When you find arbitrage deals to flip on Amazon, you might find a great opportunity to make some additional income. I have seen people be able to afford a new car, a house payment, a vacation, or even be able to leave their job from the extra income that is generated by buying and reselling items on Amazon. So how do you take advantage of the opportunities that are presented through retail and online arbitrage? Use this guide as a starting point and then build upon your knowledge as you turn into an experienced Amazon seller.
What is Arbitrage And What Types of Arbitrage Opportunities Exist?
Amazon arbitrage is the act of buying a product from a retailer at a low price in order to sell it at a profit on Amazon. In short, you are essentially buying something low and selling it high. When it comes to selling on Amazon, there are three main types of arbitrage opportunities.
- Retail arbitrage – When you buy something from a retail store and flip it on Amazon.
- Online arbitrage – When you buy something online and flip it on Amazon.
- Amazon arbitrage – When you buy something from Amazon and flip it on Amazon
In terms of selling on Amazon, you will usually have the option of selling the item yourself (by merchant fulfilling the item – also known as shipping it yourself), or using Amazon Fulfilled by Amazon (FBA) to help you sell your stock. I tend to prefer Amazon FBA because it takes the hassle out of the customer service and shipping, plus it allows you to offer your products to customers through Amazon Prime.
What are the Benefits of Using Amazon FBA for my Arbitrage Activities?
There is nothing wrong with buying a product, selling it, and shipping it yourself. It is the way I got started selling and some people make a lot of money doing this full time. Although you can make money, I tend to recommend using Amazon FBA. When you use Amazon FBA, you might have to pay a little more for the service, but you sell products at a quick rate and a higher price.
When you sell with Amazon FBA, Amazon takes care of everything for you. When you have sourced products, all you have to do is add them to your Amazon online store for sale and send them to your designated Amazon fulfilment center. You will then see a “Fulfilled by Amazon” badge added to your product page, while your products may then become eligible for Amazon features such as “Free Next Day Delivery with Prime” and “Free Super Saver Delivery”. It might cost a bit more, but at the same time, you don’t have to worry about the headaches. Plus the customers get the amazing customer service that Amazon is known for.
From the perspective of a customer shopping on your Amazon page, they see that they can get the product in one or two days and it is backed by Amazon’s guarantee. This increases the likelihood of you making a sale. If I look through it as a shopper, I would personally choose a faster delivery, especially if the price difference wasn’t crazy.
We all know that Amazon is a logistical mastermind and by using Amazon FBA you can tap into the power of the Amazon fulfillment network. Using Amazon FBA means that Amazon take care of everything for you. As your items are held in Amazon’s fulfilment centers, once an order is placed they will pick and ship the order for you. Plus (and this is one of my favorite parts of FBA), they will deal with any returns or other customer queries.
Meanwhile, when your item is sold, you get paid, and can start to think about reinvesting in further inventory to keep making profits.
I Know How to Sell, So Where Do I Get My Stock for Arbitrage?
Amazon FBA is a fantastic opportunity for anyone who sells on Amazon. I could spend hours telling you why, but let’s assume you are already informed and you are ready to buy inventory.
Where do you look? To be honest, it’s a little harder than just reaching for the top shelf in a store and picking up a few items (well – it can be, unless you know how to do it).
If you’re a seller of your own self-made products or you use Amazon for what we’ll call traditional e-commerce, then you will almost always know where your products and stock is coming from because you are buying them directly from a middleman or a wholesalers. Sure, you might have the odd hitch with your wholesaler or a time when your supplier can’t fulfill your needs, but you’ll have your supply chain in place and it’ll usually be pretty consistent.
On the flip side of this, if you’re selling products via Amazon FBA that you’ve sourced for arbitrage purposes, you will need to think about:
- What you’re going to – and want to – sell.
- Whether you’re going to specialise in a specific type of product to give your Amazon online store a focus or if you are going to sell anything that makes a profit.
- Where you’re going to get your products from (online or in-store).
There are pros and cons no matter what option you choose, but most people tend to land in either two different camps: Online or Retail Arbitrage. Some love to run from store to store sourcing clearance and replenishable items and others love to do it from the comfort of their own home. Regardless of the method, there are opportunities for profit and growth from arbitrage opportunities.
