Masters of Arbitrage with Jon Shugart & Luke Sample

In this Episode

• [02:02] – Jon and Luke talk about arbitrage as a revenue model and how it compares to affiliate marketing.
• [05:21] – Arbitrage has been around for a long time as far as the internet is concerned, Stephan points out. Luke then talks about whether this kind of arbitrage is still around, and Jon points out that there was a big push over the last few years to arbitrage native ads.
• [07:30] – Jon defines native advertising for listeners who may not be familiar with the term, then finishes off his idea about native ads.
• [10:53] – Stephan gives an example of a non-obvious thing that you can arbitrage.
• [13:15] – Luke tells the story of how he and Jon got into the textbook industry.
• [19:00] – Is it possible to send purchased books directly to the place offering trade-in, or do you have to take possession of it?
• [20:25] – Jon talks about how long it takes to make a decent income off of the textbook market, considering each transaction is for relatively low amounts.
• [25:00] – We hear about whether Jon and Luke have friends or family members doing textbook arbitrage since it’s basically a guaranteed way to make money.
• [29:48] – Why did Luke and Jon turn this into a service rather than just building an arbitrage business themselves?
• [33:04] – The key for Luke and Jon is that they’re continually innovating, Luke points out, which makes it a win for everybody.
• [34:21] – We hear whether Luke and Jon offer a prep service for their customers.
• [37:57] – Jon gives a rundown of what they offer listeners, in response to Stephan’s point that one needs a fair amount of information upfront.
• [40:11] – The program has a secret Facebook group where people have a sense of camaraderie and generosity that’s unusual in other industries.
• [42:11] – Is there an MLM component to the program?
• [44:10] – We hear about the next step for a listener who is interested in learning more or taking part in this program. If you’re interested, head to this link!
• [45:13] – What would be Jon and Luke’s parting advice for someone in terms of arbitrage or looking beyond traditional affiliate marketing?

Transcript

In this episode number 132, a couple of industry insiders are gonna give us a behind-the-scenes tour of the fascinating world of BizOp, business opportunities, as well as arbitrage, in other words, buying low and selling high. The dynamic duo on today’s show is gonna be be Jon Shugart and Luke Sample. Jon is an entrepreneur at heart and a computer programmer by trade. He’s a master at webinar marketing, in fact, he was on this show already at episode number six–it’s a must listen, by the way. Jon has made millions online using webinars. Luke is a serial internet entrepreneur and blackhat SEO known widely by his nickname, LamboLuke. Yes, he happens to be a passionate owner of multiple Lamborghinis. Together, they are the the co-creators of booktrades.biz formerly known as Textbook Money. Jon and Luke built this eight figure business from scratch and are going to share how they did it and how you can too–build your own internet empire anywhere in the world with just online tools. Luke and Jon, welcome to the show.

Thanks for having us.

For sure. Jon, I’ve had you on before. That episode is still fantastic and worth listening to, that was all about webinar best practices, you can get more sales through webinars. In this episode, we’re going to be focusing on arbitrage as a way to make money online. There’s a lot to talk about affiliate marketing but this is another way that could actually be even more lucrative, you don’t have to be a super affiliate, you could be an expert on arbitrage. Let’s talk about this, where does this business model or revenue model come from in terms of online marketing and how does it compare to affiliate?

Both Luke and I are on, I don’t want us to stomp on each other. I’ll take a stab and then Luke, I’ll let you fill in any details that I missed. Basically, when it comes to making money online, there are thousands and thousands of different ways to do it, nuances and all kinds of methods. What’s the simplest method? If you’re getting started and trying to figure something out, it’s the one that you can remove, all the different pieces that are involved with online marketing. Meaning, do you have to actually market? Most people, if they go and create a product or even do affiliate marketing, they actually have to know how to market something and be a marketer, drive traffic and things like that. When you get into arbitrage, what you’re doing is you’re leveraging the power of a brand or maybe another product that people already want and know about. All you’re doing is finding it at a better price and then profiting from the difference in what you can sell it to that market for. When we looked at all the different models, because we’ve tried them all pretty much, this is one of the simplest ways for someone to get started making money online. But the beautiful thing is you can go pretty deep. Luke, you wanna add anything to that?

