Have you ever wondered how some people make a full-time living selling on Amazon?
A lot of them are doing something called retail arbitrage, also known as online arbitrage.
In short, retail arbitrage is buying products at a discount from retail stores or an online marketplace and then selling them on Amazon for a higher price.
If you're looking for a way to earn some extra money (or even replace your day job), retail arbitrage might be the perfect opportunity for you. In this blog post, we'll take a look at what retail arbitrage is, how it works, and whether or not it's right for you.
So let's get started!
What Is Retail Arbitrage on Amazon?
Retail arbitrage on Amazon is an increasingly popular way to make money. It involves purchasing items from brick-and-mortar retail stores and then reselling them on the vast Amazon marketplace. You can also find products from online marketplaces like Alibaba or eBay, but most people that do retail arbitrage focus on the big box stores in person.
For example, let's say you go to Walmart and find a product that is selling for $10 but you know that the same product sells for $30 on Amazon. This way, you can buy the product from Walmart for $10 and then resell it on Amazon for $30. That's a $20 profit!
By taking advantage of deals, discounts, or clearance sales at physical stores, retail arbitragers can quickly find opportunities in pricing differences between the original outlet and Amazon's online platform.
Retail arbitrage sellers can acquire products very inexpensively, often much lower than the official Manufacturer's Suggested Retail Price (MSRP). With a careful selection of items, it's possible to find profitable products to sell on Amazon without spending too much time or effort.
What Are the Benefits of Retail Arbitrage?
1. You Don’t Need to Invest a Lot of Money Up-Front
Unlike other business models where you need to invest a lot of money before seeing any returns, with retail arbitrage you only have to invest the amount you are willing to spend on each item.
You can find good deals: With some research and knowledge of current trends, it's possible to find amazing deals that will maximize your profits. You have total control over the products you choose to purchase and resell - and how much you are willing to invest up-front.
2. It’s Easy - Most People Can Do It
The retail arbitrage business model is simple - start with a few products and build your business over time. There are no manufacturing costs, you don't have to develop products, and you don't need any special tools. All you need is a computer and an internet connection, and you can get started right away. You don't need any experience to start!
3. Flexible Working Hours
Retail Arbitrage is a flexible career option where you can set your working hours and work whenever you like. You can work as much or as little as you like, and there's no need to meet any deadlines or quotas. You can even do it part-time while keeping your day job!
4. Great Potential for Profit
With the right strategies, savvy retail arbitrageurs could potentially make a great living if they are willing to devote the time and effort. The potential for profit is unlimited, you are only limited by the amount of time and energy that you can devote to it.
5. Amazon Handles the Customer Service
Once your product is listed, Amazon will take care of the customer service, payment processing, and shipping - so you can focus on finding more deals and increasing your profits.
What Are the Downsides of Retail Arbitrage?
1. Brand Regulations
If you try to list and sell a product without approval, you could get in trouble with the manufacturer or Amazon. Some brands have specific regulations about who can sell their products, so make sure to read up on any brand regulations you encounter before listing a product.
2. Difficult to Scale
If you find a killer product at a great deal, it can be difficult to scale that product up quickly. For example, if you bought 100 items and they all sold, you might not be able to get more of them at the same price.
3. Stuck With Inventory That Doesn’t Sell
If you didn't do your homework and bought something that doesn't sell on Amazon, you might be stuck with inventory that you can't sell.
What’s the Difference Between Retail Arbitrage and Other Amazon Business Models?
Retail arbitrage is just one way to make money online with eCommerce. There are other eCommerce models to consider such as:
Private labeling - Private labeling is where you develop and find an existing product, create your own branding, and then list it on Amazon.
Dropshipping - Dropshipping on Amazon is where you find products from an external supplier, list them on Amazon, and if someone buys, you forward that info to the supplier. They then will package and ship the item to your customer on your behalf.
Wholesaling - Wholesaling is when you buy products in bulk from a manufacturer or distributor and then resell them on Amazon for a profit. Wholesaling requires more up-front investment than retail arbitrage, but it can offer larger potential profits with higher profit margins.
At the end of the day, there is no one size fits all eCommerce model, and what works for one person may not work for another. It's important to research and understand the different models before deciding which one is right for you.
Retail Arbitrage 101 - How To Do It
So, if you think retail arbitrage is for you, here is a quick guide on how to do it.
