The Ultimate 2025 Guide to Retail Arbitrage: How to Start Flipping Walmart and Target Products for Profit

Ever walked through a Walmart clearance aisle, scanned a toy for $5, and wondered if you could sell it for $50 online? That’s not just a daydream; it’s a multi-million dollar business model called retail arbitrage. If you’re looking for a legitimate side hustle to earn extra income, pay off debt, or even build a full-time e-commerce empire, you’re in the right place. Forget “get rich quick” schemes. This is a real, step-by-step business.

This advanced guide is designed for beginners but packed with expert-level strategies. We’ll dive deep into starting and scaling a product-flipping business using two of the biggest goldmines: Walmart and Target.

What is Retail Arbitrage (and What Isn’t It)?

At its core, retail arbitrage is the simple art of buying low and selling high. You purchase discounted products from a retail store (like Walmart or Target) and then “flip” them by reselling them on an online marketplace (like Amazon or eBay) for a higher price.

The “arbitrage” is the price difference, and your profit is what’s left after subtracting the product cost, marketplace fees, and shipping.

This isn’t about dropshipping (where you never touch the product) or private labeling (where you create your own brand). This is a hands-on, low-startup-cost business where you are the hunter. You’re leveraging price inefficiencies between a local brick-and-mortar store and a massive national or global online marketplace.

Why Start Your Flipping Journey with Walmart and Target?

You could source from any store, so why focus on these two retail giants? The answer is simple: volume, predictability, and opportunity.

Walmart’s Massive Clearance System: Walmart is a volume king. To move billions in inventory, they rely on a constant, aggressive clearance and rollback system. This creates a predictable flow of heavily discounted products. Their nationwide footprint means a strategy that works in one store is likely to work in another.
Target’s “Hidden” Deals and Exclusives: Target is a goldmine for different reasons. They have “hidden” clearance (items not on a main aisle), a fantastic digital coupon system (Target Circle), and a massive “Only at Target” exclusive product line. These exclusives often have less competition when resold on Amazon, leading to higher profit margins.
Brand Recognition and Trust: You’ll be selling products people already know and trust. You don’t need to convince someone that a LEGO set or a L’Oréal cosmetic is a good product. The brand already did the work. You’re just the supplier.

Getting Started: Your Retail Arbitrage Beginner Toolkit

Before you sprint to the nearest store, you need a few essentials. A successful flipping business runs on data, not just guesswork.

The Bare Essentials (Under $100)

A Smartphone: This is your command center. You can’t do this without it.
An Amazon Seller Account: You’ll need to register as a seller on the platform you plan to use. The Amazon Seller Account is the most common. You can start with an Individual plan (pay-per-item) and upgrade to a Professional plan ($39.99/month) once you’re selling over 40 items monthly.
The Amazon Seller App: This is your most basic, free tool. You’ll use it to scan barcodes. It will show you the product’s current price on Amazon, the estimated fees, and—most importantly—if you are “gated” or “restricted” from selling that product or brand.
A Starting Budget (Your “Bankroll”): You can start with as little as $100-$200. The key is to reinvest 100% of your profits back into buying more inventory. This is how you scale.
Shipping Supplies: Get a few basics: a tape gun, shipping tape, poly mailers, and free USPS and UPS boxes (you can order them online).

Advanced Tools to Level Up Your Sourcing

Once you’ve made a few sales, reinvest in tools that provide better data.

Scanner & Database Apps (Scoutify 2, Keepa, ScoutIQ): The Amazon Seller App is good, but it’s slow and the data is basic.
- Keepa: This is the most critical advanced tool. Keepa installs in your browser and has a mobile app. It shows you the entire price and sales rank history of almost every item on Amazon. This allows you to see if a product actually sells or if its price is just temporarily high.
- Scoutify 2 / ScoutIQ: These are paid scanning apps that give you much faster, more detailed data at a glance, including your net profit and ROI after all fees.

Part 1: How to Find Profitable Products at Walmart

Your first sourcing trip can be overwhelming. A 200,000-square-foot store is a lot of ground to cover. Here’s your game plan.

Step 1: Understand Walmart Clearance Tags

Not all “clearance” is created equal. Learning how to read Walmart clearance tags is a beginner’s first-level-up. While myths about specific price endings (like $.01 or $.05) are common, the most reliable information is the date on the tag and the color.

