Imagine if you could find potential buyers online for a specific service, and you could find sellers wanting to sell the same service but at a significantly lower price. hmmm…..$
If you matched up the buyer with the seller, you could stand in between the transaction and collect yourself a profit.
This is a standard business model known as arbitrage.
Arbitrage occurs because markets have imperfect information or there are constraints preventing buyers and sellers from dealing directly.
Common Types of Arbitrage
Retail Arbitrage: Buy low from retail stores and sell for a higher price online. Used where there is an inefficiency in supply and distribution. Lots of profits are generated doing this by selling on Amazon, as well taking advantage of their FBA (Fulfilment by Amazon) program.
Read more about retail arbitrage here… Arbitrage: The authoritative guide on how it works, why it works, and how it can work for you
PPC (pay per click) Arbitrage: A few years ago people starting buying pay-per-click ads on yahoo or bing to push traffic to their websites. Visitors would then click on google adsense ads, and a profit would be produced. The opportunity is now closed as search engines developed systems to stop this happening.
High Frequency Trading: A Wall Street style trading strategy dominated by geeky ‘quants’ running sophisticated software to profit from financial market imperfections. Out of reach for most people to take advantage, not only due to skill but also large volumes of capital required.
Offline Arbitrage: Works well if you notice a product for sale in one geographical area at a lower price than another area. This is what drives imports and exports from country to country. A simple example is when mates of mine would buy a car and then drive it into another area, stick a sign on it and sell it for a profit in one day!
Services Arbitrage: This is where you find buyers offering to pay a higher price for a service than those offering to perform the exact service. Read on and I’ll explain exactly how you can do this online yourself with buyer/seller matching software.
Buyer-Seller Matching Software
If you think about how to do online services arbitrage, you would have to:
- Decide on a service to search for
- Find a source of buyers for the service
- Find a source of sellers for the service
- Check if there is a difference in price to make it profitable to transact between the buyer and seller
- Assess if the seller can provide the service in time
- Contact the buyer and promote the seller’s services
- Agree to do the transaction
- Deliver the service
- Handle any revisions of the service that may be required by the buyer
- Pay the seller
- Receive payment from the buyer
Whenever there is a systemized method that can be done over and over again – think automation by software.
I have been fortunate enough to be given review access to some very powerful software that automates most of the above steps.
Arbitrage Underdog desktop software has been used to efficiently search for buyers and sellers as well as co-ordinate the transaction process so that consistent profits can be made.
The software uses a sophisticated matching algorithm over the following buyer sources:
You can search for any service wanted by potential buyers straight through the software, no messing about with different site interfaces through your browser.
This makes research on the buyer side very efficient saving a lot of time.
Your time is worth money especially with arbitrage based transactions where he/she who strikes first wins.
On the seller side, fiverr is being used to source the services required by buyers. If you haven’t heard of fiverr, it’s a very successful site where sellers offer their services for 5 dollars as a base payment.
Found a Match!
When you find a buyer/seller match, the software helps you assess the seller’s capacity to deliver the service required and on-time. It also assists with templates for contacting via email and a whole host of other time-saving features.
Using Arbitrage Underdog as a Research Tool
The searching algorithm is so effective that some users are simply using the software as a lead research tool and then providing the services themselves.
What Markets to Target?
The easiest markets to target are those that require the least amount of effort communicating back and forth between the buyer and seller. Logo design is an example.
The best markets to target are where there are barriers to entry for other would-be abitragers. So if you have skills in a certain area you could target those services and value-add where most others cannot. By choosing these sorts of markets there is much less prospect of competition and profits can be maintained.
So for me as a web architect, I would target basic web development/programming tasks and value-add using business process diagrams and other methods of interpreting business requirements to the seller.
A simpler idea would be if you were proficient in SEO style services and perhaps setup ongoing services with your own payment subscription systems. Thinking on-the-fly here.
It just takes some creative thinking, giving it a go, and then fine-tuning the process.
Bonus Software Available
I use Arbitrage Underdog software to source leads for my software development business, as well as match buyers and sellers in other markets. I’ve decided to add a great bonus software to those that see how good this arbitrage software is and buy it. This bonus is only available from me
Retails for $57 (Developer version). Yours free with full access to members area when you purchase Arbitrage Underdog.