retail arbitrage amazon

Are you an online retail arbitrage Amazon seller and want to find a new way to make good profits?

Are you stopping because of the low budget?

Well, how about we tell you that there is a method through which you can sell on Amazon without having to think about the budget

The method is Retail Arbitrage. Retail Arbitrage is a way of starting a business and taking full advantage of the price difference between the two markets.

Due to this scheme, a lot of new beginners are entering the Amazon market in order to learn more about the ecommerce business. There are tons of advantages to this business model.

In this blog, we will tell about the retail arbitrage business and how you can use this to create your name in the Amazon world. The guide contains all details about the model and how to get started.

Table of Content

Chapter 1: Retail Arbitrage on Amazon-Does it works?

Chapter 2: Why should you start with Retail Arbitrage Amazon?

Chapter 3:  8 Tips for Identifying the Right Products for Amazon Arbitrage

Chapter 4: How to Start Retail Arbitrage on Amazon? -Step by Step Guide

Chapter 5: What kind of Retailers you should target in Retail Arbitrage Amazon?

Chapter 6: Best Products to Sell using Retail Arbitrage on Amazon?

Chapter 7: 5 Tips to Scale Amazon Retail Arbitrage Amazon Business

Chapter 8: Frequently Asked Questions about Retail Arbitrage Amazon

Chapter 1: Retail Arbitrage on Amazon-Does it work?

Retail Arbitrage on Amazon-Does it work

There are multiple ways of selling on Amazon. But, if you are a beginner and want to get an idea about the Amazon market, we recommend you to start retail arbitrage.

But, the question is, “What is retail arbitrage”. This is the chapter that covers the details of retail arbitrage and how it works.

1. What is Retail Arbitrage?

Retail arbitrage is a method of taking advantage of the price difference between the two markets. In other words, it is a method of reselling products.

We all know that the prices of different products are regulated from time to time. One store sells that socks pair for 10 USD, the other store sells the same product for 15 USD. People who are in the business of retail arbitrage make profits on the price difference.

2. How does Retail Arbitrage work and earn you profit?

It is important to understand the concept of discounts and promotions before we talk about the working of retail arbitrage.

Whenever a retail store or online store wants to clear the shelves, they put their products at discounts so that they can clear the excess inventory fast.

Whenever a retail arbitrage seller gets to know about this deal, he swoops in and buys the inventory that is on sale.  Then, these sellers relist the inventory on their page and sell those products at a fair market price. In turn, they make a profit.

Let me give you an example, suppose an Amazon seller is selling that coffee maker at a discounted price of $25. At the same time, eBay is selling the same product for $40.

What retail arbitrage sellers do is they will buy the coffee maker from Amazon and then sell that on eBay. Hence, they are making a profit of $15.

3. Is Retail Arbitrage legal or illegal?

The retail arbitrage business model is totally based on the price difference. So, it is totally legal. You are just playing between the sale price and retail price.

One store wants to clear the shelf by putting items on sale, and you are helping them by doing that. Then, you are making yourself a profit by selling that product at the actual retail price. Hence, it is a win-win situation.

Just to be on the safe side, do look at whether Amazon or the manufacturers allow you to resell that product. If not, that can become an issue. And, make sure you have all the receipts for that product so that you can give proof if in case something happens.

4. Retail Arbitrage + Amazon- Can it work together?

Retail Arbitrage Amazon- Can it work together

Retail arbitrage is a perfect way to enter the Amazon market because the entry barrier is low compared to other business models (Wholesale or Private Label).

You can easily start a retail arbitrage business on Amazon. Amazon does not restrict you from selling a product unless it is banned, restricted, or requires special paperwork.

Chapter 2: Why should you start with Retail Arbitrage Amazon?

There are five main reasons why you should start selling on Amazon through the retail arbitrage model. If you are a beginner in the e-commerce world, then this chapter is especially for you.

1. No need for high budget

Business models like Private Label or Amazon Wholesale requires a lot of investment because they have different costs associated with them.

