What is GeoArbitrage: Things You Should Know [GUIDE]

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Geoarbitrage is a term used by marketers to describe the act of buying and selling items on different geo-locations in order to take advantage of price differences.

The geoarbitrage strategy has been around for centuries, with people traveling vast distances just to trade items like tobacco or slaves. In today’s world, geoarbitrage takes place online through systems like Amazon and eBay.

This article will teach you how geoarbitrage works, why it’s important to your business, how you can make money from it, and what some best practices are when using this marketing tactic.

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What Is Geoarbitrage?

The word geoarbitrage is a mash-up of geo (geographic location) and arbitrage, which is the act or practice of taking advantage of differences in price for items between various geographic locations.

For example, an online retailer may purchase Lego toys from one country at $100 each but sell them on eBay to US customers for $130 per toy because they know that it’s more expensive domestically.

The geoarbitrage strategy has been around since ancient times, with people traveling vast distances just to trade goods like tobacco or slaves.

In today’s world, geoarbitrage takes place online through systems like Amazon and eBay. This article will teach you how geoarbitrage works, why it’s important to your business.

Geoarbitrage Factors To Consider

Below we have listed the factors of geoarbitrage.

Taxes

Everyone hates tax; we know geoarbitrage is no different. The geoarbitrage tax that you are most likely to encounter when doing geoarbitrage in the US is an import duty, a percentage of your product’s value, or a flat dollar amount per unit imported into the country. These taxes may vary depending on where and how you purchase products from overseas, so make sure to take this into account before making any purchases.

Housing

There is no surprise that housing cost, taxes, and real estate property tax will be geoarbitrage factors. You must account for all the hidden costs such as closing costs, purchase prices, and mortgage rates to make sure you can afford your new home before moving there. The geo-arbitrage factor of housing is not just about the initial investment but also what it will cost in order to live day to day in that country.

Transportation

When we talk about transportation, it is less of a question of geo-arbitrage and more about how expensive and inconvenient it is to get around a new country. You will need to consider the cost of gas, car insurance, tolls, or parking if you are not living in an area that has free public transportation.

Everyday Goods

Stuff like clothing, food, restaurant, and going to the movies can be much more expensive in other countries. Geo-arbitrage is about, though, that you will find many of the day-to-day living costs are cheaper and might even be subsidized by your employer or through government benefits programs.

For example, there could be free childcare services which would make it easier for a single parent working full time to afford both housing and child care without having one of them suffer financially. This also makes geoarbitrage goods like groceries less expensive as well because you do not need two incomes after all!

School

Do you have school-aged kids, or are you preparing to send them to school in another country? There may be grants and scholarships available for international students, which could help offset the cost of tuition.

Lifestyle

In the end, we all should enjoy our lives, and geoarbitrage is a great way to do that by allowing you the opportunity to live in more affordable places.

You should spend your quality time with your family and friends. You can find geoarbitrage goods like groceries less expensive as well because you do not need two incomes after all! So, when looking for a school or job, consider the geo-arbitrage opportunities available to you to make life easier.

Schools may also offer grants and scholarships, which could help offset tuition costs if they’re an international student. Finally, remember to spend quality time with loved ones – geoarbitrage will allow you this opportunity without having two incomes coming into the household.

Types of Geoarbitrage

The strategy for geoarbitrage can be big or small. You can use geoarbitrage by getting a job in another country, or you could use geoarbitrage on your own terms and bring specific items to sell at home.

The best way for most people is to move abroad and work remotely from there because this offers the lowest risk with significant gains if those geo-arbitraged goods are successful back home.

This also helps families maintain ties without breaking up their relationships and staying close with relatives who may not speak the same language fluently.

Domestic

Executing the geoarbitrage in domestic markets is also a viable option and has the benefits of being closer to home. While geo-arbitrage requires some investment, it can be as small as an additional room in your house or larger, like buying property or investing in equipment for production.

Some people might find that they have access to geoarbitrage opportunities because their work provides them with international experience.

Talk to someone knowledgeable such as our team at Global Traders Group Inc, about how you may qualify for geo-arbitraging goods from overseas markets without having two incomes coming into the household.

International

Internation geoarbitrage is more adventurous because of high savings with greater investment. It is typically done by setting up a shop in your country of residence and then importing products from overseas markets to sell domestically at the lower domestic price point with geoarbitrage savings passed on as profit.

For example, you might buy raw materials cheaper abroad than locally (or have access to cheap imported goods) and then use them to produce something like clothing that can be sold at a higher price back home.

Another geo-arbitrage opportunity involves buying into businesses or franchises based upon their ability to export internationally and import while expanding your market reach through trading partners around the world, such as Global Traders Group Inc who specialize in geo-arbitraging opportunities across borders without having two incomes.

Steps to Execute a Geoarbitrage Strategy

Here we will discuss some of the important points to execute geoarbitrage strategy.

Choose Your Location

The very thing is to choose a good location. This is a geoarbitrage strategy for buying and selling goods or services in different geographical regions.

Find an Opportunity

You need to find opportunities that offer you geo-arbitrage benefits such as trading across borders, access to imports at low prices, limiting your costs while leveraging export markets with no additional investment required on your part.

Do Your Research

It’s important to do some research before starting any geo-arbitraging opportunity. You want to know the risks involved and also how best it can be leveraged by understanding the market rather than just blindly jumping into something without knowing what you’re doing.

Look for products of which there are large price disparities between them based upon where they are being sold currently versus their true value.

Move & Enjoy

Along with your financial goals, geo-arbitrage can provide you with the opportunity to explore new cultures, countries, and cities. You could even relocate as a result of geo-arbitrage opportunities, allowing you to have a different life experience while still earning income in your chosen profession.

Final Words

The GeoArbitrage strategy is based on the idea that it’s cheaper to live in one country and work remotely from another, usually a less expensive location. The goal of this lifestyle change can be summed up as “living cheaply abroad while working for an American company.”

While many people are familiar with the concept of telecommuting or remote jobs, few realize they too could take advantage of geoarbitrage by benefiting from lower living costs outside their home country.

I lead product content strategy for SaltMoney. Additionally, I’m helping our broader team of 4 evolve into a mature content strategy practice with the right documentation and processes to deliver quality work. Prior to Instacart, I was a content strategy lead at Uber Eats and Facebook. Before that, I was a content strategist at SapientNitro, helping major Fortune 500 brands create better, more useful digital content.

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