10 Hard Truths Why People Fail with Online Arbitrage

Nobody likes listening to hard truths, especially when they are negative. But, the truth is that everyone who starts online arbitrage, ends up being successful and there are reasons why people go into this business model and end up failing. So, in this blog we will be honest and cover truthfully 10 reasons why people fail online arbitrage and not hold anything back. Hopefully, when you get to the end of the blog post, you will be able to do a reflection of your own business in your own mind and hopefully avoid these things.

1 – False Expectations  

This is the biggest reason why people fail with online arbitrage. The biggest reason why people fail with this is because they go into the business model with the false expectation that it is going to be an easy ride, and that it is going to be easy to find profitable items to sell. The truth is everybody who starts online arbitrage and pushes through those beginning months will have to go through the difficulty of finding those early products, when you are trying to learn as much as possible can. You genuinely feel as though you have spent half an hour to an hour in front of a computer, trying to find your first profitable product, then you cannot find them, and you think to yourself that you thought it was going to be much easier, and it is going to be a slap across the face. The truth is that everyone of us who has pushed through and continued to be successful with their business, has gone through the hard challenges of having to find those products. You must know beforehand that if you want to go into this business model, then you must put in the work. Whether you have to get up super early in the morning, or go to bed super late at night, whatever you must do, you must realize that you must put in that time.  

2 – Lack of Data / Emotional Selection  

When it comes to online arbitrage, it is a system and criteria, the products must match A, B, C, D, E and F. Whatever that criteria are, it is go vary for all of us; however, what is concerning is when people play on their own emotions thinking to themselves, “I think this will sell”. The truth is you have got to look at the data, the data does not lie, also do correct research. If you start putting your emotions into it and start picking products which you think would sell, that is when you will start to go downhill. You must always be strict on it and take your emotions out of it. What is the data showing you? It is very important that each person on your team has a strict criterion of what is a profitable product in the business, and what is not.  

3 – Chasing Sales / Revenue (Not Profit) 

This is a super big one. Unfortunately, time and time again, you see prices just plummet on products, and it makes you wonder how products sell at these prices. The chasing sales are not revenue, always think profit, it is the most critical thing in your business, which will keep you surviving and growing into the future. It is not worth it to spend £20 on a product, just to get £21 back. Nobody is to say what your minimum profit margin should be, but you have got to stick to it and stay at that profit. 

4 – One Man Band Mentality 

Unfortunately, one man band reality is when people start their business model, and they go into it wanting to do everything – they keep piling more onto their plates. As this business model keeps growing for you and you go over your first 5,10,15,20,50,100 products, those plates keep getting more and more and this is going to make you struggle. Any person who has started a business has always had a team around them. If you are wanting to start a business, this means you have got to have people around you and invest in your team. You must get away from this one-man band mentality, because in the end, it is going to bring you down.  

5 – Systems Mindset 

You must start developing some systems in your business and developing some systems on how you do something. It doesn’t matter if you do it, a virtual assistant, or employee, whatever the case is, create some systems and makes sure you know how you are going to do your tasks each time. When it comes to growing your team and your business, you are going to be developing systems, because systems manage tasks, the people and your operations. It is super important that you are not the vocal point in your business.  

6 – Lack of Investment  

The truth is in business you must invest. You must invest in your resources, your tools, people and virtual assistants, because ultimately, this is going to help you make a profit. If you want to buy back your time and freedom and have your business running on autopilot, then investing in your business is the best way to go. Lack of investment is always going to bring down your business in the long-term. Invest in your business and invest in making the experience better for employees.  

7 – Accounting – Purchasing Records 

If for example you do online arbitrage or you are going to start online arbitrage, you just buying products is not going to work. You must make sure that you have very good and detailed purchasing records, so that you know exactly what your margins are. Make sure that you know exactly the margins you sold it for, exactly to the decimal point; is it 30%? 30.23%? 133.37%?  

One awful thing to do is have a pile of receipts on your desk, you must have all of this documented to the reference – What you purchased it for, what your margin is etc.  

8 – Accounting – Money Management 

The truth is online arbitrage is a cash-flowing business, which means that you must be very good at managing your money. Every month, you must make sure that you are able to pay your expenses, and that you can pay for the resources and expenditures. The truth is with business, everything is stacked up against you to fail in your business. Therefore, only around 10% of businesses go out of business within a year or two and 2% survive past two years. The clearer you are with your money management, the better you can react and make an adjustment. Business is like the seasons, after winter you get spring, but after summer, you also get autumn and winter. When Q4 is on and everything is going fantastically, then you splash the cash and go all out and buy so much. It is great to invest, but you have to manage the money well in your business and know your limits.   

9 - Expand Too Rapidly  

Before you run, you must be able to crawl and walk first. It is very important that you do not try to get too ahead of yourself, just because you just started purchasing recently, does not mean you are ready for a warehouse, or just because you are filling up your house, does not mean you are ready for a warehouse. You must make sure that you are strategic in your expansion. You must know when it is right to expand and invest in virtual assistants. You must find that balance between time and money – your time is invaluable, as the business owner, your time is so valuable that you need to invest in getting your time back.  

10 – Mindset  

Your mindset is the most critical thing. Every one of these points comes from mindset. What are your thoughts and beliefs? What is it that you need to do? Are you going to get up in the morning to take action or rest? Your mindset is so important, always look to other people to learn and be successful. A great way to make sure that you stay in check and that your mindset is on the right thing is by having a mentor who you can talk to a lot. You need to be very alert in business and anticipate. 

Further reading:
13 Reasons Why People Fail to Build A Successful Online Business

5 Reasons Why You Should Start an Amazon Business Today

Amazon FBA for Beginners: Retail Arbitrage VS Online Arbitrage VS Wholesale VS Private Label