However, there are no extra costs related to retail arbitrage Amazon business.

You don’t have to pay for extra marketing schemes because your competitors have already done that. Moreover, there is no need to pay for differentiated designs or logos because, essentially, you will be selling the same product.

These kinds of things make retail arbitrage less expensive and require low investment.

2. Requires low time management

Requires low time management

Like all Amazon business models, retail arbitrage gives you the power to become your own boss. You can start retail arbitrage anytime and can close it whenever you want.

Sellers can source the products whenever they want.  There is no need for extensive time management. You can run retail arbitrage as a side hustle or a full-scale business.

3. Anyone can start it easily

Retail arbitrage is not rocket science. Anyone who has the will to make a change can start a retail arbitrage business. All you have to do is keep track of stores that put their items on sale.

Then, you list those products and sell them under your own name.

Getting into the retail business will give you an idea about wholesale and private label business. The model will give you a detailed understanding of how selling on Amazon works.

4. High Return On Investment

High Return On Investment

One of the best advantages of retail arbitrage is that it gives you huge returns on investments. Essentially, you are selling a product that has the same price as other stores.

On retail arbitrage, you can earn as high as 50% returns, provided you are doing everything right.

5. Low Risk

Like all businesses, there is risk involved in retail arbitrage Amazon business. However, the risk is low compared to other Amazon business models. If you learn how to source your product correctly, you can quickly lower the risk.

Chapter 3:  8 Tips for Identifying the Right Products for Amazon Arbitrage

8 Tips for Identifying the Right Products for Amazon Arbitrage

Retail arbitrage sounds too simple, and at some point, it is that simple. However, you still need to find the right product for Amazon retail arbitrage business because there are reasons for that.

For instance, the gloves at that Target store are on discount because they are not getting sales. Or, existing sellers on Amazon are already selling those gloves for $10.

So, how to make sure that the product you are selecting is right for retail arbitrage Amazon business. Here are the tips for that.

1. Go for product hunting tools

Go for product hunting tools

For this business, you need to have complete information on how a product is performing in the market. That is why you need the right product hunting tools. Some of those tools include:

  • Amazon

Amazon itself gives you detailed information about the product sales, the sellers who are selling that product, selling price and customer reviews.

  • Amazon scanner app

Amazon scanner app lets you scan the barcode of that product. The app provides information about product performance, FBA fees, ranks, and the weight of the item.

  • CamelCamelCamel

Lastly, CamelCamelCamel is the tool that will fill the gaps that are not filled by Amazon or the scanner app. It will provide detail such as stock levels, product pricing history, and other details.

2. Take a look at the prices and compare those

In this business, the first thing that you need to do is look at the price of the product Amazon. Then, try to find the same item you can buy at a cheap rate from a store. Usually, this happens when a store has a discount or is offering deals.

Take a look at the prices and compare those

3. Check whether the products are banned or restricted

It is important to check whether you are allowed to sell that potential product or not. On Amazon, there are two types of restrictions.

Banned products: Are products that are prohibited by Amazon or are prohibited for reselling by the manufacturer.

Restricted products Are products that require special paperwork or approval.

4. Know your competitors

There are chances that someone is already selling the same product that you will be going for. So, it is important to get an idea about the competition. The things to consider are

  • Price at what they are selling
  • Whether they are offering prime shipping
  • What their customers are saying
  • Whether Amazon is the direct seller of that product

5. Go through customer reviews

Customer reviews are the main part of any Amazon business. They tell you whether a product is liked by the customer or not. It also shows the comments related to quality. Do take a look at these reviews to get better insights into the product.

6. Check stock levels of competitors

You can get an idea about the sales of that product by looking at the stock levels of your competitors. Moreover, it will also show you how much you need in the inventory to make good sales.

The best method to check competitors’ inventory is to add their products to your basket and increase the quantity to the maximum level. It will give you an error saying that you cannot add more.

