Are you a newcomer to Amazon? Do you want to sell different things but don’t know where to begin? Or do you lack the funds to develop a private label product? Don’t worry! Amazon retail arbitrage is an excellent place to start. You can invest as much money as you can afford and have success in the marketplace.
Lets start with a basic example: Assume a pen costs $1 in X marketplace and $5 in Y marketplace, and you can buy a bundle of pens from X marketplace, then sell them to Y marketplace, and profit from the difference. This basic concept has helped many individuals establish profitable online businesses.
In this article, we’ll explain how to achieve the same thing. Continue reading to discover Amazon retail arbitrage and get a step-by-step guide for getting started.
What is Amazon Retail Arbitrage?
Amazon retail arbitrage is a product sourcing strategy in which you buy products at a discounted price from a retailer and resell them at a higher price on Amazon. It follows the same strategy as any other type of arbitration, but the resale platform is Amazon; that’s it.
For example, if your local marketplace offers a 10-pack of ballpoint pens for a 50% discount, you can purchase them for $5 and resell them on Amazon for $10. You’ll generate a profit of $5 by doing so. So this is unquestionably a profitable business for new Amazon sellers.
Some sellers purchase items from online rather than searching in brick-and-mortar stores, a strategy known as online arbitrage. The method remains the same: purchase low and sell high on Amazon.
Advantages of Amazon Retail Arbitrage
In general, retail arbitrage provides online entrepreneurs with more straightforward options and a lower level of risk when beginning to resell products on Amazon. It’s perfect for online sellers who have trouble launching their brand or securing their business websites.
Other advantages of retail arbitrage are listed below;
- Retail arbitrage is a great alternate resource for inventory products that cannot be obtained from internet sources or conventional vendors.
- One of the best parts about Amazon retail arbitrage is that you only need a small amount ($100 to $200) to get started. Because you are not purchasing huge amounts of your goods directly from a source, you will not lose the same or more money if your products don’t sell well.
- Retail arbitrage is a terrific approach to making quick money. You’re not aiming to establish a brand or a long-term relationship with a provider. If you’re just getting started selling on Amazon, that’s one of the easiest methods to generate money.
- You become your boss, just as any other Amazon business has done. What you have is to determine when you need to engage in retail arbitrage and when you do not.
- Find things on your own time. Retail arbitration can be a full-time or part-time job. If you’re starting, we recommend starting with your every-week shopping and sourcing.
- There’s some risk involved, as with anything. However, learning to source your products correctly may significantly reduce your risk. The high return on Retail Arbitrage more than pays for itself. It’s common to come across items offering 50% or higher returns, and for the amount of risk involved, a 50% return is astounding.
Amazon Retail Arbitrage VS Other Business Models
The following section will cover some other successful business models on Amazon to help you compare whether Amazon’s retail arbitrage is the right choice for you.
1. Private Labeling
Private Labeling is creating your product label or brand, usually by changing an existing product on the market. For example, you could design a significantly greater garlic press than what is currently available on Amazon, have it replicated from a manufacturer, and then add your brand.
It’s one of the most popular ways to sell on Amazon and can be highly profitable. But most sellers require some funds to get started.
2. Amazon Wholesale
When you acquire things in bulk from a brand or distributor with excess inventory and sell on Amazon, it necessitates a start-up investment and doesn’t entail purchasing items from retail outlets.
Amazon wholesale is the way to go when running an accessible and successful business. Here you can replace orders monthly. Also, as an authorized reseller, you do not need to be as concerned about fraudulent claims.
3. Amazon Dropshipping
Without a doubt, Amazon dropshipping refers to purchasing items directly from manufacturers, carrying out the customer’s purchase, and sending the product to them. However, launching a lucrative wholesale dropshipping business can require more effort and work. On the other hand, retail arbitrage makes it simple to launch a business and generate revenue.
This method refers to creating or constructing your own crafted items or products for sale on Amazon. It’s about how you develop or craft your Amazon items. It may take some time and effort to complete the order. Although it’s a profitable business, retail arbitrage is a simple and inexpensive way to get started.
How to Get Started with Amazon Retail Arbitrage
Creating a buy-and-sell business on Amazon is a relatively straightforward process, and it turns your regular shopping trips to your favorite stores into a successful business enterprise. To get started you’ll need to do the following:
Create An Account
First, you need to set up an Amazon Seller account, and this is self-evident, as you can’t engage in Amazon arbitrage without first creating an account on the marketplace.
Choose a Plan
Individual and Professional plans are available. There are no monthly costs for the former. But Amazon usually charges you for each item you sell, and the Professional plan is $39.99 monthly and does not charge per item.
Consider the Professional plan if you sell at least 40 products per month, otherwise, the Individual plan is the better option.
Sign Up for FBA
If you don’t want to bother with fulfilling orders, you may want to sign up for Amazon’s FBA service. You must browse for cheap products, post them on the site, and ship them to Amazon’s warehouse in this manner.
Find the Right Products
Fortunately, there’s not a lot of guesswork involved. Some apps can help you evaluate which products will be profitable to sell or which ones would be wise to sell; such as, SellerApp, Helium 10, AMZBase, and so on.