I think you hit on the big point there which is there are several ways to do it. Jon and I have been doing this for almost 20 years, he said almost everything from affiliate marketing to owning our own products. We owned a very large affiliate network for a while, we were heavy into that space, we’ve done quite a bit. What we quickly realized, this was even referring friends and family, we have people ask us all the time, “What do you do? Can I do it?” It was very hard to get anyone to replicate that type of success because there are a lot of skill sets there, there’s traffic, there are ads, there’s being able to write ads, all these different things, website building, landing pages, funnels, conversion, tracking, all these different things.

Retargeting.

Yeah, retargeting. Jon and I have a whole giant retargeting platform that’s custom, that was built. Those are great but not for a lot of the people that were really seeking out the ability to make some money online. We came across the arbitrage systems that we’ve been implementing and started using in our own business and realized, “Wow, this is really easily replicable because there’s none of that stuff that people get hung up on.” The big one’s being paid advertising and traffic and the actual websites themselves. We removed all that and realized very quickly that anyone could do arbitrage. We have a 10-year old little girl doing it up to 89, Jon is our oldest person that has done this successfully. We quickly realized, remove all the difficult parts and figure out something that can be replicated by people that don’t have those skill sets. Arbitrage was the no brainer and it worked out amazingly well.

Arbitrage has been around for a long time as far as the internet is concerned. People are buying paid traffic or using SEO to get free traffic to a page which would then have lots of ads like Google AdSense, ad units and so forth. They would happily pay two cents a click to get five cents a click in revenue so they’d have a three-cent upside and so they’d just be spending money until the traffic was unavailable. That was one very early form of arbitrage. Does that arbitrage still work? I don’t hear much talk about that anymore.

That’s one of the things I was having two years ago, which was the search engine arbitrage. We would pay for sponsored ads, we drive people to a page, it was basically another search engine listing of all of our results and we got paid per click on those. There were ways to be profitable with that back in the day but that’s been years ago, not just a couple years ago like 15 years ago. That was really lucrative. Things have changed a lot, that type of arbitrage isn’t nearly as lucrative. Certainly, still, even with that type of arbitrage, you still had to have a pretty high skill set to pull that off. I don’t see those types of arbitrage opportunities available anymore, at least at any kind of scale like the more retail and we’re having the books. The type of arbitrage that’s available now, more ecommerce arbitrage, we’ll call it. Jon, what’s your thoughts on that one?

I guess, Stephan, you’re referring to over the last few years, they were trying to arbitrage native ads networks and that kind of thing. Those kinds of opportunities, they get taken advantage of and then disappear. I don’t even know if they disappear but they definitely come much more competitive, it consolidates them.

Can you, for our listeners, define native advertising because not everybody is familiar with that term.

In terms of native advertising, I’m referring to, I guess, networks where the ads are showing up. You probably have seen them, most of them are usually pushing some kind of diet offer or a credit check. They’re showing up all over the internet, not necessarily search ads or Facebook Ads. They blend into the articles, it’s really, I guess, the best way to describe it. There’s a blog out there talking about weight loss or something and then they’ve got advertising that blends in a little bit with that.

It’s like advertorial.

A little bit like advertorial.

You see that a lot these days, you see those types of ads. When you click on an article in Facebook and you’ll see things, maybe silly things like the top 10 things, this or that. Usually it’s a number, a lot of times, the top 10 biggest celebrity homes. You click on this thing and then you go through these pages and pages. Each celebrity home has three pages dedicated to them, you go through all this whole countdown. They’re usually embedded in those pages at the bottom, there’ll be networks like Taboo. Those are embedded ads in those articles.

Let’s finish off that idea, Jon, about native ads. I distracted you by asking you to define it, back to what you’re saying.

They come in waves. Every time there’s a new advertising platform, there’s the maturity of that advertising platform that takes place. Usually there’s opportunity because they’re hungry for money. They end up taking a lot of advertisers and things like that, I guess that they normally will not take as much when they mature and have the scrutiny on them and things like that. Usually when you’re advertising platforms, there’s this time period where there’s a good chance that you can make money arbitraging. That’s basically what I’m trying to get at.

It makes total sense because there are some information asymmetry in those initial stages, somebody will become an expert at it, will recognize that they can get cheaper clicks or more effective traffic or leads than the average person and then they resell that traffic at market rates even though they were able to get it for cheaper.

