I was reading up on yet ANOTHER WSO, and from skimming the comments I could already tell that it’s basically the same thing as Arbitrage Cash Cow and Buyers List Arbitrage. It even has strong similarities to Speedy Snowball profits.
Is it a coincidence that the three WSOs I reviewed in a week period are all selling the same thing? Probably not. Apparently this is now a ‘thing’ that people are selling as a way to make money online.
While I do understand that there are some merits to the business model, I strongly believe that it’s not as simple or profitable as they make it out to be.
Of course, any junk coming from Warrior Forum is going to be a sales page a million miles long, filled with ridiculous claims like how a total made $30,000 in a month or that you can turn $5 into $1000 with a piece of software.
The majority of the time it’s just another case of what worked for one guy, one time, instead of what is going to work for most people. So I want to take a look at what it really takes to start a service based arbitrage business, and if you can really make money doing it.
Update: After doing a few more reviews since publishing this article, I did find some software that I think works really well. Of course, it won't make you rich overnight, but it can help you get started with your arbitrage business.
How Does Craigslist Arbitrage Work?
In a nutshell, what you’re doing is purchasing a service for a price and selling it for another price. Buy low, sell high. The most common example that people give is buying and selling logos. Yes, you can make money doing this, and I've actually done it.
Where do you get a cheap logo? Fiverr.com.
Fiverr is the other part of the equation to your business. Most products called ‘arbitrage’ these days heavily rely on Fiverr for cheap products and services. I’ll admit that I haven’t done lot of selling on Craigslist, but I have spent hundreds of dollars on Fiverr, so I know a thing or two about the type of stuff you get there.
*Note: Fiverr is a place where people sell goods and services for $5.
To understand 90% of what these ‘arbitrage riches' themed products are selling, it’s basically buy on Fiverr, sell on Craigslist. End of story. Almost.
My Personal Experience With Both Websites
Let’s first look at the Fiverr side of things because that’s what I have personal experience with. $5 isn’t a whole lot of money these day, so as you might expect, a lot of what you get on the website is junk, or stuff that qualifies as “not bad for the money” in a best-case scenario.
I guess if someone could churn out 2 items per hour, that’s $10 an hour, so you could probably expect 30 minutes of work to be put into the project.
Perhaps if you get someone from a developing country to do it, they might spend an hour, considering $5/hour isn’t a bad wage in some places. Still, consider that they still have to pay listing fees, receive instructions, upload, and send it to you, so I’m sure that factors into how they track their time.
At the end of the day, in practice, a lot of what you get is low-quality stuff. I have had numerous logos done for my niche websites, and none of them were delivered in very high quality formats.
Compare that to logos you have done at places like Upwork.com or Freelancer.com, where a job will absolutely include multiple edits, multiple image formats, high quality images, and even the source files so you can have some else make edits in the future.
On Fiverr however, you usually have to pay extra for those files, sometimes $5-$20. Need a redo? It might be free, or it might be another $5.
So what happens if you don’t do your homework, get a ripped off logo, then sell it on CL for $100? Trouble, that’s what. You've now committed copyright infringement, and ignorance is not an excuse in the eyes of the law!
But OK, that’s just one example. What about the other stuff? Many books on how to do arbitrage with these two websites do little more than give you one example, and leave the rest up to you. They don't tell you how to run a business, how to manage feedback, or ideas of how to scale.
A very popular gig on Fiverr is having someone do an SEO audit of your website, or help to improve your SEO. As someone that actually runs my own online business and takes care of the SEO on my website, I'm pretty confident that these guys on Fiverr do not not really know what they're doing.
At the very least, I'm sure you can believe that they don't give a rip about your business. Anyone that is actually good at SEO will not be selling their services for five bucks.
You could potentially sell SEO services on Craigslist. I hate to knock it before I try it, but I just don't see a lot of activity there, which makes me think that it's a dead market. Here's your competition:
Sure, this may be a huge untapped market, but oftentimes no competition means there's no money to be made. And with the limitations of a Craigslist listing versus using a traditional website or landing page, I'm not convinced that selling SEO services on CL is a business I would get into. I guess anything is worth a try.
However, you then have to worry about the end product you are delivering. What can you promise in your ad versus what can your hire deliver? This is a big problem for making long term sales. If you want to make a business out of this, you need to keep your mind off of ‘just making a sale' and start thinking about how to turn this into consistent income for yourself.
Content Creation Services
Searching Craigslist, one problem I ran into was actually finding the proper listings for jobs people were offering. After searching around a bit, I did find two interesting things related to content creation that could potentially be interesting.
You could potentially pay someone $5 to set up a Facebook page, but the only gig I found related to that was just designing the cover photo.
You still would have to design the tab images, get the tabs on the page, and possibly write a description, and even just set up the basic page. This type of custom work may be hard to find gigs for!
