well as less risk of an abrupt Amazon price cut wiping you out.


Why don't Wal-Mart and other retailers get into this game themselves? They know their own stock, they could constantly compare their in-store prices to what they could make selling on Amazon. After they develop the processes it would just be part of their usual inventory management.


Walmart is not going to help their direct competitor. Ever since AMZ bought whole foods they know the game is very real and that whole foods could eventually scale up to something similar to what walmart has. They can just call it "whole foods warehouse" or something like that. Amazon will be able to compete because amazon is using technology for customer benefit while walmart is just using logistics, strong arming suppliers and employees. Those were advantages in the past but no more. Amazon is also doing logistics innovation and they're doing it better than walmart.


Gary Vaynerchuk has demonstrated doing the same thing. But his sources are garage sales and dollar stores. He carries apps for EBay and Amazon on his phone so he can easily see whether the margin is worth his effort. He aims his advice at kids who can easily pick up $1-2K a month.


Does it add any value? Seems like pure middleman profiteering without positive output.


And?

A gas station convenience store clerk gets a salary in part from selling sugar water that promotes tooth decay and cancer.

What's the difference?

Everyone has to make a living, and our economy is not structured to prefer "positive" output, it only cares about profit. If you call this guy into question, you should be looking at the larger picture.


Sure, I agree with you, it's not an unusual thing. Still, the question remains.


Well it's more convenient for someone to buy, that adds value.


Lower price for consumers. Increased competition in the market. Increased product turnover for Walmart, meaning he helps those stores remain open.

He has filled a gap in the market.


Where do you see price reduction here?


Providing liquidity across markets.


thats a lie. almost all brands sell also on amazon and will come after your listings if you list their products on amazon. the fact that those are original products and you arent infringing any trademarks or other ip dont mean shit, ‘retail arbitrage’ is not allowed on amazon. your walmart receipts wont prove anything either. you must be authorized reseller who buys the stuff from wholesale suppliers of the product.


Is this evidence that on average you can expect to pay more on Amazon? I thought part of the appeal of Amazon was that it was generally the opposite?


They try to maximize the profits they make on all of their existing and potential customers, now and in the future


Good to know retail arbitrage is still a thing. I guess the algorithms haven’t taken over yet!


until the labor to manipulate all these goods drops to near zero- it will continue to exist.


Walmart must be trying to dump inventory for the cost of an article. =P


this is like scourging the prices on runescape and alching them lool


Meat space HFT.


Classic arbitrage opportunity trade


I am not sure what the point of these news stories is. Arbitrage opportunities have existed throughout history. How is it newsworthy? However, a basic understanding of economics would indicate that such market inefficiencies tend to disappear once widely publicized. I guess the journalist wants to grab a piece of the ephemeral surplus by publishing. In the same vein I don't understand why people share truly original ideas on show HN or waste their time contributing to open source. I guess everyone is wired differently. If I had been practising the sort of arbitrage the guy in the article was doing I would have been highly motivated to keep it secret, to minimize the number of new entrants (competitors), etc.


> waste their time contributing to open source

"Waste time." I shouldn't reply to this kind of antisociality, but this is gross enough that I feel compelled to. I contribute to open source because it is the right thing to do, because I have gotten so much from it that it is only right to pay it forward. You should be doing the same, not sneering at people with a sense of community to them.


You're very right, the internet and technology would be very different if open source didn't exist.

Basically saying, if you aren't only helping yourself and turning a profit you're doing it wrong is a little disturbing to hear.


The internet and modern computers are the result of Government and University funding (e.g. DARPA, UC Berkeley BSD) and corporate R & D projects like Xerox Alto / Start at PARC and Bell Labs Unix, C, etc.

Free Open source volunteers merely imitated (Linux vs. Unix) or extended institutional or corporate sponsored projects or ideas. Without robust government and corporate funding of basic research in the later 20th century we would not have the well developed information technology industry we have today. People founding vanity projects, ICOs, and forking is not moving the industry forward. What truly revolutionary innovations have originated from open source software vs. just imitation or variation?

Blockchain is revolutionary but the developers did monetize their work in that case (literally). In this society you need to earn money to live. It is mysterious that so many people in software want to practice their trade for free. I guess they love what they do but I think the quality of their work would increase if it was monetized. Monetization need not imply centralization or appropriation c.f. bitcoin.

It just means assigning value and ownership to the results of socially valuable work. What is so evil about that? I think, from an evolutionary psych view why people think contributing to OSS is prosocial is because of something like a genetic tendency to share new technology with the tribe. In the ancestral environment it would have been uncool for one shaman to have monopolized a new flint knapping technique. But with the rise of trade and property right people can develop and protect their competitive advantage / economic niche and monetize their work for benefit of the whole of society why collecting a reward from their innovations. Free Open Source fanatics like the GNU people are stuck in the stone age and do the profession of software development a disservice.


It just means assigning value and ownership to the results of socially valuable work. What is so evil about that?

Nothing at all. That's how Canonical built a billion dollar corporation building on and releasing, for free, open source code. That's why Facebook, Microsoft, Apple, Google, etc all release huge amounts of their code openly and for free. There's no reason to believe you can't make amazing open code and generate huge profits too.

Free Open Source fanatics like the GNU people are stuck in the stone age and do the profession of software development a disservice.

GNU gave us the GPL and LGPL, which, combined with the rise of the internet for distribution, was fundamental in changing the way applications are built using other people's code. Those "fanatics" made every developer's lives immeasurably better. Even if you don't like the code they produce themselves you still have a lot to be grateful for.


It is also possible that Satoshi Nakamoto was an alias for an NSA project. I have no special knowledge either way on this matter.


>If I had been practising the sort of arbitrage the guy in the article was doing I would have been highly motivated to keep it secret

By your own token I think the sharing of such information would be "newsworthy". Your comment is rather inconsistent.


I don't know what you mean. My comments are not newsworthy. I am not practising arbitrage. I am commenting on HN because that gives me some recreational utility. What is inconsistent?


Just think about someone needs to stroll around Walmart and find all these 4000 items each month chosen meticulously, buy them, store them, package them and ship them. Then there is a classic and dreaded inventory problem. The items you bought from Walmart has no guarantee that they will get sold by same day, week or even a month. It's not hard to imagine that you will need 2X inventory and many of these items may go unsold in long tail easily wiping out significant profits.


wow!


The Black-Scholes algorithm in effect.




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