It’s a great way to make money for a while typically, however, it’s a game. Like Luke said earlier, it requires a lot of skill. When we set out and looked at different methods, we were looking for something that would eliminate a lot of skill set needed for online marketing. The arbitrage that we like to focus on has the physical world, ecommerce type scenarios and things like that, and got away from what we call click arbitrage, getting paid from one ad network and paying cheaper for the traffic and things like that. They’re not sustainable, usually, long term. You’ll have more advertisers and your initial cost will go up like in Facebook’s case or something like that, it gets more expensive and you can’t make money, arbitrage in the traffic, usually, over time.

There are a lot of things that you can arbitrage that are not obvious. I heard a recent example that comes to mind for me is Traffic And Conversion Summit, the initial ticket at the early bird price was $500 for the first ticket and then you could buy additional tickets for $400. You know that eventually the event will sell out, it always does. On its way to selling out, they keep jacking up the price, it becomes $1000 and then $1500 and then it sells out. You could hold onto those $400 tickets, buy a whole bunch of them and then sell them to your friends and industry people and stuff and even advertisers, let’s say Facebook groups and so forth, “I’ve got tickets, it’s almost sold out. If you don’t wanna pay $1500, you wanna buy it for $750, I’ve got some tickets for you.” Then you’ve made a profit because you bought them at $400, but then you might be sitting on used tickets if you didn’t sell out all of them. This model can work if you’re smart about it and you can apply that model online too. You’re buying stuff, real physical products or digital products for that matter and then reselling it for a profit because of the asymmetry.

That’s a great example. Like you said, it’s a little bit risky because it’s event based, you might be stuck holding those tickets.

You have a spoiled inventory if the event has already passed and you’re still holding onto the tickets.

That brings a couple of great points. Speaking of inventory, if you’re gonna arbitrage something, you want to arbitrage something that is not likely to lose its value over time because you can’t necessarily control when it’s gonna sell always. Looking for those opportunities, you wanna try and find products that are likely, at least over the next 12, 24 months to go down significantly in value and preferably have a consistent market that’s looking for them.

You settled on textbooks as the initial product that didn’t have a lot of spoilage, didn’t decrease in value significantly in a short period of time. How did you end up choosing textbooks?

Jon, do you want me to tell the story?

Yeah, do it.

The initial way we got into textbooks was interesting. My wife is an instructor at a local university, criminal justice department. She came home one day and said, “I made a couple hundred extra dollars today.” I said, “Really? How did that work?” She said, “There are guys that came around knocking on our doors, offering us money for our textbooks.” As an instructor, you usually get these samples sent to you from different publishers and all of these textbooks you get for free or old, you end up with a lot of textbooks that you likely wanna get rid of as an instructor. They were coming around paying the instructors and the professors for their old textbooks. I said, “Wait a minute, they paid you how much? Let me show you something.” I pulled up Amazon and I said, “Let’s spot off some of these books that you sold.” We were looking, after the first three, we were already over $200 that she could’ve made easily by posting them to Amazon for sale or even sending them in to Amazon through the FBA program, the Fulfilled By Amazon program. About the time we added this up, there’s over a thousand dollars worth of books. I said, “How about we make sure that you guys don’t lose money anymore in your department? Bring the books home, I’ll show you how to post them on Amazon. We’ll do it for your department, it’ll be much better. You guys can use those funds for the department or for yourself or however you wanna do it.” We did that and it worked very well and the books were sold. In the process of some of the research on some of those textbooks, I was browsing Amazon and noticed that one of the books said, “Trade yours in for,” I think it was $90 or something like that. I was like, “Trade in it, that’s interesting.” It said about $90, I looked over to the price of that book, I could buy the book for $45. I said, “Wait a minute, I can buy the book for $45 but they’re offering $90 for the trade in? This is interesting, how is this working?”

That’s trade in as far as credit on Amazon, it wasn’t cash.

