A Beginners Guide To Retail Arbitrage on Amazon

By now, you may or may not have heard of “retail arbitrage”. Essentially, this involves purchasing products at an often low or discounted price from retailers and reselling them on a platform like Amazon for a profit. It differs from traditional reselling in the sense that these products are not necessarily ones in high demand which go out of stock in seconds. Rather, they are actually often quite basic products. This article aims to guide beginners into the uncomplicated yet potentially profitable world of retail arbitrage on Amazon. To start with we will look at how to begin retail arbitrage. Following this, we will briefly look at the pros and cons of the method compared to others before finally, we will include some tips on how to succeed.

Starting Retail Arbitrage on Amazon

Set Up An Amazon Seller Account: As this article is intended to be a beginner’s guide, we will start with the absolute basics. An Amazon Seller account is your passport to the world of retail arbitrage. Starting with an Individual account is probably the smartest approach since it does not come with a monthly subscription fee. However, it has per-item fees, which can add up as you sell more items. On the other hand, a Professional account costs $39.99 a month but exempts you from per-item fees, making it more cost-effective once you’re selling 40 or more items per month. You’ll also need to provide bank account details for the receipt of your payments, and business-related information when necessary such as your business name, address, and tax information.

Finding Products: Sourcing products is the core of retail arbitrage so it’s crucial you get it right. To start, consider visiting local retail stores, focusing on clearance aisles, seasonal sales, and promotional items. A helpful tip is to stay up to date with clearance cycles and shopping seasons in various stores. Additionally, branch out to a variety of retailers, both big and small, to diversify your sources. While purchasing, use the Amazon Seller App or a similar app like Scoutify to scan the products. These apps provide invaluable information such as competitive pricing, sales ranking, and estimated profits after fees.

Listing and Pricing: Listing your products on Amazon is the next logical step of this simplified guide. Ensure your product listings are thorough and professional, with clear, high-resolution images. It also helps to provide accurate and detailed product descriptions, including condition, colour, size, and brand. When pricing your products, remember your goal is to make a profit, but you also need to stay competitive. Utilize Amazon’s Match Low Price feature or repricing tools like RepricerExpress to set a competitive yet profitable price.

Pros and Cons

Like any business model, retail arbitrage has its pros and cons. The pros are that it offers a low barrier to entry, flexibility, and the potential for high profits. Additionally, you’re leveraging Amazon’s vast customer base and infrastructure. However, it can be time-consuming and there’s potential for losses if you pick the wrong products, for example.

Of course, retail arbitrage is just one of several business models you can pursue on Amazon. Others include drop shipping, private label (selling products under your own brand), and wholesale (buying bulk from manufacturers or distributors and reselling). However, we would have to say that retail arbitrage offers the lowest barrier to entry and arguably the least amount of risk ( with the exception of the often complicated drop shipping).

Tips for Retail Arbitrage

Finally, it is time for some of our personal tips and tricks that will hopefully help you when starting to sell on Amazon!

Start Small: If you are reading this article it’s likely you’re learning the ropes and so it’s essential to understand that every business has a learning curve. Start with a modest budget and invest in low-risk items initially. As you gain experience and begin to understand market trends better, you can invest in higher-cost items in larger quantities for larger profit margins. The last thing you want when starting out is to be stuck with huge amounts of undesirable stock.

Research: Knowledge is power in the retail arbitrage world. Use Amazon’s Best Sellers List, Amazon’s Movers & Shakers, and tools like Keepa or Camelcamelcamel to monitor price history, sales rank, and product demand over time. The more you understand market trends and consumer behaviour, the better equipped you’ll be to make profitable sourcing decisions. Currently, simple items such as clothing and toys like Lego are performing well in this space.

Diversify: A diverse inventory reduces risk and increases the likelihood of consistent sales. Spread your investments across various product categories and price points. Over time, you will get a sense of what sells best, and you can then adjust your product mix accordingly.

Be Organized: Retail arbitrage can get complicated with multiple product lines, suppliers, and sales. Track your purchases, sales, returns, fees, and profits meticulously. Good record-keeping not only helps you understand your business performance but also comes in handy during tax season and potential audits.

Inventory management is arguably the most important thing here. Thankfully, the Juiced app can help you with that. Our app not only helps you source the most profitable collectables, sneakers, toys and more but also features tools such as a bulk listing tool and cross-platform listing. You can sign up for free here.