1Do you want to sell on Amazon but don't know how to start or lack the budget for a private-label product? Try retail arbitrage. But what exactly is it?
Highlights
- Amazon arbitrage involves buying products at a lesser price from one marketplace and reselling them at a higher price on Amazon to make a profit.
- Using FBA allows Amazon to handle storage, packing, shipping, and customer service, making products eligible for Amazon Prime benefits.
- Calculating net profit involves deducting Amazon’s referral, fulfillment, and storage fees from the selling price.
- Regularly reviewing and adjusting pricing strategies is crucial to maintaining profitability in the competitive market.
Why We Wrote This?
We wrote this content on Amazon arbitrage to help aspiring sellers understand this lucrative buying and selling strategy. Our main intent was to explain the process, offering clear, actionable steps for those interested in starting their own arbitrage business on Amazon. By highlighting the most popular and profitable product categories, we help readers decide what to sell.
Therefore, in this guide, we’ll discuss Amazon arbitrage, its two primary methods, how to start it, types of products that can be resold, and Amazon arbitrage strategies.
What Is Arbitrage on Amazon?
Amazon arbitrage refers to a buying and selling strategy where you capitalize on price differences between different marketplaces, particularly Amazon. It involves purchasing items at a lower price from one marketplace and reselling them at a greater price on Amazon to make a profit.
For example, if a product is priced at $5 on one platform (market B) but sells for $15 on Amazon, you can profit by purchasing it from market B and listing it for sale on Amazon at a greater price.
There are two primary methods for conducting Amazon arbitrage: retail arbitrage Amazon, and online arbitrage.
Amazon Retail Arbitrage
Retail arbitrage, also known as Amazon arbitrage, involves purchasing products at a lower price from physical stores like Walmart and Target and reselling them at a higher price, typically on Amazon.
For instance, during a clearance sale at Walmart, you might buy a deeply discounted television and then sell it on Amazon for a profit.
Amazon Online Arbitrage
Online arbitrage, on the other hand, includes buying items from online retailers like Walmart, eBay, or Target and selling them at a greater price on platforms like Amazon, eBay, or Alibaba.
How to Get Started with Arbitrage Amazon?
Here’s a step-by-step guide on beginning retail arbitrage on Amazon once you’ve understood the basics.
Open Your Amazon Seller Account
Start by creating your Amazon Seller account. You have two options: a free individual seller account, which charges $0.99 per sale and limits you to 40 products, or a professional account at $39.99 monthly. The professional account has no per-sale fee, allows listing more than 40 products, and includes access to Amazon FBA for storage and shipping.
Look for Products to Sell
Finding profitable products for retail arbitrage takes time and patience. Seek inexpensive items that can still be sold for a profit despite competition from larger retailers. Use clearance sales and Amazon product reviews to identify potential winners. The Amazon Seller smartphone app helps compare prices, scan barcodes, and view live listings. Always factor in Amazon’s fees and shipping costs when calculating potential profits.
List Your Products and Start Selling
Once you’ve sourced your products, list them on Amazon and start selling. Optimize Amazon listings with relevant keywords, complete product information, and high-quality images. For deeper insights and improvements, trust the SwiftStart Amazon agency. It offers actionable tools based on Amazon’s A9 algorithm, enhancing visibility, clicks, and sales.
Choose Your Fulfillment Option
Consider using Amazon FBA for your retail arbitrage business. With FBA, Amazon handles storage, packing, shipping, and customer service. This makes your products eligible for Amazon Prime benefits, including faster shipping and better visibility. Prime-eligible products often rank higher in search results, attracting more customers.
To stay competitive, use price-matching strategies. Monitor competitors’ prices, adjust yours to attract buyers, and win the Buy Box directly from your listing.
Assess Profit Margins
Calculate your net profit by deducting Amazon’s fees and other costs from your selling price. Amazon charges referral, fulfillment, and storage fees, which impact your profit margin. Regularly review and adjust your pricing to earn profitability.
Monitor Reviews and Manage Your Platform
Customer reviews are crucial. Offer excellent service to earn positive reviews and monitor competitors’ reviews for insights. Change your strategy based on feedback to boost sales performance.
Types of Products You Can Resell on Amazon
Here are the top 10 favorite categories among retail arbitrage sellers on Amazon:
- Home & Kitchen: 25% of retail arbitrage sellers
- Cell Phone & Accessories: 18% of retail arbitrage sellers
- Electronics: 18% of retail arbitrage sellers
- Arts, Crafts & Sewing: 16% of retail arbitrage sellers
- Grocery & Gourmet Food: 16% of retail arbitrage sellers
- Toys & Games: 14% of retail arbitrage sellers
- Appliances: 12% of retail arbitrage sellers
- Beauty & Personal Care: 11% of retail arbitrage sellers
- Books: 11% of retail arbitrage sellers
- Sports & Outdoors: 9% of retail arbitrage sellers
Amazon Arbitrage E-Commerce Selling Strategies
Amazon to eBay Arbitrage
This involves purchasing items from Amazon at a lower price and listing them for sale on eBay at a higher price. The seller leverages the price disparity between Amazon and eBay to make a profit after accounting for eBay fees and shipping costs.
Amazon to Amazon Arbitrage
This strategy involves buying products from Amazon at a discounted price, often during sales or using discounts, and then listing them back for sale on Amazon at the regular or higher cost. Sellers may take advantage of temporary price drops or promotions on Amazon to resell at a profit when prices revert to normal.
Summary
Understanding and utilizing Amazon arbitrage can be a highly profitable venture for aspiring entrepreneurs. By following our guide, you can gain the knowledge and strategies to understand retail and online arbitrage complexities. With the right approach, careful product selection, and effective pricing strategies, anyone can leverage price differences across marketplaces to build a successful business on Amazon.
Become A Part of The SwiftStart Community
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FAQ
What is Amazon arbitrage?
Amazon arbitrage is a retail strategy where individuals buy products from retail stores or online marketplaces at a lower price and then sell them on Amazon at a higher price to earn revenue.