It is cash, basically. What happens is they give you an Amazon gift card as a credit, of course there are several ways to turn that into cash. However, what I also noticed at the same time was not only Amazon offering trade in but there were several other websites offering trade in, some of them offering more than Amazon was. I said, “Wow, there’s an opportunity here.” By the way, Amazon is the only one that pays you in credit which again is easily converted to cash. But then the third, we call them third parties, these non-Amazon book dealers were all offering about the same or even more and they all pay in cash, PayPal. I said, “This is wild, I don’t understand this. Why can I buy this book for $45 and immediately turn it around for $90? Why are they doing this? What’s going on?” What’s happening is Amazon and these other book dealers are offering a specific trade in price to buy the books and beef up their inventory. Amazon actually already has a lot of these books sold to other buyers on the back end, they might offer you $90 but they’ve already got it sold for $100, for example. But then I realized, “This price at $45 isn’t Amazon selling the book, these are people just like us that we’ve been posting our books for sale on Amazon. These are people that didn’t know the trade in program existed probably either or for whatever reason, they’re not taking advantage of this price discrepancy. I ordered a few and it worked and then we started doing it over and over, I showed Jon, we started to scale this up. It was an amazing market because we could see right there on the screen by subtracting two simple numbers. If the book was gonna be profitable or not, we didn’t have to carry any inventory, we knew it was gonna be profitable before we ever had to buy a book. Basically we said, “Wow, they’re offering $70, we can buy it right here for $40.” You actually claim the trade in before even buying the book and then we would send the book in, they’d pay us and we would get the difference, $30 in that case. Doing that over and over at scale, we found out that it worked really well. We got good at that process but also started to hone the ability to buy textbooks for resell as well because not only can you take advantage to these trade in opportunities, but then there’s also a lot of opportunities to resell the book yourself. Let’s face it, if a book dealer or if Amazon is offering you $90 to trade the book in, they’re gonna sell it for more than $90. Why don’t you just be that person that’s selling it for more than $90 so you can get even more margin with that. It developed into two separate arbitrage systems, one, we started doing the trade arbitrage where we would claim a book and then buy it after we claimed it and send it in and make that guaranteed instant bankable profit, but then also evolved into some of them, buying them and actually selling them ourselves and scaling up that side of the business. We really found two fantastic arbitrage opportunities within the textbook market itself by doing that. That’s how it started.

Can you send the books that you buy to get the trade in directly from where you bought it to where you’re gonna trade it in or do you have to take possession of the book and then repackage it and ship it back out?

You do have to take possession but not you personally. There are several services out there called Prep Services, you can actually send the book to them so you don’t ever have to touch a book, that’s what we’ve done. Let’s say you find a trade in that’s lopsided, they’re offering $90 and you can buy it for $35, you buy the book but instead of having the book shipped to your home or your office, you ship it to this Prep Service usually for between one dollar and two dollars depending on your volumes and who you’re working with. The Prep Service then will receive that book, inspect it, prepare it, and send it in for the trade in credit or for resell if you’re wanting to resell it, either way. For a dollar or two per book, you can have somebody else handle it completely, you never have to touch, look at, see, or store a book.

That’s pretty cool and yet it’s hard for me to get my head around this idea of dealing with all these books, buying and selling them or trading them in and making a lot of money off of that. We’re talking about $30, $50 books or $100 books, we’re not talking about arbitraging $1000 items or $10,000 items, cars or boats or whatever. How long does it take to make a decent, let’s say six or seven figure income from this?

Jon, you wanna take over here and talk about some of the stories in the times?

Absolutely. That was our initial thought as well when we were getting into this, Stephan. We were exploring and seeing how deep can this go, how much money is there to be made. When we started on a research, the textbook market, just in the US, is between $15 and $20 billion market. You always have new buyers every year, almost every semester even. It’s a constant, I guess, cycle of people buying books. It’s a force market and they’re provided money through student loans or scholarships and they have to buy the books, they’re supposed to buy the books. The market is really good but that’s just textbooks, I guess that’s where we started but it actually expands out even to all books as far as doing the resell arbitrage, not necessarily the trade ins but doing the resell part. Think about how big the book business is. It’s really a matter of scale, how many books can you realistically manage yourself and scale up to? Let me put it in a perspective, we have had people, we’re talking multiple people, 10s, probably up to, I would say in the 20s, probably about 20 who are already over six figures doing it in their first year starting from scratch. When I say scratch, I mean a $5000 credit card or a $3000 credit card, a very small amount of startup capital for starting a business and you’re hitting six figures. I’ll be clear, that’s probably six figures in total revenue and getting close to six figures in profit because the margins are usually around 40% to 60%. If they did $150,000 to $180,000 in sales, they’re probably pushing $80,000 to $90,000 in net profit. When we started, which was offering this as a service that people get involved in. It was August of 2016, we’re coming up on two years, this would be two years this August. We have people that are gonna hit seven figures this year, they’re already on track to do it. I think we actually have one that will probably hit it before summer. They literally started with $6000, that was it. They started with $6000 and they’ve turned that inventory over because the return on your investment for these books, we’re talking 100% ROI. You invest $50 for a book and you make a $50 profit.

