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You’ve probably already considered selling on Amazon but its way easier than you think.
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The Amazon marketplace is a lucrative ecommerce platform for any business owner. If you’re considering selling on Amazon, you may have heard of the phrase “retail arbitrage”.
Well, Amazon retail arbitrage is one easy and quick way to become a third-party Amazon seller.
If you want expert guidance on sourcing, pricing, account setup, and scaling your arbitrage business, ePlaybooks can help you navigate the process and build a profitable Amazon strategy with confidence.
But what is Amazon retail arbitrage, and how does retail arbitrage work on Amazon? Is Amazon retail arbitrage worth it?
Read on as we dive into what Amazon retail arbitrage is all about and highlight great tips to get you started.
While ‘Retail Arbitrage'' may sound complex, the concept is quite simple. Retail arbitrage on Amazon refers to the practice of buying products from retail outlets, either physical or online, at a lower price and then reselling them on Amazon for a higher price, thus generating a profit.
For example, if your local store is selling a stationery set at a discounted price of $10. You could buy the stationery set from them and sell it on Amazon for $15. Retail arbitrage can be a great way to start earning on Amazon with minimal initial investment. Many sellers begin with just $1000 or less, and some even start with as little as $500. With retail arbitrage, you can easily start selling your products without having to do any design, shipping, or manufacturing. In addition, you can get a healthy profit margin and increase company sales.
In countries like the US and UK, retail arbitrage is legal. The US Supreme Court allows someone to resell products as long as the product is acquired legally. However, if you’re planning to sell using the retail arbitrage model, it is best to stay clear of counterfeit products or branded products that require authorization.
Is retail arbitrage legal on Amazon? Well, the answer is yes. No aspect of retail arbitrage violates any of Amazon’s retail arbitrage policies. However, it's important to navigate Amazon's rules and regulations carefully. This includes providing accurate product information, adhering to category restrictions, maintaining good customer service standards, and respecting intellectual property rights.
You can get started with retail arbitrage on Amazon in three simple steps:
The first step to getting started with Amazon retail arbitrage is to create an Amazon Seller account. Amazon offers two options: the Individual seller account and the Professional seller account.
The Individual seller account is free. However, you need to pay a commission of $0.99 on every sale made, along with a 15% consolidated fee. With this account, you can only sell 40 units of products or below. If you won't be selling more than 40 units per month, this may be a great option for you.
The Professional seller account requires that you pay a fixed monthly fee of $39.99, which gives you access to more sophisticated features. With a professional account, you can list and sell more than 40 products. Once you create your account, you can also sign up for Fulfillment by Amazon (FBA). With Amazon FBA, Amazon takes care of the storage, packaging, shipping, and customer service. You also have access to sell to millions of Amazon Prime members.
This is where all the action happens. The type of product you sell can greatly impact your Amazon business. When sourcing products to sell, you want to get products that you can sell at a good profit margin. Start by looking for inexpensive products that can be sold for a profit. Consider clearance sales and product reviews on Amazon to identify potentially profitable items. Remember to analyze Amazon’s fees and shipping costs when calculating your potential profits. Also, don't compromise on the quality of the product.
We will look at some tips to help you source the right products for retail arbitrage on Amazon shortly.
The final step is to list your products on the Amazon marketplace and start selling! Optimizing your listing can go a long way in boosting sales. Optimize your product listings by using relevant keywords, providing complete product information, and including high-quality product images. Don't forget to optimize your prices to ensure they stay competitive.
If you choose to use FBA, you’ll need to send your inventory to an Amazon warehouse. With the FBA program, Amazon handles storage, packing, and shipping on your behalf. This can be a significant advantage, especially if you’re looking to reduce shipping costs and improve customer service.
Regularly monitor and optimize your listings based on performance data. Use tools like SellerApp to gain insights into how your listings are performing and make adjustments as needed. This could involve tweaking your product descriptions, adjusting your pricing strategy, or experimenting with different keywords to improve visibility and sales.
Selling with retail arbitrage through Amazon comes with its advantages and disadvantages.
Finding the right product is more than just finding a cheaper product. Some products may be sold at a discounted price because they are slow-moving products.
Some products may also come with brand restrictions, making it impossible to sell them on Amazon.
So how do you identify the right products to sell and increase Amazon sales? Here are tips to help you find the right product for retail arbitrage on Amazon:
Knowing where to find the best products is the toughest part of selling with retail arbitrage. You want to ensure you find the best possible deals to increase your profit.
Well, we have a few suggestions for you. You can go to local thrift stores that sell new or fairly used items. Secondly, you can check out department stores or places like Walmart or Target for items that are marked down. You can also check out liquidation stores and outlet malls. Some popular retail arbitrage stores include Walmart, Target, Home Depot, Lowe's, etc.
One way to succeed in the Amazon marketplace is to keep an eye on the competition. When finding the right product, check out the competition on Amazon. Chances are, other Amazon sellers are offering your product. You want to analyze factors like price, customer reviews, shipping, and so on.
It is important to analyze these factors carefully and consider whether you can match up or beat other sellers on these factors. In other words, look for ways to stand out from the competition.