7. Calculate shipping costs and storage fee

Find items with extended return option

If any seller is considering buying the product in bulk, he needs to calculate the shipping fee as well as the Amazon FBA storage fee. You can calculate those using an online shipping fee calculator and Amazon FBA fee calculators.

8. Find items with an extended return option

Most retailers give you an opportunity to return the items after a month or two. Try to find products that come under the extended return window. This way, you will be able to return the items if they haven’t been sold.

Chapter 4: How to Start Retail Arbitrage on Amazon? -Step by Step Guide

Let’s talk about how you can start a retail arbitrage business on Amazon. This chapter covers the details in the form of step by step guide.

1. Create Amazon Seller Account (Professional or Individual)

The first step towards starting the Amazon arbitrage business is creating the seller central account on Amazon. There are two types of seller accounts available out there.

Create Amazon Seller Account

  • Individual account (Amazon charges $0.99 per item sold)
  • Professional account ($39.99 per month subscription)

Go to Amazon seller central page and enter the required details. Then upload the documents, and press the sign up button.

2. Choose a Retailer for getting the products

The next step is choosing the retailer. This is the retailer that you will use for buying the products. There are plenty of retailers available out there that offer discounts and offers. You can take advantage of their deals.

Choose a Retailer for getting the products

We have added a list of top retailers in this blog that are good for the Amazon retail arbitrage business.

3. Search for clearance product

The idea behind the Amazon retail arbitrage business is to look at the right place. And for you, that place is the clearance shelves of retailers like Walmart, Target, and many more.

There is no point in scanning all the items of that retailer’s store because, in the end, you will leave empty-handed. So, direct yourself towards the aisle that is on sale.

4. Analyze the metrics of product

Once you have decided that you will go for that product, there is a need to analyze the metrics of that product. You can do that by visiting product hunting tools or the Amazon page itself. Check these indicators of that product.

Analyze the metrics of product

  • Check profit ratio

The first point is to look for is whether you can make a profit from that product or not. Visit Amazon pages and see sellers who are selling the same product.

Then calculate the profit margin using the price they are selling and the price you are getting from that retail store. A good profit margin is between 30%-50%.

  • Use product tracking for historic prices

Product hunting tools will give you a detailed graph of how the price of that product has changed over the past years. This gives you an idea about whether the product has performed well or not.

  • Check sales rank

If you find the same product or similar product on the Amazon page, take a look at its sales rank. If the score is lower, that means the product has demand.

  • Go through ratings

The last metric to consider is the rating the customers are giving to that seller. If the rating is above 4, that means customers are happy with that product. If not, then that product has no use.

  • Buy the quantity

If every metric of that product comes under your favor, and you are sure that the product will profit, then order the quantity from that retailer store.

  • Start selling

Once you have the products in your hand, have created the listing on your Amazon page, add the description and relevant images. Now, you are ready to sell that item using your own brand store.

Chapter 5: What kind of Retailers you should target in Retail Arbitrage Amazon?

What kind of Retailers you should target in Retail Arbitrage Amazon

Now that you have an idea about what retail arbitrage is and how you can start your own retail arbitrage Amazon business let’s talk about some of the popular retail stores.

These retail stores have promotions from time to time, and you can take advantage of that.

1. Walmart for Amazon Retail Arbitrage

Walmart is an American company that operates a chain of discount stores, retail stores, and grocery stores. The store contains all household items along with categories such as groceries, automobile parts, electronics, clothing, and many more.

Walmart is best known for its promotional schemes, and from there, you can get items at a very low price.

2. Kmart for Amazon Retail Arbitrage

Like Walmart, Kmart is another retailer store that has its roots in the USA. The store features almost every type of product under its roof.

You can get items such as furniture, toys, clothing, TVs, and phones from this store. They do run promotional offers for their customers.

3. The target for Amazon Retail Arbitrage

Target for Amazon Retail Arbitrage

We all know that Target is and how it has changed the way of buying products. The main reason target is popular is because they have arranged the products in a very well manner.