Usually within 30 to 60 days. Your actual annualized ROI is usually several hundred into the thousand percent plus return which is insane. I know of nothing else that has returns anywhere near the book business, anywhere even close, I mean orders of magnitude close, not just close.

Or maybe crypto, crypto currency.

What’s amazing about this, especially with the trade ins, it’s guaranteed profit, it’s guaranteed. You never spend a dollar until you know for sure you can buy that book, it’s like having a crystal ball. If I know I could spend $45 and it’s immediately worth $90 with the trade in, I don’t even know how you could quantify that return because it’s not the same as any type of return you’re used to which is always risk or if it’s not, you’re talking tiny, tiny returns. If you’re getting half a percent per month on a very low risk investment, you’re doing really well. With this, we’re talking about 100% plus a lot of times, the ROI is astounding. The other cool thing about it is the barrier to entry is small, we have had some people start with $5000, $10,000 but we’ve also had people start with $100. What’s amazing about that is you could run the math on this, if you could double your money every 30 days starting out with $100, it doesn’t take very long to get the really big numbers. Even starting with a small budget, you can still get to the six and seven figures like Jon is talking about. In fact, we have several that are doing it. It’s a pretty amazing little market.

I’m curious if this is such a slam dunk for people to make money, do you have loved ones, family members that you have using this system and are doing the textbook arbitrage?

My dad who just turned 70, he’s never been an online kind of guy. I have shared with him along the way many different things that we’ve done to earn especially in the affiliate market world, he’s never had any real success with or interest for that matter. Before Luke and I started offering this to other people, I shared it with him and he made money. As a matter of fact, he still makes money today, this is actually what he does. He retired but he does this part time to make some extra money every month. When I knew that he was able to do it, I was like, “This is definitely a winner for most people that want to get started especially if you don’t have a lot of experience or retirees or anybody.” The truth of the matter is it’s a great way to get started making money online. On the other side of the spectrum, my 10-year old son started doing it. He opened up his store in January and sold his first $500 worth of books, he only had 12 and he sold 10 of them so far.

[bctt tweet=”The truth of the matter is arbitrage is a great way to get started making money online.” username=”mktg_speak”]

That means he’s in the green now, or in the black.

Yes, he’s in profit now.

But mean, old dad won’t let him spending that money he’s making.

Yeah, no.

What’s up with that?

Make him reinvest.

He’s gotta reinvest it. The goal, for him, is to use this to leverage to build so that when he’s 18, going off to college, he’s got his college paid for or whatever he wants to do. It’s so easy to do part time, he doesn’t need direct full time income from it. For him, to start earning money that way even at 10, it’s amazing.

Is he using the Prep Service or is he actually receiving the books and then repackaging them and sending them back out?

This first round, we had him shipped here and I let him claim the books, box them up, and get the full experience so he could build the work ethic in him as well. Eventually, once the scale starts happening, we’ll use a Prep Service for him. He’ll just have to ship there and he’ll make the buying decisions and the pricing decisions. That’s the really cool thing. You eliminate a lot of work if you use a Prep Service, it can be done part time, you’re spying and listing, that’s it. That’s why I can scale as well to that point. We’ve mentioned some smaller numbers in terms of someone starting out with $4000, $6000 and get into the six figures. The truth of the matter is if you have a bigger budget, this is a seven figure business that you can grow into easily within a year, you just have to have the inventory, it’s basically how this works. Most of the people that have started with this are those that are really have tried a lot of things and they failed at them or didn’t have the right knowledge or expertise and they finally had success with this. They burned a lot of their budget because we’ve hundreds of people that have been doing this over the last 2 years, we did 62 of them right before Christmas. We heard their stories, all of them are pretty similar. They tried a bunch of things, they never had any success until they started doing this and it’s because it’s so easy. It’s a simple method.

It’s guaranteed because you don’t buy the book unless you know that the trade in is whatever percent higher than what you would invest in getting the book in the first place. I’m curious, why did you not focus on building an arbitrage business based on this yourself? Why did you turned this into a software as a service so that other people could make the money instead of you?

