Collecting on a Tight Budget: Retail Arbitrage

Arbitrage is a simple concept with a fancy name. It’s all about buying low in one market and swiftly selling high in another market. Best of all, it applies to video games and can fuel your collecting hobby. 

Step 1: Discover a bargain

The idea is to identify clearance or sales items that can be purchased at one retailer and immediately flipped online or sold to a pre-owned game buyer at a gain. One way to start is to simply visit retailers and take a look at what they have in stock.

Some of the best retailers for buying deeply discounted items include Kmart and Toys “R” Us. These retailers will often overstock in popular titles and offer deep clearance prices. Also be on the lookout for sales opportunities and exclusive bundle deals.

If you don’t want to pop into stores with your fingers crossed, you can do some research. Prowl resources like cheapassgamer or /r/consoledeals to find the latest sales. Even if you don't intend to buy and resell, these are great resources for finding deals. 

Step 2: Gauge profitability

Just because you found a low price or an enticing bundle doesn't mean you've found an arbitrage opportunity. Before making the purchase, you should use your smartphone to estimate the profitability of what you’d like to flip.

You can estimate and compare trade-in values using several sources:

• GameStop (or check a comprehensive unofficial list)
• Amazon Trade-In
•  F.Y.E.
• CeX

Additionally, you can perform a completed item search on eBay. Flipping games on eBay almost always results in a higher return than a trade-in, but it is much more time consuming and risky.  Don’t forget to include shipping costs, eBay fees, and PayPal fees when estimating eBay profitability.

Step 3: Make the swap

After you've successfully identified a bargain and made the purchase, it’s time to cash in. Games purchased new at a retailer will need to be opened and sold as “used” to places accepting trade-ins. Be sure to carefully investigate the item’s profitability on eBay before removing the cellophane wrap.

Keep in mind that some stores may not accept a bulk trade of several copies of the same title. For instance, it’s not advisable to try to trade in 10 copies of the same game at a single location.

With a profit margin over 25%, I converted $25.92 of merchandise from Toys "R" Us to $35 at CeX.

Want to learn more?

Read a good book on retail arbitrage to really get educated. Learn about Fulfillment by Amazon, and consider expanding your retail arbitrage into product categories beyond video games. The best of the best can make a full-time job out of retail arbitrage through strategic purchases, chaining coupons, and participation in rewards programs.