Step 1 - Create an Amazon Seller Account
To create an Amazon seller account, you need to sign up and provide some basic information. You can choose between an Individual or Professional seller account.
What's the difference?
- With an individual account, you will need to pay 99 cents for every sale you make but the account is free to set up.
- With a professional account, you will pay a monthly fee of $39.99 but you won't need to pay for individual sales.
Step 2 - Find Products To Sell Using Amazon Seller App
Head on over to one of your favorite big box stores like Walmart, Target, Staples, Costco and so on. Download the Amazon Seller App on your iPhone or Android device and use it to scan the barcodes of items.
The app will show you a list of items that are currently selling for more than their in-store price on Amazon.
You'll also be able to tell if the item is restricted to certain brands or manufacturers before you list it, so you can choose to avoid any items that won't be allowed on Amazon.
Step 3 - List Items On Amazon and Ship To Customers
Once you have found an item that is selling for more than its in-store price that will still yield a healthy profit, upload the images to your Amazon seller account. Make sure you fill out all the details about the item on your product listing.
If you have an FBA account (fulfillment by Amazon) then you just need to send your products to an Amazon Fulfillment center and they will handle to packing and shipping.
Step 4 - Repeat
If you sold out all the items and made a good profit, you can check to see if you can get more items at the same price. If you can, repeat the process and keep building up your business. You can also check for other items - the choices are endless.
Tips For Finding the Best Products
Stick to big box stores like Walmart, Target, and Costco - These stores typically have a more diverse selection of products and you're more likely to find items that are selling for more on Amazon.
Scan the barcodes with the Amazon Seller App - This will help you quickly identify items that are selling for more on Amazon.
Avoid restricted brands or items - Make sure to avoid any items that are restricted by Amazon before you list them, as they may not be allowed on the site.
Check sales Rank - The lower the sales rank, the easier to sell. To uncover your product's Amazon Best Sellers Rank, take a peek at the Product Details section located near the base of its page. A general rule is that products that are under the 100,000 sales rank will sell best.
Stick to the best product categories - Categories such as Home & Kitchen, Toys & Games, Beauty and Personal Care, Pet Supplies, and Office Products work best. But you are not limited to that, just do your own research.
Is There a Course That Teaches Retail Arbitrage?
You can find a lot of free training online for retail arbitrage. However, if you want something structured and from a reliable source, get a good course. Check out my best Amazon FBA courses list.
Some of these courses teach retail arbitrage. The benefit here is that if you are successful with online arbitrage, then you might want to take the next step and do Amazon FBA. Most of these courses will teach both, so you'll have the training already and won't need to invest more in other courses.
Amazon retail arbitrage can be a great way to make some extra money, but it’s important to understand the risks involved. By following the tips we’ve provided in this post, you should be able to start making profits from retail arbitrage on Amazon quickly and easily.
Have you tried Amazon retail arbitrage? What have been your experiences? Let me know in the comments below!
Frequently Asked Questions
Is retail arbitrage on Amazon legal?
Retail arbitrage on Amazon may seem like it would be illegal, but surprisingly, it is actually a perfectly legal practice! Just be sure that you are legally able to sell a particular product on Amazon first.
How much money do you need for retail arbitrage?
The truth is, there’s no set number; the budget required for retail arbitrage depends on two factors. This includes the type of merchandise you purchase, and the number of those items you buy to flip on Amazon for profit.
Is Amazon arbitrage easy?
Amazon arbitrage has been growing in popularity as a side hustle for entrepreneurs to make money. But is it really easy? On the one hand, there are people who've made significant incomes from Amazon arbitrage, and many claim that it doesn't take too much effort or expertise to do so. On the other hand, they often forget to mention the amount of research and hard work that is required to be successful in arbitrage. However, if you start off slow and learn from each experience, you should have no problems.
Can you make money with retail arbitrage?
Yes, you can. While it's not always easy, many people are turning towards retail arbitrage as an opportunity to create a passive stream of revenue among the competitive e-commerce landscape.
Can you get rich from retail arbitrage?
Retail arbitrage can be a great way to make some extra money, but you won't get rich overnight using it. Still, when done right, retail arbitrage can become a viable business and generate passive income. Through efficient researching and analyzing of products, resellers can uncover profitable opportunities that could result in steady profits when selling online.
Just like any other venture, it will take some dedication and hard work to see consistent returns from retail arbitrage. However, with the proper approaches and strategies in place there is certainly potential for profits that surpassed the expectations of many entrepreneurs.
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