It was a little bit selfish because what we were doing is we were initially designing software and it was costing a lot of money to speed up our business, we were spending a lot of money on development teams and that sort of thing. We said, “We’re building this, there’s no possible way anyone could even touch, be a blip on the radar on this market spending millions of dollars a year.” We’re nowhere near that scale. What if we offer the tools that we’re building to other people, allow them to pay for access, that’ll help us continue develop tools for ourselves. We’re not hurting ourselves because there’s no way this market can get saturated, it’s gigantic. That was the initial thought, this isn’t the business we’ve been in and built software and design and all that but this is the first thing that we decided let’s really dig our heels in and focus on this and scale it for the long haul. Being able to offer the system and the training allowed us to continue to develop our in house tools, it was a win-win for everyone because then there were a lot of folks that were able to make a lot of money with this. Jon can go through a couple of the stories but quit their jobs and all kinds of cool things. It’s been a great win-win, of course for us as well. We have been doing this for over 20 years, we have several business and make good money. This one, by far, has been the most rewarding business. We have a pastor, he actually doesn’t live too far away from me, I’m in Missouri and he’s just west to me a little bit. He was living in, which we didn’t know this, he just told this to us recently, it was a two bedroom, because he’s got nine kids, two bedroom, one bath house, nine kids. He was a pastor, he started doing this with our system. We trained him the whole nine yards and he went through our program, he is now purchasing a brand new home. The last post he had done, I think it was $156,000. He’s been about a little over a year he’s been doing this now, it completely changed their lives. I know it always sounds a little bit cheesy when you hear someone say this but it’s been so rewarding for us to offer to other people, it’s been an absolute blast. Some of the most fun Jon and I have had, like I said we’ve been doing this for 20 years online just allowing people to take this business and run with it and see their result, it’s been a lot of fun. Selfish reasons, of course, to help us develop our own thing but also seeing those stories has really doubled down and just had so much fun seeing their results, it’s been awesome.

I think it allows you to scale your business too, you’ll probably get a decent sized seven figure business just doing it yourselves but being the solution provider for all these other people, enabler for them to create their own wealth using your system probably allows you to get to eight figures, who knows, plus.

The key for us is we’re continually innovating and designing new systems to maximize this market, selling different channels and track everything. We’ve set up a whole warehouse with our system, it allows us to grow and scale as well. It’s a win all the way around, it’s a win for Jon and I financially, it’s a win for us personally and rewarding, and then of course for the folks that jump on board. It’s been a great thing for them, something they would’ve never had the chance at. It’s been a really cool win-win win all the way around and a lot of fun.

Would you say this is an eight figure business? You don’t have to answer that if you don’t want. Has this business for you been an eight figure business? I’m putting you on the spot so you don’t have to share if you don’t want.

Let’s say it’s very possible, let’s leave it at that. That’s a possibility, how about that?

I get it. You mentioned you have your own warehouse, does that mean you’re not using a Prep Service or you offer a Prep Service for your customers?

We have our own warehouse for storage and things like that. There are two types of services that can be used for this business, one is what we call a processing center. They focus specifically only on trade ins. That was a local company that we use and they’re not far from me, I can drive to their building. We train them specifically on how to help us and our customers do the trade in side of the business, the reason is there are plenty of services that will prepare your books for Fulfilled By Amazon, for FBA, for sending in for resell. Plenty of those services exist, they’re all over the place, very large services that already do that for people but what we found, none of them really knew anything about or had done the trade ins portion of the business before. It was a little bit unique. We worked with them and they’re fairly local to handle all of that side of things. Our customers can send it, we call out a processing center, they can send their books to the processing center and have it done. The beautiful thing about the processing center and the reason we initially did that in the first place, we had a lot of folks that were international that couldn’t do the business or is very difficult for them to do because if you think about it, if you’re in Australia, you buy a book, you get it shipped all the way in Australia, first of all expensive, then you ship it back to the states. By the time you do all of that, you’ve gone over your time limit, you spent more money, it’s just not that viable. We had to come with a way where someone in Australia could do it, obviously they needed to use a processing center. We developed that for trade in specifically. On the flipside of the business, the other side for preparing books for resell, that’s a little bit different strategy, you’re doing things differently. There are several companies out there already experts in doing that for you, like I said for a dollar or two dollars a book, they’ll even do special grading services for you and all kinds of cool stuff. That already existed and we have several of our members using multiple Prep Services. We developed the processing service for the trade ins on our own because nobody was really doing that yet and just partnered with the local company that had the space and the man hours and all the equipment that was necessary to pull that off. I think they’ve processed several tens of thousands of books for our members at this point, I know the Prep Services have done even more than that. Several of our people have thousands of books in inventory, a lot of them have never even touched the book. That’s the story on how we got into that game with the processing, it was a necessity for a lot of our people and for us too. We didn’t wanna have to deal with those books anymore because we found a Prep Service to handle our books for resell, that was easy and already existed but we’re still manually trying to grind out the trade ins side of things. Building that out worked great for us and worked great for our customers especially the international ones. It’s gone well ever since.