Yellow Tags: These are your best friend. This signifies a clearance item.
Red “Rollback” Tags: These are temporary price drops, not true clearance. They can be profitable, but they’re less likely to be “deep” discounts.
The Date: Look at the date on the yellow sticker. If it was marked down yesterday, it’s fresh. If it was marked down six weeks ago, it’s probably the lowest price it will ever be… or it’s a product nobody wants.

Step 2: Know Where to Look (It’s Not Just One Aisle)

Don’t just go to the main, sign-posted clearance aisle. That’s where everyone goes. The best deals are found elsewhere.

Main Clearance Aisles: Start here to get your bearings. Scan everything, even if it looks like junk.
“Hidden” End Cap Clearance: Walk the main “racetrack” of the store. Look at the end caps (the shelves at the end of an aisle). Many departments will have their own clearance end caps. The toy, electronics, home goods, and health & beauty sections are famous for this.
Top-Stock and “Wrong” Items: Look at the very top shelf. Often, clearance items are tossed up there. Also, look for items that are clearly in the wrong spot. An employee may have scanned it for a customer, seen it was 90% off, and “hidden” it to buy later.

Step 3: What to Scan? The “Scan Everything” Method

When you’re a beginner, you don’t know what’s valuable. So, your job is to build a mental database.

Go to a clearance section.
Pick up the first item. Scan the barcode with the Amazon Seller App.
Analyze the data:
- Am I gated? If it says “Restrictions Apply,” you can’t sell it (yet). Put it down.
- Is there profit? The app will show you “Estimated Profit” after fees. Is it $5 or more?
- What is the Sales Rank? A lower number is better. A Sales Rank under 100,000 in a main category (like “Toys” or “Home & Kitchen”) is good. A rank over 1,000,000 means it sells very slowly.
Put the item down and scan the next one.

Do this 100 times. Then 500. Then 1000. This is how you train your eye to spot profitable items before you even scan them.

Best Walmart Categories for Beginners

Toys: This is the #1 category for many. Look for LEGO, Barbie, and popular brand-name toys. The profit margins are huge, especially leading up to Christmas (this is called “Q4”).
Home & Kitchen: Small appliances, cookware, and gadgets. These items can be heavy, so factor in shipping costs.
Health & Beauty: Think high-end makeup, skincare, and vitamins. People pay for name brands, and these items are small and light to ship. Be careful, as this is often a “gated” category.
Sporting Goods & Outdoors: Fitness equipment, camping gear, and branded apparel.

Part 2: How to Find Hidden Deals at Target

Sourcing at Target is a different game. It’s less about brute-force clearance and more about finessing the system.

Step 1: Understand Target’s Clearance Tags

Target’s clearance system is famously transparent, which helps resellers.

Look at the Top Right: You’ll see a small red number: 15, 30, 50, 70 (or 90). This is the percentage off.
The “Price Ending” Myth (That’s True!):
- Prices ending in $.98 are initial markdowns (15-30%).
- Prices ending in $.04 are the final markdown (70-90% off). If you see this price, it’s the lowest it will ever go.
The Target Markdown Schedule: This varies by store, but many follow a weekly pattern for markdowns in specific departments.
- Monday: Electronics, Kids’ Clothing
- Tuesday: Domestics, Women’s Clothing
- Wednesday: Men’s Clothing, Health & Beauty, Furniture
- Thursday: Housewares, Lingerie, Shoes, Toys
- Friday: Cosmetics, Jewelry, Auto(Ask an employee in your store! Sometimes they’ll tell you.)

Step 2: The Magic of Target Circle and RedCard

This is how you get an additional discount on top of the clearance price.

Target Circle: This is Target’s free digital coupon app. Always check the app for additional percent-off deals (e.g., “15% off all Toys”) or manufacturer coupons. You can scan an item’s barcode in the app to see if any offers apply.
Target RedCard: This is their debit or credit card. It gives you an instant 5% off every single purchase. This 5% comes after all other coupons and clearance prices. For a reseller, this is a 5% boost to your profit margin on every buy.

The Pro-Level Stack: Find a toy on 50% clearance. Add a 15% off Target Circle coupon. Pay with your RedCard for an additional 5% off. You just bought an item for a tiny fraction of its retail price.

