Interested in starting up an online arbitrage business?
Then you’ve come to the right place.
Any business that is started needs some start up cash. When it comes to selling on Amazon, that amount is a little different than your typical brick and mortar business. Since you don’t have the overhead expenses like a warehouse, electricity, etc, you can get started with less cash than most other businesses.
If you are searching about the start up money needed for online arbitrage, you most likely know that it can be a great business model for those who need a side income or even need to replace their full-time income. Amazon is one of the world’s biggest marketplaces and the potential for growth is outstanding.
After you are done reading this article, you will have a better understanding of the funds needed to get started with online arbitrage, but you will also learn a little more about the business model in general.
What is Online Arbitrage?
If you have no idea what online arbitrage is, you are in luck because you found one of my personal favorite ways to make money online.
Arbitrage has been around for a long time (I actually learned about the whole concept in an economics class with an example from the Bible, which was odd, but helped me to learn). In short, it’s the process of buying products from a website at a low price and selling them on Amazon (or another platform) at a higher price.
And cue that one question you have on your mind right now…
Why in the world would someone buy something from Amazon at a higher price when they can get it on another site cheaper?
I could list a litany of reasons, but it comes down to brand loyalty and convenience. Amazon is a massive marketplace that gets items to you in 2 days or less. Most people have Amazon Prime and are used to a level of customer service that isn’t around on other sites. They are willing to pay more to not have to deal with another site and the hassles that might come along with it.
So, the reality is that people are more than happy to pay extra for the Amazon experience – perfect for someone like you to step in and make some profit!
How much money do you need?
The short answer:
You can get started with online arbitrage for a whopping $100. If you are really wanting to start marketing money, I would suggest having $1,000 on hand to get started.
I remember when I started my first business in high school. My parents helped me buy some DJ equipment so I could start DJing dances and weddings. All in all, we spent around $1,000 for all of the equipment.
So in terms of comparisons for other businesses, online arbitrage is something that is actually a low cost business to start.
The long answer:
In order to even start selling on Amazon, you will need to get the Amazon Seller Central Pro Subscription. This will run you $39.99/month, but it will give you access to the Amazon marketplace and the fulfillment resources that will save you a ton of time and money.
And then you will need some boxes and some labels. Depending on exactly what you choose to use (I recommend getting a Dymo printer and labels for the labels and a laserjet printer and free UPS labels for the shipping labels plus boxes from Home Depot or Lowes), you could spend a few dollars or a couple hundred on getting started. I always recommend starting small and working your way up as you start making money.
Altogether, the vital expenses add up to around $50 – depending on where you buy your labels from etc. A Tactical Arbitrage package ($89) is another tool that can save you a lot of time, money, and energy when starting out – providing you with the ability to scan through over a thousand different stores. The tool makes searching for products much more practical – something worth considering if time is not a luxury you can afford.
Finally, you will need between $250 and $500 to invest into stock and products. When you start out, you are most vulnerable to mistakes and bad decisions. Perhaps you make the wrong purchasing decisions or you are unlucky enough to receive a lot of returns, you need to have some money to fall back on to recover.
With this as a starting point for your online arbitrage business, you should have plenty of breathing room, low overhead costs, and a lot of potential to grow and scale your business.
What Are the Must-Have Tools?
When you think of a construction worker, you know that they need specific tools in order to get the job done. Online arbitrage is not much different. There are ways you can search for items and manage your business that are free, but you will spend a lot of precious time doing so.
I prefer to get the right tools for the job and doing so makes my life a lot easier and also makes me a lot more money in the long run.
I know you are reading this article on the Tactical Arbitrage blog, but I am not directly connected with them at all (that’s what you get when you hire an outsider writer to help with the articles). That being said, Tactical Arbitrage is the best tool on the market and it is the only reason I continue to source online. Without Tactical Arbitrage, I would spend hours wasting time and never getting anything done.
FBA Revenue Calculator Browser Extension:
This browser extension allows users to determine how much money they would make from a product if they were to list it on Amazon. With the FBA Revenue Calculator, you lower the risk of your investments by pre-determining the return on investment that you would make – perfect for a beginner who needs to lower risks as much as possible.
Keepa Browser Extension:
This browser extension displays extremely useful data whenever a user is looking at an Amazon listing. For example, Keepa displays how quickly the items have been sold over a period of time, as well as how many competing offers there are against it.
Ebates and the Honey Browser Extension:
These two separate extensions are my all-time favorites at finding coupons and discounts to cut the costs of purchasing products. The money you save using these two tools will be reinvested into your online arbitrage business – further boosting growth. Since they pop up when you check out on a site, it helps you to remember that every penny counts when you are trying to lower your cost of goods.
A Second (Or a Third or a Fourth!) Monitor:
If you’re sure that you want to invest your time long-term into online arbitrage, then definitely look into purchasing a second monitor. This allows you to compare potential items and amazon listings in an effortless and hassle-free way. I am sitting in front of two monitors right now and I have a blog post on one and Tactical Arbitrage and my Seller Central account running on the other. I freaking love my dual monitor setup. I used to think it was a waste of money, but now I can’t live without it.
So, there was a breakdown of the money and tools you need to start up a successful online arbitrage business from scratch! The prospect of making a lot of money from online arbitrage is very exciting, but you have got to be smart about how you run your business. Doing so will save you a lot of headaches down the road. Invest in tools that make life easier and continue to make smart and profitable investments.