Sounds like there’s a lot of specialized knowledge at least at the beginning to know which processing centered to use, that they’re even are processing centers available or fulfillment centers, Prep Services, whatever, the process, setting up the systems and knowing the ins and outs of this. I assume you have some training platform or online course or something for your members.

Jon, you wanna give a run down on what we’ve got?

Yeah. Everything’s been built from the ground up custom. We have a member’s portal and literally we have training on how to do it, we’ve got the software that takes to really automate and scale. Maybe automation might be a little bit of a stretch because someone has to interpret it and use it, we do two live help sessions every week. Not only do you get the knowledge one time in video training but every week on Tuesdays and Thursdays, you get at least 90 minutes and a lot of times it’ll go to 2 hours and sometimes 3 hours. Luke and I are on live with our members. Just today, as a matter of fact, we have one about over two hours. We’re there to answer questions, a lot of times we’ll go through the basics, sometimes we’ll go through advance, it depends on who’s on and what kind of questions. Those are always available and recorded so you can watch it if you can’t attend live. From a resource standpoint, one of the coolest things that we’ve been able to do, some of our members who probably have been doing the longest and have had tremendous success, they wanted to give back. We have created a mentor program to where new members can work one on one with members that are willing to share. No, it’s not free but for what you get, it’s basically free, it doesn’t cost much because you’re getting one on one sessions with people that know what they’re doing and have generated six and some of them seven figures doing this so far. You get that knowledge, again, they’re just ordinary people who went through the program and are giving back. We have a lot of resources that have been developed over the last 18 to 20 months that allows someone to do this, we’ve learned from our members and tweak things along the way, we’ve improved the software tremendously from where we first started even. We have everything that anybody could possibly want to do this business and be successful with it at this point.

Sounds like you’ve created quite a community there of these people, is there a lot of camaraderie amongst the members?

I guess I forgot to mention that we have a private or a secret Facebook group. I think that’s the pride and joy of the program because the members are so giving. A lot of times they’ll even throw out profitable books that they find, it’s really, really cool. There’s no scarcity mindset with the Facebook group. A lot of times you have people that won’t share because they’re afraid they’re gonna lose out, not with this group. You ask a question and you get 10 people responding with real answers. I’ll be honest, it shot me because when you go in the affiliate world, it’s completely different because the affiliates, we used to deal with that, they’re not gonna share a campaign, they’re not gonna share how did they something because you literally will take if you do the same thing, typically. In this world, there’s so much opportunity. People are willing to give and to share, that Facebook group is really amazing. They encourage each other, post in their results. As a matter of fact, one of our members just hit the $50,000 mark, she’s only been doing it less than six months and not a large budget to start, a couple thousand dollars. It’s growing from there, she’s gonna hit six figures before the year is out. Anyway, very, very good. The Facebook group is an amazing asset, we’d like to take credit for it but it’s really the people that have done so good.

That scarcity mindset you talked about, it happens in the affiliate world, it also happens with Amazon sellers a lot of times because they won’t even tell you what product that they’re sourcing out of China because they’re afraid you’re gonna rip it off and sell in that same market. It’s very competitive, dog eat dog. It’s nice to hear that there’s a giving community that you’ve created there. Is there an MLM component to this? Is there a multilevel marketing involved like if I recruit or if somebody recruits some additional members into your program, do they get a piece to that or how does it?