Looking at the equestrian articles request, there is definitely some potential here, but money is not just going to fall into your lap. Can you find someone that can write those descriptions? Will you give them the login details and have them complete the work, or will they just write, and you upload the work? These are things you need to think about.
One possible plan I think could work would be to do it in reverse…find writing gigs on Fiverr, see what their description is like, then write a similar one for CL.
Edits and changes will be a problem, especially if you jack up the price too high, but maybe that can fit into your business plan some how. For example, if only 30% of jobs request an edit or redo, then you may be able to sell writing services at a decent price.
Quality of writing will depend heavily on the writer, so be sure to take care when you choose who you work with.
Other Types Of Jobs To Outsource
Other than logos, SEO, and content, there are many other potential arbitrage opportunities. Which ones you follow up with will require research and testing. One piece of software that could make your job of matching requests is called Arbitrage Underdog Reloaded (review). In my review, you'll see a video of how it works, and proof that I actually make money using it.
The Issue of Value
When you charge someone $100 for a service, they probably expect you to spend a few hours on it. One time I ordered a gig on Fiverr where a guy did a podcast introduction for me. It was pretty cool, and I couldn’t believe it only cost me $5. Would I have paid $100 for it totally!
But it was almost exactly the same as every other one he did, except that it used my script (which I wrote). To write the script was another $10. I was also limited to 50 words I think. Extra words? Another $10. The gig limited me to one redo as well. Extra fixes? More fees. It adds up.
So what do you do when a company comes at you with a 200 word radio script and wants you to narrate it based on some guidelines they’ve set up? You outsource it to this guy but now, instead of a 20 minute, $5 gig you are asking for a real, custom service that may cost you more than planned. You may be paying $50 instead of $5, and asking for $200 instead of $100.
Suddenly the deal is a bit more complicated.
Now instead of a cut and paste business where you just buy and sell, you are coordinating two different parties that have requests, issues, corrections, complaints, etc. What happens if your buyers want to speak on the phone? You will have no clue what the seller is doing, unless you call him as well. Asking for his phone number could be an issue as well because it’s against Fiverr’s TOS and a big red flag when someone wants to connect ‘off site’.
Let’s say this guy takes 2 days to get back to you. Remember this is probably just a side job for him, and doesn’t know your business depends on him being on time. Want a 24 hour turnaround? That’s another $10.
The point I’m trying to make is that buyers are going to expect $100 of value from you. Not $5. The stuff people are selling on Fiverr is usually worth about $5 and the ones that give more value for their work are usually overloaded with work and start to charge more or limit the number of orders they take on. That's kind of how free market economy works.
Problems With Craigslist Delivery
One of the interesting tricks these make-money-through-arbitrage products do is that they give a few easy examples, but fail to really dig into the ins and outs of the business.
- Answering machine recording
- Social media
- “SEO services” (in quotes because I don't qualify it as legit SEO)
Then they trail off and mention things like “you can do this with all kinds of stuff!”
How about some more examples bro. Because the thing about Craigslist is that most people go there to do LOCAL transactions, and meet you in person to get the goods delivered. I buy things like furniture, appliances, tools – physical stuff that I can see and verify before I pay for it. There's no payment security or accountability within the Craigslist system – it wasn't built for that. In fact, CL has this warning on their website
So how do you plan to get paid – Paypal? There’s also a warning about that. Buying and selling physical good sight-unseen is going to be a major road block that products like Arbitrage Underdog tend to glaze over.
You’re going to have to trust that the person will pay, and they will have to trust that you actually deliver the item. Then what happens with returns? Looks like you’re going to be the proud owner of a brand new fridge! There’s no buyer/seller rating system on CL either, so each transaction will be just as hard as the last.
Arbitrage Works, But…
Yeah, it works. I’m not saying it doesn’t. But it’s not the cure-all money making bonanza that these guys make it sound like. WSOs and other products launched on Clicksure or JVZoo are created by internet marketing gurus who are just looking for a system to sell so they can package it up, give it a snazzy name, and get affiliates to promote it. I highly doubt that they are actively using it to make money.
This is why we see the same guys launching new products every month that claim how you can make a million bucks with their one secret way to skyrocket newbie profits. 90% of the time they fall under these categories
- Email marketing
- YouTube videos with affiliate links in the description
- Building multiple niche websites with spun content
There’s rarely anything new being sold – just the same old ideas repackaged under new names.
I digress. I truly believe that buying and selling services online is a way that someone could make money. But I think you are going to have to work your butt off to actually understand the services you promote, and still work even harder to start making regular income from this.
If you are ready to move forward with your Fiverr + Craigslist arbitrage business, then you should check out my review of Arbitrage Underdog reloaded 2015. It's a great software that can help you find gigs/jobs from both companies, compare side by side, and make your job of matching up buyers and sellers much easier.
What do you think?
Am I slamming a business model I don't really understand?
Is there a better way to do arbitrage?
Let me know in the comments. Let's discuss!