Step 3: Hunt for “Only at Target” Exclusives

Target collaborates with brands to release exclusive items (e.g., a specific Funko Pop, a special edition board game, or a unique clothing line). These items often have no Amazon seller, or only a few. This means you can control the price. Always scan items with the “Only at Target” sticker.

Best Target Categories for Beginners

Toys (Again): Especially their exclusive lines and board games.
Electronics Clearance: This end cap is often fantastic. Look for headphones, phone cases, and smart home devices.
Seasonal Items: The day after a holiday (Christmas, Easter, Halloween) is a gold rush. Seasonal decor, candy, and gift sets are marked down to 50% and then 70-90% within days.
Home Decor (Bullseye’s Playground): The “dollar spot” at the front of the store can have amazing finds that can be “bundled” (selling 3-4 related items together as one new product on Amazon).

The Flipping Process: From Shopping Cart to Shipped

You’ve got a cart full of profitable items. Now what?

1. Listing Your Products on Amazon (FBA vs. FBM)

You have two main ways to sell:

FBM (Fulfilled by Merchant): You store the products in your house. When one sells, you pack it and ship it to the customer yourself.
- Pros: Higher profit margin per item (no FBA fees), more control.
- Cons: Extremely time-consuming. Your house fills with boxes.
FBA (Fulfillment by Amazon): This is the game-changer and what most resellers use. You pack all your items into a few large boxes and ship them to an Amazon warehouse.
- Pros: Amazon handles ALL storage, customer service, and shipping to the customer. Your items become “Prime-eligible,” meaning they sell much faster. This is how you scale your business.
- Cons: There are FBA fees (storage and fulfillment). But the volume you can sell makes it worth it.

Beginner’s Recommendation: Start with FBM for your first 5-10 items to learn the process. Then, move to FBA as fast as you can.

2. Pricing Your Products to Win the “Buy Box”

On Amazon, multiple sellers can offer the same product. The one who “wins the Buy Box” (the “Add to Cart” button) gets the vast majority of sales. Pricing is the #1 factor. You don’t always have to be the lowest price, especially if you are an FBA seller competing against FBM sellers. A good rule is to price your item to match the lowest FBA seller or be $0.01 below them.

3. Shipping and Logistics

Shipping to Amazon (FBA): Amazon’s system, “Send to Amazon,” will tell you exactly how to label your products and which warehouse(s) to send your boxes to. You’ll get to use Amazon’s deeply discounted UPS shipping rates, which is a huge cost-saver.
Shipping to Customers (FBM): Use a service like Pirate Ship to get discounts on USPS and UPS rates. Never just walk into the post office.

Common Retail Arbitrage Mistakes for Beginners to Avoid

Going “Too Deep” on a Bad Product: You find a toy that gives you $10 profit. You’re excited and buy all 30 on the shelf. You get home and realize its Sales Rank is 2,000,000. You’ve just tied up $300 in cash on a product that might take 3 years to sell. Start small. Go “a mile wide and an inch deep.” Buy 1-2 of many different items instead of 30 of one.
Ignoring Sales Rank and Keepa Data: A $50 profit means nothing if the item has never, ever sold on Amazon. Trust the data, not your gut.
Forgetting to Factor in ALL Fees: Your profit isn’t just Sale Price - Buy Cost. It’s Sale Price - Buy Cost - Amazon Referral Fee - FBA Fee - Shipping to Amazon - Your Time. Use a profit calculator.
Selling in Gated Categories: Don’t buy a pallet of Nike shoes or L’Oréal makeup until you’ve checked the app. If you’re gated, you can’t sell it. You can get “ungated” in many categories, but it requires invoices and a sales history.
Mismanaging Your Bankroll: It’s tempting to “pay yourself” after your first big flip. Don’t. Reinvest 100% of your profits for the first 6-12 months. That is how you turn a $100 bankroll into a $10,000 bankroll. This is, after all, a key part of the side hustles to pay off debt strategy.

Scaling Your Retail Arbitrage Business from Beginner to Pro

This can be more than a small side hustle. Here’s how you scale.

