niche market arbitrage

In this age of global internet markets, there are many business owners who are feeling as though the virtual world is rendering physical brick and mortar sales ineffective. However, it is important to remember that there are still arbitrage opportunities available for those who have the capability of breaking their paradigm, and seeing "ordinary" products as "new" products in other markets. And of course, since it makes no sense to try and avoid virtual sales, the internet can still be used to help brick and mortar stores reach those niche arbitrage markets.

It is a case of niche market knowledge and convenience. For example, I have several music websites, and on some of them I sell CDs by the bands featured. Sure, the visitors could easily jump onto eBay or Amazon and find those discs for cheaper, but in many cases they end up spending more because I have served them the product in a different context. They want to be good "fans" and the discs are right there in a convenient place for sale. This is an effective form of arbitrage, and there's nothing wrong with combining it with impulse shopping. In a sense, you are placing the customer in a new paradigm, and in this case, leading them away from the competitive market that is found on auction and used CD sites.

Another example would be the local artist who purchases cheap products from the local plumbing and electrical store and turns them into art. Granted, there is a certain amount of creativity and effort involved in rendering bits of plastic and metal into works of sculptural art, but it is still a process of taking cheap products from one market, relocating them to a new customer base, with considerable markup.

One last example is taking items that are expectedly larger or better from one niche market and selling them in the common market at markup. I recently picked up a 62" umbrella from a golf store for $20 and resold it for quite a bit more to a non-golfing customer. I marketed it as a two person umbrella. Granted, we're not talking expensive Titleist golf brand umbrellas, but typical store brand umbrellas that are usually just as nice. Regular umbrellas are dirt cheap and can be bought at any big outlet store, but two person umbrellas - well, those are special, and accordingly fetch a special price.

So if you're running out of ideas for making money, whether via physical sales or online sales, try pushing a product into a different market. You may be surprised at its reception, demand, and the price that it fetches.