Initially we did not offer referral program, we were affiliate marketers, a lot of experience there. Our mind does think that, initially we did not. We didn’t want people just to promote, let me backup. What I’m trying to say is we don’t have a program where you can just be an affiliate and not be a member, let’s put it that way. We’re not on CPA networks or networks out there and go promote this offer that kind of thing, we have done some private invitations with people we know and that kind of stuff. For the most part, if you’re a member in good standing, you know what you’re talking about and you know what you’re doing, we do allow you to refer other people because you may wanna bring in some family members. We have one lady, she brought in three of her, I think one was a friend and maybe two other distant family members. She’s from Ireland and they are all doing the program. As a matter of fact, she was on today and said that they are getting ready to scale up collectively. I think they’re pulling resources and doing a lot of it together and that kind of thing. You get a referral for that because we want our members to have another revenue stream and recommend this program if they feel strongly about it which all of them do that are actually doing it. We do have that at this point.

You’re looking to expand into other markets beyond textbooks.

We are. Right now you can go outside of books but what we have been looking at is other products besides books, other opportunities out there. We’re exploring and trying to really find another market that might be similar and easy for people to make money at. Yeah, we’re trying to expand it outside of books.

What’s the next step if somebody is interested, a listener wants to either try this program themselves or have their kid do it or their mother in law or an aunt or uncle or whatever, where should we send them to so they can learn about it?

We’ve got basically a training webinar, it will show the methods because you can learn how to do this without necessarily getting involved with us. I will you that it’s very hard to scale without some software and things like that but you certainly could do it and learn about this and decide if it’s something you wanna do. We actually created a link specifically for this podcast to make it easy, they can go to tbjoin.com/stephan. If they’ll go there, make them watch a training, a free training, and then they can decide if it’s something they wanna do or not and take the next steps if it is.

What would be your parting bit of advice for somebody generally in terms of arbitrage or looking beyond traditional affiliate marketing as a way to generate revenue?

I think the one thing I can say, I know I’ve said this a couple of times but what the experience Jon and I have of doing everything you can think of online for 20 years, this is absolutely the best thing we have seen in terms of ease of doing it, certainly the best thing we have seen as far as percentage of success. If 10 people tried it, 10 people have success with it. It’s hard to mess up subtracting two numbers and sending a book in or even on the resell side, buying… Today we boiled it down to four little simple rules on help session. I would say, definitely take a look at the arbitrage opportunity, specifically the book arbitrage opportunity because of the nature of the market, because of the ease of successfully implementing the business model. I think there’s nothing better, if there was, Jon and I would throw another recommendation but we haven’t seen anything nearly as good as this particular opportunity to get in and have some success which is why we’ve got family members and friends doing it now. I would say give it a very hard look. Again, coming from the guys that have done the affiliate world, we’ve done everything that you can think of online pretty much. We haven’t seen anything that has the success rate this does. Take a hard look at it. It’s for any budget, for any age, you can scale it, you can start with $100, you can start with $10,000. I think it’s something to take a serious look at.

Thank you so much, Luke and Jon. This has been a really fun, interesting episode, really outside the normal realm of what we’re talking about on the show in terms of different tactics and strategies, pretty cool stuff. Thank you for sharing that. Listeners, take what you have learned and apply it even if you don’t wanna go through this program, figure out a way that you can arbitrage something and make money on that information asymmetry. We’ll catch you on the next episode of Marketing Speak. This is your host, Stephan Spencer, signing off.

Important Links:

Your Checklist of Actions to Take

☑ Learn about the different types of strategies in marketing and find what truly works for making money.

☑ Use arbitrage to leverage the different sets of supply and demand happening in my area.

☑ Find products that I can buy low and sell high. I can start a business without having to invest too much money.

☑ Take advantage of affiliate marketing. This involves sharing business and product information in exchange for a commission on sales.

☑ Create a foolproof marketing system that can help me take the right steps to implement my strategies.

☑ Continue to innovate by staying on top of trend updates and customer feedback.

☑ Develop a community of supportive people who are willing to talk about my business and become affiliate marketers.

☑ Share updates, tips and answer questions on Facebook Groups. Make this one of my standard means of communication so that I can reach a majority of my customers.

☑ Don’t forget to give back and avoid the “dog eat dog” mentality. Teach and share my knowledge with others.

☑ Get the special Marketing Speak training offer on BookTrades Biz and start learning how to arbitrage now.

About Jon Shugart and Luke Sample

Jon Shugart is the Co-Creator of BookTrades.biz, the simplest way to create a business a successful business online.

 

 

 

Luke Sample is a serial internet entrepreneur and black hat SEO.

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