This article has prices that are accurate as of September 2018. Prices will fluctuate and change in the future.
What would you do with an extra $200 per week? 200 is a very achievable amount to make using the method of Craigslist arbitrage.
$200/week * 52 weeks/year = 10,400 $/year. It adds up to an extra $10,000 per year, That’s pretty good money.
The idea is that people on craigslist (and other markets for used goods) don’t understand the value of the products they are selling. You can capitalize on this mispricing and profit. This is the concept of Arbitrage (Wikipedia), the practice of taking advantage of a price difference between two or more markets: striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the market prices. Theoretically, arbitrage is risk-free. Unfortunately we live in the real world, where economic theories almost always fall apart.
- Time Commitment: This is ultimately up to you, but the main time commitment is searching Craigslist. I recommend checking product listings 3 or 4 times per day. When you are arbitraging, the money is made when you buy not when you sell. The good deals will be purchased quickly, usually within a few hours. When you are selling you will be selling for a fair value that allows selling within 1-2 weeks. Finding products is the main time commitment. Responding to messages is incredibly easy once your listings are posted. Simply set up email notifications and respond to the emails whenever you check your inbox.
- Knowledge: You need to understand the products you are going to be buying and selling. This doesn’t require expert knowledge but you should be able to read the headline of a listing and be able to formulate an approximation of the retail price and how much you will able to resell for. You will also need to understand the risks of the product you are buying. I arbitrage coffee grinders and espresso machines. I understand the internal mechanics of these devices may be worn out or broken, and people may have apprehensions about buying 2nd hand kitchen equipment.
- Price Point: The more expensive the product you are arbitraging, the greater the profit potential. The higher the retail price of the items you are reselling, the greater the potential profit for each unit sold. On the other hand, the more expensive the product the less there are, there are less buyers and sellers for luxury items than for general household goods.
- Geography: This is entirely out of your control, however the larger the city you live in the greater the amount of potential deals you can make. There will be more buyers and sellers in larger cities, naturally. It is also an advantage to be in a more affluent city, it will be easier to find good deals in New York City than in small town Kentucky.
How to write listings:
Your headline will be the product name. Your initial price will be slightly higher than you think you can sell the product for. You can always adjust downwards, and people will often send low ball offers. Once you have more experience arbitraging certain goods you will have a more intuitive grasp on how much you can sell them for and how long it will take to move inventory.
For example the Baratza Encore Coffee Grinder from the deal below has this listing:
Baratza Encore Burr Coffee Grinder
Excellent condition, 5 months old
$100, Retail Price is $150+tax
The listing is super simple. If someone wants the grinder they want it – don’t over complicate this step, simply focus on finding good deals.
The products I arbitrage are coffee grinders and espresso machines. People tend to buy fairly expensive kitchen appliances and forget how much they are worth when they sell them. Also, for many people they don’t have the time or interest in squeezing all the value out of their appliances in the 2nd hand market.
If someone is moving across the country in a month, selling their coffee equipment for maximum value is nowhere near the top of their priority list. They post their ad with an arbitrary price that will gain them some money. They may have an $800 espresso machine and sell it for $150. Most people don’t have the mindset of extracting maximum value on the 2nd hand appliance market.
This is where I come into the picture. I check Craigslist 2-3 times per day, I respond to people’s ads quickly and I am extremely reliable. This is the mindset you need to succeed, you are helping someone else out by buying what they no longer want.
Your best purchases will be made within 1-3 hours of the product being posted online. This is particularly true in a big city, you are not the only person trying to make a bit of cash on the side.
Let’s get into the action. These are the two deals I have done in the last 2 weeks.
Baratza Encore (Amazon)
This grinder sells on Amazon for $139.99+tax. I bought a used model for $25 that was 5 months old and in great condition. I sold the grinder in 6 days for $100.
= $75 Profit
This espresso machine sells on Amazon for $249.99+tax. I bought a used model for $30 that worked great but was mediocre visually. The black setting labels were heavily faded. I sold the espresso machine in 4 days for $150.
= $120 Profit
Tips & Tricks:
- Most people are afraid to make low ball offers and obscure requests. The simple way to overcome this is to realize you are dealing with a random person who is selling something. They are selling and you are trying to buy. That is a win-win situation, so don’t be afraid to low ball or ask someone to drive an hour to deliver the product.
- Minimize your travel time. Never offer to deliver the product, and always ask the seller to deliver (they will often say no, but when they say yes it saves you valuable time).