Be aware of seasonal trends and fluctuations in demand. Some products may experience increased sales during specific times of the year, such as holidays or seasonal events. Adjust your sourcing strategy accordingly to capitalize on these trends.
Customer reviews can provide great insights when carrying out product research. Pay attention to your competitor's customer reviews to evaluate the quality of the product, the level of demand, complaints, and how well the product might perform in the future.
Aside from customer reviews, you also want to look out for the ratings of the product. This will let you know the quality of the product. Even if a product has good profit potential, a poor rating may indicate that the product is of low quality. This will also help you avoid many product returns. We recommend choosing products with at least a three-star rating and above.
Next, you also want to pay attention to the stock levels of your competitors. What do we mean? If the product demand is good and your competitors are low or out of stock, you may be able to fill that gap and gain some pocket share.
You can scan products using scanning apps that you can link to your Amazon seller account. Amazon has its own scanning app. However, you can also invest in other scanning apps like Scoutify. These apps show you your competitor’s pricing, search history, and gross and net profit, among other information. To scan products, open your Amazon seller account. Next, click on the camera in the top right corner, and a scanner should appear. Lastly, place the scanner on the barcode to see the product and its details.
After scanning the product, you can click on the product details to look at the profit potential. The profit potential shows you how much you can expect to make after sales.
Ideally, we recommend that your profit potential falls between a minimum of $3-$5.
On the product details page on your Amazon Seller account, you will find the sales rank of your product at the top left corner. This metric is important when analyzing products.
Sales rank is measured as the Best Seller Rank (BSR) and reflects the demand for a particular product compared to other products within the product category. The lower the sales rank, the better.
You want to establish relationships with store managers, employees, or local distributors. They may provide insider information about upcoming sales, clearance events, or exclusive deals, giving you an advantage over your competitors.
It is important to check if you are permitted to sell the product on Amazon. Some products are outrightly banned by Amazon and cannot be resold by the manufacturer. Some of these items include illicit drugs, weapons, alcohol, and so on. Also, you may find products that fall under Amazon’s restricted category. These products require prior approval before they can be sold on the Amazon marketplace. Some restricted categories on Amazon include the automotive category, cosmetics, skincare, animal-related products, etc.
While retail arbitrage is one quick way to get profits rolling in, you want to keep shipping and storage expenses in mind as you calculate your ROI.
Whether you are taking advantage of the Amazon FBA service or fulfilling your orders on your own, you need to keep in mind that you have to deal with storage and shipping costs.
Keep your shipping speed in mind when selling through Amazon retail arbitrage. You want to get products to your customers in the fastest possible delivery time. In addition, familiarize yourself with Amazon's fee structure to accurately calculate your potential profits. This includes referral fees, fulfillment fees, and other additional costs.
We’ve identified that retail arbitrage is a quick way to make money online. It is easy to start and comes with a low startup cost. However, retail arbitrage is not scalable in the long term.
Let’s look at other business models you can choose for your business:
Amazon retail arbitrage is a business model worth trying, especially as a beginner. If you have a keen eye for undervalued products and are willing to invest time in research and sourcing, Amazon retail arbitrage can be an exciting opportunity to turn your shopping skills into a profitable business venture. You can learn the ins and outs of selling on Amazon before launching a retail arbitrage business.
Not only is it easy to start up, but you can also start making profits in a short amount of time.
What’s more, you don’t need to have thousands of dollars to start. If you're looking for a flexible income stream that doesn't require a large initial investment, retail arbitrage can be worth exploring. However, it requires patience and the right expectations.
You can also eliminate the process of importing products from China or inventing a new product. If you're already on Amazon but looking to diversify your sales methods, retail arbitrage can serve as a foundation for expanding your business model.
Overall, Amazon retail arbitrage can be a profitable venture for those who are willing to invest time and effort in product research, pricing, and listing optimization. It's a low-risk method for those looking to start selling on Amazon without a significant upfront investment.
Amazon retail arbitrage is a cheap and easy business model you can start with. However, keep in mind that to succeed, you need to plan and put in the work. Don’t forget to optimize your listing and prices to stay competitive, attract the right customers, and increase Amazon sales.
Yes, retail arbitrage is legal and allowed on Amazon. Amazon permits sellers to buy products from retail stores or online retailers and resell them on its marketplace. However, sellers must comply with Amazon’s policies, including selling authentic products, avoiding restricted or gated categories without approval, and meeting performance standards.
You can start retail arbitrage with as little as $300 to $1,000, depending on your sourcing strategy and product prices. Many beginners start small to test product demand, reinvest profits, and scale gradually.
Beginner-friendly ungated categories include Home and Kitchen, Grocery and Gourmet (with restrictions on some items), Office Products, Sports and Outdoors, Tools and Home Improvement, and Toys and Games. You always want to confirm category requirements in Seller Central, as Amazon can change gating rules.
Most retail arbitrage sellers prefer Fulfillment by Amazon (FBA) because Amazon handles storage, shipping, customer service, and returns. FBA also increases your chances of winning the Buy Box. FBM may be useful for oversized items, slower-moving inventory, or when testing products with lower margins.
To succeed in retail arbitrage, you’ll need tools like:
You’ve probably already considered selling on Amazon but its way easier than you think.
Call Us Now