At the age of 31, Larry Lubarsky was $100K in the hole and unemployed. Luckily, instead of finding a dead-end job that barely paid the bills, Lubarsky taught himself about “wholesale arbitrage.”
Wholesale arbitrage involves buying massive quantities of products from wholesale and retail stores and flipping them online for a profit.
After finding early success, Lubarsky got aggressive with his new business. That was seven years ago.
So how’s Lubarsky doing now? He’s killing it.
In 2017, Lubarsky’s business pulled in roughly $18 million in revenue, including a net profit of $4 million, from selling products on Amazon. Lubarsky only launched the business in 2014, and he brought in more than $3 million in that first year.
While Lubarsky’s story is a real rags-to-riches tale, he did have a little help along the way. A friend made a $60K believed in his idea enough to invest that much from the jump.
The budding entrepreneur used that loot to invest in his venture.
Lubarsky spent about $10,000 of that amount on renting a small office space and on shipping supplies (to ship the products he’d sell on Amazon). He used the rest of the money of to buy his first batch of inventory, including almost 100 different wholesale products that he knew would sell well on Amazon and return a respectable profit.
Lubarsky shared some tips with CNBC in case anyone else wants to give wholesale arbitrage, or item flipping, a try and doesn’t have the initial $60K from a very trusting friend.
- Get the products wholesale – “What I basically do is buy directly from big national distributors, or brands direct,” Lubarsky told CNBC. “I open wholesale accounts with them, and I basically have access to their products and to their catalogs, and I go through all those tens of thousands of products that I can get my hands on.”
- Do your homework – “In order to decide what to buy, Lubarsky and his employees research extensively using Amazon’s Fulfillment by Amazon (FBA) site, which offers sales-tracking tools to third-party sellers that can tell Lubarsky how many units of a particular product are typically sold each day.”
- Remember ROI – Return on investment (ROI) is crucial to Lubarsky’s success. “He wants any product he’s buying to give him at least a 30 percent ROI so that if he buys something for $10 per unit, he’ll make about $3 on each sale. And Lubarsky requires a minimum of $3 profit per item, because otherwise, the margin is too small to be worth the effort.
- Put the profits back into the business – Don’t spend the money on a fat ride or new kicks. All profits should back into buying more inventory.
Finally, Lubarsky warns that a business like his isn’t a side hustle. It takes long hours and tons of work because after all, it is a business.
If this all sounds like too much, maybe the side hustle is a better idea.