This makes it easy for retail arbitrage customers to scan the sales section. With a target, you can buy items like clothing, shoes, toys, and electronics.

4. Home Depot for Amazon Retail Arbitrage

If you are planning to enter the business of home improvement items, then Home Depot is the best choice.

That is because the retailer covers all items that are associated with the home and garden. You can buy construction material, tools, bathroom tiles/sinks, furniture, and so on.

5. Lowes for Amazon Retail Arbitrage

Lowe’s is the same as Home Depot, and it deals in products that are made for home improvement. The reason Lowes is on the list is that it offers free shipping on products.

Moreover, it also has promotional deals, making it a convenient store for retail arbitrage sellers.

6. Big Lots for Amazon Retail Arbitrage

Big Lots is famous for its furniture products. The retail store offers a wide range of furniture items at discounted prices.

Other than that, they have promotional schemes such as getting 15% off on the first order or free delivery if the order is above $59. The combination can be good for Amazon retail arbitrage sellers.

7. CVS for Amazon Retail Arbitrage

CVS for Amazon Retail Arbitrage

CVS is a convenience store that is popular for pharmaceutical items. You can get medical devices, pharmaceutical equipment and prescribed tablets from this store.

The store is best for people who are in the business of the pharma industry. If you have the approval to sell these kinds of items on Amazon, then consider CVS as your retailer.

8. Rite Aid for Amazon Retail Arbitrage

Like CVS, Rite Aid is another retail store that deals in the pharma industry. Rite Aid offers deals such as free home delivery and that can be used as an advantage. And, if you buy items in bulk, they do give you a discount.

9. Bed Bath & Beyond for Amazon Retail Arbitrage

One of the best categories on Amazon to start a business is the home category.  If a retail arbitrage seller is in this business, then most probably, he is buying items from Bed Bath & Beyond.

This store offers fantastic promotional deals and discounts. That can leave you with hefty profits.

10. Kohl’s for Amazon Retail Arbitrage

Kohl’s is known for its clearance sales section. That retailer store offers free shipping if the product comes under the clearance sale category. You can get items such as kitchen equipment, clothing, toys, bedding, and many more from this store.

Chapter 6: Best Products to Sell using Retail Arbitrage on Amazon?

Best Products to Sell using Retail Arbitrage on Amazon

Amazon retail arbitrage sellers are dealing in a variety of products. However, there are some categories that can make you good profits. Plus, these types of categories are easy to enter because no special paperwork is required for them.

1. Toys and Games

One of the first categories that you can start with is the toys and games niche. We all know that kids are the main reason why there are so many sales.

Plus, some adults are also into games. That can be a good category for beginners. Currently, 41% of the retail arbitrage Amazon sellers are selling games and toys.

2. Beauty/Cosmetics

Beauty Cosmetics

Due to the rise of social media platforms, the demand for beauty products has also risen. Many sellers are selling products such as beauty creams, face masks, lotions, and many more.

33% of retail arbitrage cosmetics/beauty product sellers are currently on Amazon.

3. Grocery and Canned Foods

The next category that you can target is grocery products. Grocery items have become an essential part of life, and that is why their demand is increasing day by day.

To cater to this demand, 27% of retail arbitrage sellers are selling grocery items on Amazon.

4. Kitchen/Dining

The kitchen/dining category is the best niche for people who are new to Amazon arbitrage. There is no need for special paperwork, and the competition is not that challenging.

5. Baby Products

Baby Products

If the budget is not an issue and you are looking to double your investment in no time, then you can select the baby products category.

Currently, there are 25% arbitrage sellers who are selling baby products on Amazon. You can easily enter this market if you have a strategy.

6. Pet Supplies.

Nowadays, everyone has at least one pet in their house. Obviously, there is a need to meet the demand for pet supplies. And, that is why it can be a good option for new arbitrage sellers.

Try to enter this market because currently, the competition is low.