List Your Products on Amazon
Once you’ve found something valuable to sell, the next stage in Amazon arbitrage is to let people know what you’re selling. Optimize your listing as you go to acquire an advantage over the competitors.
Keep An Eye on Sales and Listings
You might just as well skip the preceding step. After that, wait for the money to come in. However, if you’re a serious seller, you’ll need to keep an eye on your sales and listings to verify that everything is moving correctly. Amazon merchants that fail to check their listings are frequently victims of stranded inventory.
How to Choose the Right Products for Retail Arbitrage
This is possibly the most essential step in the procedure. There are some core features to consider while selling using Amazon retail arbitrage, and the Amazon Seller App will assist you in selecting the appropriate option.
These apps work by scanning a product’s barcode to determine its sales ranking and price instantly. This comes in handy while conducting retail arbitrage hunting at a local retailer.
- Not every product is acceptable for resale. When searching for products to sell, first ensure that they’re not restricted on Amazon.
- Some brands prohibit the resale of specific products. Amazon already has a list of prohibited products that you may not sell. This is simple to check in the Amazon Seller app and other comparable apps. It makes no difference if you can make $90 for each item, the bottom line is: it won’t be beneficial if you can’t resell it!
Note: Check out Amazon Hazmat to sell dangerous goods on Amazon.
- Choose products from the appropriate category. You should avoid purchasing products with a limited shelf life. If you’re unsure how quickly your products will get from the warehouses to your buyer’s door, focus on the ones that will last a long time.
- Toys, computers, video games, and books are the most sought-after items in their respective categories.
- You can experiment with things with an expiration date, but do so at your own risk.
- Think about your profit margin. If you wish, Amazon arbitrage can become your primary source of revenue. No restrictions on how much money a business can make. On the other hand, being a business can result in more losses than profits.
- The general rule is to spend on products with a minimum ROI of 50%. This is after all shipping expenses, and other Amazon charges have been deducted.
- Consider the size of the goods. The ideal scenario is to buy and resell different products immediately, eliminating the need for storage fees.
Additional Fees to Take Into Account
It’s normal for Amazon arbitrage resellers to gain more than 100% profit, making it easy to match competitors’ prices. However, you may deal with some additional fees to be aware of.
FBA or Freight Charges: Whether you use Amazon FBA or not, you still have to worry about shipping and storage expenses if you fulfill the orders yourself.
Amazon Charges: Amazon earns money from third-party merchants through various fees. There is no difference between the two available plans, and you’ll still have to contend with Amazon fees, which you should consider in your pricing.
Where You Can Get the Products for Retail Arbitrage
If you know what to buy, the next question is, where can you get the products? The basic answer is anywhere it’s sold at a discounted price. These can include retail giants like Walmart, Target, and Home Depot, as well as dollar and thrift stores.
Regarding online arbitrage, you can browse the official websites of the stores mentioned above and seek reduced things there. Moreover, you can subscribe to their newsletter to keep up to date on future sales.
Thrift stores are excellent places to find secondhand stuff to resell. However, be sure they fall into the categories that Amazon permits for resale. You’re good to go if you find an option of selling it used.
Pro Tips to Find Discounted Products
To find successful products, you have to do your research. Verifying trends on Google as well as other marketplaces, searching at Amazon’s best seller rankings, then using keyword research tools to assess demand or competition rates are all part of it.
Aside from that, we’ve shown you other techniques for locating inexpensive things to resell on Amazon. For best results, check out the tips below.
- Don’t buy everything you need from a chain store like Walmart, but from small businesses that have helped make your community what it is today. These arbitrary, discontinued products are more likely to be found in a “mom-and-pop” store.
- Look for items that are labeled “refills.” Numerous cleanup products require refill packages to keep using the product. Multiple refills are discontinued for various reasons, but people still enjoy using them.
- Go to eBay and type in “discontinued.” After which, only sold listings will be displayed. This will show all the “discontinued” products recently sold out on eBay.
How To Improve & Increase Sales on Amazon Retail Arbitrage
You can improve your Amazon retail arbitrage by following some necessary steps we have identified in the below section;
1. Use the Amazon Scanner App
You should use an Amazon scanner app on your pc or smartphone because you will spend time browsing for things at retail establishments. This scanning program will scan barcodes to assist you in determining the profitability of a specific item.
2. Pick The Most Popular Categories
For enhanced revenue when reselling on Amazon via retail arbitrage, ensure your chosen category is one of the most popular. Toys & Games, Home & Kitchen, Beauty & Personal Care, and Kitchen & Dining are some of the most popular Amazon product categories among arbitrageurs.
3. Keep Up With the Trends
When shopping for products to purchase for retail arbitrage, you must also consider the current trend and the seasonality of the products. Examine the market to see what kinds of goods are currently popular or are likely to become fashionable soon.
4. Improve Your Product Listings
When you identify a profitable product for selling on Amazon, your work does not end there, and you should guarantee that Amazon customers can find your product listing.