I personally recommend looking into online arbitrage because of the ability to use software to do the heavy lifting for you. I got my start sourcing in different stores across the midwest and I learned a lot from the process. The one key takeaway I learned was that I am only one person who is limited by the number of hours in a day. That’s why I love online arbitrage. I can shop while I am at work and I can use some high end software like Tactical Arbitrage to source while I am asleep.
Regardless of which way you lean, you’ll have a number of options for sourcing arbitrage inventory.
1. Sourcing Locally in Bricks and Mortar Stores
The process of retail arbitrage is pretty straightforward: Download the Amazon Seller app, go to a store, scan items, see if there is a profit, buy profitable items, send said products to Amazon, and repeat.
Sourcing inventory through retail arbitrage locally can take some time, especially if as you get started you’re still doing a full-time job or simply want to try arbitrage as a means of getting extra income. This method can be intense, as you’ll be out and about and looking for items on store shelves yourself. Plus you might be like me and run out of room in your car if you land a monster deal.
And there are some decisions that have to be made in the store before you check out with any items.
- Will the product sell?
- What is the average price history?
- How many should I buy?
- Is Amazon on the listing?
This makes retail arbitrage as much of an art as it is a skill. You have to be able to process all of the information at hand in a matter of minutes and make a decision that can make you earn or lose money. Some people have the magic touch, but some struggle with analysis paralysis in the aisle of their local Walmart.
I personally love retail arbitrage, but I also understand that the entire process is very limiting. You are limited by time, location, space, and you are at the mercy of each and every store.
2. Shopping Yourself Online (Online Arbitrage)
Shopping online is far easier than going to the store in person. If you are like me, the benefit of not having to deal with people at Walmart is good enough to keep me in my recliner to shop.
You can take that same convenience of online shopping and apply it to your hunt for items to sell on Amazon. Stores run sales all the time online and you can use that, along with some other online data points, to find items to flip on Amazon.
The process is pretty simple again (much like retail arbitrage): Search for a product online, find a good deal, check Amazon to see if the item is profitable, use cash back and promo codes, buy the item, have it shipped to you, ship it back to Amazon, sell it, and repeat the process.
Although sounds really easy, there are few issues that arise:
- Sometimes online retailers have limited items in stock.
- Some deals and promo codes are time sensitive.
- You might typically shop on the sites where arbitrage opportunities exist.
- You might not have the skills or the time to search websites all day
Those these could be potential roadblocks, I recommend looking at our next option to make your life a lot easier.
3. Using an Online Arbitrage Sourcing Tool
Imagine a world where you could take the best of retail and online arbitrage?
Using an online tool gives you all the benefits of searching for online arbitrage opportunities, plus some others, while taking away many of the potential disadvantages, particularly in terms of the demands on your time.
My favorite tool is Tactical Arbitrage. With Tactical Arbitrage, you can source products from over 1,000 retailers in a number of geographical locations. The software allows you to set your own parameters for searching, so if you want to search for specific products, or want to focus purely on volume, or high margin arbitrage products, or alternatively just shop as you find opportunities, you can.
Think of it as an army of internet researchers that are working just for you. You can tell them exactly what you are looking for and they will search the web to find it.
In addition to just being able to find the deals, Tactical Arbitrage goes a step further by helping you analyse the deals. Instead of having to make that split second decision in a store or having to bounce between multiple tools online, Tactical Arbitrage has all of that information right at your fingertips. You’ll have the information to know how many of an item to buy and how quickly that item should sell on the Amazon marketplace.
Taking Advantage of Arbitrage Opportunities
How do you plan on taking advantage of arbitrage opportunities with Amazon?
Whether you are looking to make a small side income from Amazon arbitrage or want to build a profitable business, choose the best type of arbitrage to help you buy the best products to sell on your Amazon store via Amazon FBA (or merchant fulfilled if that’s your thing)!
And if you want to try a best in class software to help you find your first deals, give Tactical Arbitrage a try. All new Tactical Arbitrage users can enjoy a seven-day free trial, sign up and start yours today.