Chapter 7: 5 Tips to Scale Amazon Retail Arbitrage Amazon Business

Let’s say that you have started a retail arbitrage business on Amazon. And, you are getting really good sales. Don’t you think it is time to scale your Amazon arbitrage business? We are adding some tips on how you can do that.

5 Tips to Scale Amazon Retail Arbitrage Amazon Business

1. Develop connections with the managers

Whenever you are hunting for your potential products in a retail store, make sure to develop connections with the managers of that store. Start the conversation and develop a sense of trust with them.

Tell them what you do and what type of product you are looking for. If you do this, those store managers might give you a call whenever there is a product that matches your requirements.

2. Go for seasonal products

Unlike Private label or Amazon wholesale, where you have to select non-seasonal products, retail arbitrage is different. With this scheme, you should always go for seasonal products.

The reason for that is you will get your hands on discounted products in the off season. Plus, when there is a season, you can sell the products at an optimum price.

3. Get your hands on discounted products

Get your hands on discounted products

The best method to make a good return on investments is going for a product that is available at a discount. Let’s say that Walmart is selling that dining set at a discounted price of 25 dollars.

At the same time, the seller on Amazon is selling that item for 50 USD. You can buy the item from Walmart and can sell it on Amazon and can make the same profit.

4. Know your numbers

The most important thing in the Amazon arbitrage business is knowing the numbers. You have to keep track of the cash flow, the fees you are paying, and the shipping.

Moreover, keep a note of the price at which you are getting the item and the price at which you are selling. Remember, the numbers are important in this business.

5. Behavioral Aspects Retail Arbitrage on Amazon

Retail arbitrage sellers have to take the behavioral aspect of this business into consideration.

If you see a product on discount at your local target store, that means the product will be on discount on other Target stores. You can say that other arbitrage sellers will be buying that product.

This affects your business because, on Amazon, the product price will fall. You will be fighting a price war because every arbitrage seller will try to make a sale.

There are two ways by which you can tackle this situation. The first one is by getting into the price war and making whatever profit you can.

The second is waiting for other sellers to run out of their inventory. Then you can release your own stock.

There is a chance that you will find yourself in this price war if you are a retail arbitrage seller.

So, the best way to get out of this problem is by following this tip that we have mentioned. Plus, keep track of the discounts offers your local retail store is offering and act accordingly.

Chapter 8: Frequently Asked Questions about Retail Arbitrage Amazon

FAQs

1. Can you do Retail Arbitrage business on Amazon?

Yes, you can do retail arbitrage business on Amazon. But, you have to follow some of the rules of Amazon. You can basically sell anything on Amazon, provided it is not banned or restricted.

If the manufacturer of that product has not banned anyone from selling that product or the product itself is not in the gated Amazon category, you can easily sell that item on Amazon.

2. How to Ship Retail Arbitrage to Amazon?

When you are done buying the products from the retailer store, you can create a listing of that product on your page. Amazon will ask you about the shipping plan. You have to fill in the details of your products and the shipping date.

Then, Amazon will give you barcodes that you need to stick on the box. After that, you can send that shipment to the Amazon warehouse.

3. Can you make money using Retail Arbitrage?

Yes, you can make money using the retail arbitrage Amazon selling method. If you know who to play between the price differences of two stores, you can enter this business and make huge sums of money.

4. Is retail Arbitrage legal?

Retail arbitrage is totally legal. That is because you are just taking advantage of the price difference. If you have bought the products from a legal source and have receipts, then you can easily sell the products on your page.

Conclusion

Retail arbitrage is a perfect way to start a business if you are a beginner and want to make a side hustle. That is because there is no need for high investments. Plus, this business model has low risk and high ROI.

If you have the right product, right retailer, and are familiar with the numbers, then you can easily create a side gig. However, for new beginners, that can become daunting.

To help these beginners, we have created a blog that contains the real meaning of retail arbitrage and how to start this business.

The blog contains the best retailers that you can choose, profitable categories that you can target, and tips to scale your retail arbitrage business.

If you have any questions related to retail arbitrage Amazon, do contact us by sending us a message.