Ensure that your listing is optimized correctly to maximize your goods’ discoverability. According to Amazon, providing relevant and complete product information helps enhance product visibility and sales.
Furthermore, adding the right keyword in each product title and description will enhance product discoverability. You can use search terms to improve the online visibility of your listing.
5. Add High-Quality Images
Reselling on Amazon can necessitate the posting of product photos. When adding a high-quality image for your listing, ensure you only utilize high-quality product images. It can boost the likelihood that Amazon shoppers will click on your product listing.
Prospective clients can judge the quality and characteristics of your goods by viewing detailed photographs of them. As a result, clients’ purchase decisions are influenced.
6. Competitive Listing Price
Changing prices is standard practice on Amazon, and one of the main reasons sellers change their listing price most often is to entice Amazon customers to acquire their products.
A product price update/change can be implemented in various ways by Amazon resellers. Sellers can employ manual, rule-based, or automated repricing strategies according to their needs and business goals.
7. Monitor Sales
You can utilize the Amazon seller app to track your daily sales, process orders, and alter pricing. If you notice that your things are doing well, look for extra inventory so that you can keep earning sales.
If your selected products aren’t selling as well as expected, make some pricing changes to increase sales. Remember to format your SKU, so you always know how much you paid!
The way to succeed in a resale business is to always be on the lookout for new things. Retail arbitrage could be your appropriate business strategy if you appreciate the hustle and you’re ready to get out there and start looking for products.
8. Check Amazon’s Policies
Always check Amazon’s policies (product listing and limitation standards) to avoid difficulties or penalties. Amazon has tight guidelines for listing items on its platform. As a result, reviewing these rules and restrictions can assist you in achieving success in the Amazon reseller program.
Is Amazon Retail Arbitrage A Good Fit for You?
To be frank, retail arbitrage isn’t for every entrepreneur. It’s strongly recommended for individuals who:
- Can quickly obtain products in their local or nearby areas.
- Can use the method to make future purchases at a lower cost.
- Have enough time to scour clearance, discount portions of the department stores, and visit insolvency shops.
On the other hand, retail arbitrage is not a good fit for Amazon sellers who fall into the following categories:
- Those who don’t have the resources to sell the products they purchased online.
- Those who don’t have a car to get from one retail shop to another.
- Those who want to avoid competing with other purchasers during clearance sales.
Extra Tips to Get The Best Out of Arbitrage
Amazon arbitrage has been one of the simplest and least expensive business strategies, especially if you’re new to eCommerce. However, keep in mind that as simple as it may seem, it is still a commercial venture that involves labor and strategy on the seller’s behalf.
While practicing arbitrage, follow these additional tips:
- Have patience. Entering the retail businesses and scanning product after product can be very tiring, and it’s also aggravating when you can’t find any cost-effective products. Keep going! You’ll inevitably find profitable products on Amazon.
- Make purchasing decisions. Make your calls based on the information displayed in the Amazon seller app. You shouldn’t make the mistake of buying anything that you won’t be able to pay back your investment later.
- Look for price history. If another seller “tanks the price”, price levels can change quickly. The product you decide to buy may no longer be profitable, so you should also look at the price history.
- Start slowly. You can start your procedure slowly to get a feel for the procedure. Before proceeding all-in and spending a fortune on product lines to resell on Amazon, begin with a short quantity to develop a greater understanding of listing, sourcing, shipping, and other aspects.
- Buy box. In contrast to selling under your brand name, where you would have the buy box all to yourself, multiple sellers would compete for the same product if you resell it on Amazon. If you discover a product that sells 300 times per month, be aware that you might not get all 300 sales if there are other sellers on the listing.
Is Amazon retail arbitrage legal?
Fortunately, yes. The first-sale theory states that if you lawfully buy a product, you get the right to resell this product as long as it’s sold in its original condition. As a result, if you acquire and sell a product as new, the product should be in fresh and new condition.
Can arbitrage make you rich?
Global marketplaces are occasionally inefficient, resulting in price or rate imbalances between markets. Through such a method named “arbitrage,” traders can profit from these inefficiencies. Of course, arbitrage is impossible unless there are price differences between financial organizations.
Is arbitrage simple?
Arbitrage trades are deemed to have a low level of risk because of their simplicity and the fact that they can fool the untrained eye into thinking they are complex transactions.
4. What are some of the most popular places to buy products to resell on Amazon?
- TJ Maxx
- Dick’s Sporting Goods
- Dollar General or other dollar stores
- CVS/Walgreens/Rite Aid or other convenience stores
- Grocery stores
Amazon retail arbitrage is one of the simplest and least expensive business strategies, especially if you’re new to the Amazon marketplace. However, it’s crucial to realize that as simple as this may be, it’s still a commercial venture that involves work and strategy on the seller’s part.
It’s simple to sell discounted products on Amazon. But, it requires intelligence and effort to expand the business to the point where it can generate a consistent source of income and create the opportunity for you to leave your 9-to-5 job. Nonetheless Amazon arbitrage works and has led people to success when done strategically.