Reinvest, Reinvest, Reinvest: I’m saying it a third time because it’s the most important rule.
Outsource: Your time is best spent sourcing (finding products). Hire a “prep center” to receive your online orders, or hire a friend or family member to pack and ship your FBA boxes.
Go Beyond Walmart and Target: Once you’ve mastered these two, expand to other stores: Kohl’s, Ross, TJ Maxx, Big Lots, and even drugstores like CVS and Walgreens.
Set Up a Real Business: Form an LLC, get a business bank account, and start tracking your mileage and expenses. This business has real tax implications, and you’ll want to be prepared. Talk to a pro and check out resources from the IRS Small Business center.
Diversify: Don’t just sell on Amazon. List some of your items on eBay. Different products perform better on different platforms. And as your bankroll grows, you can explore other income streams, like passive income ideas, to build true wealth.

Finally, managing your new income is critical. You’ll need a side hustle budgeting plan to track your sourcing budget, profits, and taxes.

Frequently Asked Questions (FAQ) About Retail Arbitrage

1. Is retail arbitrage legal?

Yes. Retail arbitrage is 100% legal. It’s protected by the “First Sale Doctrine,” which states that once you legally purchase a product, you have the right to resell that product.

2. How much money do I really need to start?

You can start with $100. This will be a slow start, but if you reinvest all your profits, it will compound quickly. A more comfortable starting “bankroll” is $300-$500, as this allows you to buy more items at once.

3. What is a “gated” or “restricted” category on Amazon?

These are brands or categories that Amazon “locks” to new sellers. This is to prevent counterfeit items. Common gated categories include high-end Beauty, Grocery, and major brands like Nike or Apple. The Amazon Seller App will tell you immediately if you are restricted.

4. How do I get “ungated” on Amazon?

It varies by category, but it generally requires two things: 1) A professional seller account and 2) Submitting legitimate invoices (not retail receipts) from a distributor or wholesaler. Some categories (like Toys) will auto-ungate you after you’ve built a strong sales history.

5. What is a “good” profit margin or ROI?

Most resellers aim for a minimum of 30-50% ROI (Return on Investment). For example, if you buy an item for $10, you want to get $15 back after all fees, giving you a $5 net profit (a 50% ROI).

6. What’s the best-selling item to flip?

There is no “best” item. The best-selling items are constantly changing. The most profitable resellers are the ones who can analyze the data (Sales Rank, Keepa charts) to find the next in-demand product.

7. How do I handle sales tax?

When you buy in-store, you pay sales tax. You can get a “resale certificate” from your state, which makes your inventory purchases tax-exempt. When you sell on Amazon, Amazon automatically collects and remits sales tax from the customer on your behalf.

8. Is retail arbitrage dead in 2025?

Absolutely not. It’s more competitive, and you must use data and tools. You can’t just guess anymore. But for resellers who treat it like a real business, it’s as profitable as ever.

9. How much time does this take?

As much as you’re willing to give. You can spend 3-4 hours on a Saturday sourcing and 2 hours on Sunday packing boxes. Or you can turn it into a 40-hour-per-week job. The more time you spend sourcing, the more money you’ll make.

10. What’s the difference between retail arbitrage and online arbitrage?

Retail Arbitrage (RA) is physically going to stores. Online Arbitrage (OA) is doing the same thing, but you’re buying from one website (like Walmart.com) and selling on another (like Amazon.com).

11. What if I buy a product and it doesn’t sell?

It happens to everyone. You have a few options: 1) Hold it and wait for the price to go back up (if you have the cash to spare), 2) Lower your price to break even and get your cash back, or 3) Sell it on another platform like eBay or Facebook Marketplace.

12. Can I get in trouble with Walmart or Target?

No. You are a customer. They are happy to take your money. The only time you might run into an issue is if you are buying 100 of a single, high-demand item, in which case a manager might limit your purchase quantity.

13. What is the Amazon Sales Rank (BSR) and why does it matter?

The Best Sellers Rank (BSR) is a number Amazon assigns to a product based on how well it’s selling. A lower number is better (e.g., #1 is the best-selling item in that category). It’s the #1 indicator of how fast your item will sell.

14. What are the best apps for retail arbitrage?

For beginners: The Amazon Seller App (Free).
For advanced sellers: Keepa (for data history), Scoutify 2 (for in-store scanning), and InventoryLab (for accounting and listing).

15. What if Amazon is also selling the product?

Be very careful. It’s difficult to compete with Amazon on price. Check the Keepa chart. Does Amazon go “out of stock” frequently? If so, you can buy the item, wait for them to sell out, and then sell yours for a high profit. If they are always in stock, it’s usually best to avoid that product.