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How to Make Money on Amazon with Online Arbitrage in 2022

 

If you’re an Amazon seller or thinking about becoming one, you’ve likely heard about retail arbitrage. Retail arbitrage is the practice of buying a product at a low price from a retail store and reselling that same item for a higher price on an online marketplace such as Amazon. 

As the seller, you are taking advantage of the price difference between two markets, and making a profit. An example of this would be purchasing a discounted toy from Walmart for $5 and reselling it at full price on Amazon for $20. 

This business model is an easy, low-cost way to begin your journey as an ecommerce entrepreneur — though it takes a lot of time going to and from retail stores searching for products to resell. 

That’s where online arbitrage comes in! Online arbitrage is the same practice as retail arbitrage, except you don’t have to leave your house to find profitable products.

In this online arbitrage guide, you’ll learn all about online arbitrage and how you can get started.

 

What is online arbitrage?

Online arbitrage (OA) is the process of buying products from online retailers with the sole intention of reselling those products at a higher price for a profit on another online marketplace such as Amazon, eBay, or Facebook Marketplace

This business model allows you to source profitable products from thousands of websites versus limiting yourself to the physical retail stores in your area. You’ll also save on gas, mileage, time, and the potential frustration of not finding any viable products in-store. 

The best part: anyone can do it! You don’t need a special business license to buy products to resell as you do with wholesale. You simply place an order as you would with any other online purchase. 

And yes, arbitrage is legal to practice. According to the first-sale doctrine, once you purchase a product, you have the right to resell that exact same product.

 

How does online arbitrage work?

The concept of online arbitrage is simple. 

  1. Search for discounted or clearance products on an online retail store such as Target.com or Walmart.com
  2. Look up the same products on Amazon
  3. Purchase the products that sell for a higher price on Amazon (we’ll go over how to calculate profit later)
  4. Wait for the products to arrive at your home
  5. List them for sale on Amazon immediately via FBM or repackage and ship your inventory to FBA

The pros and cons of online arbitrage

Online arbitrage is a unique and resourceful way to source products to resell on Amazon, but that doesn’t mean there aren’t any downsides to it. Let’s go over the pros and cons of online arbitrage. 

PROS

Easily source products from home. The most significant advantage of online arbitrage is that you can source profitable products from the comfort of your own home — or anywhere. No more driving to and from multiple retail stores, standing in lines, and wasting energy.

It’s a low-cost way to sell on Amazon. If you are a beginner, online arbitrage is one of the best ways to get started as a seller. Unlike private label, for which you need to invest thousands of dollars upfront, you can start with as much or as little as you want with online arbitrage.

You get free packaging. Since the store delivers products to your home or location, items arrive safely packaged with bubble wrap, packing paper, and other materials that you can reuse. You can even ship your inventory to FBA with the box you receive your order in! 

Source from thousands of sites. With online arbitrage, the possibilities are endless. There are thousands of online retail stores where you can find profitable inventory to resell on Amazon. You won’t be limited to the brick-and-mortar stores in your area as with retail arbitrage. 

You can buy in larger quantities. If you find a great deal online, you can typically purchase much more inventory from a retail site versus in-store. Stores only have so much stock available, and some may even limit the amount you can purchase (depending on the product).

CONS

There’s more competition. Since anyone can shop on the same websites from anywhere, there’s room for more competition when sourcing inventory online. You’re up against more resellers shopping for products online than resellers shopping at physical stores in your area. 

It can be tedious and time-consuming. Trying to find good deals may take up time. Online arbitrage consists of a lot of back and forth between a retail site and Amazon when you’re comparing prices. And with so many websites to choose from, you have thousands of potential products to analyze. 

It’s harder to calculate profit.  For retail arbitrage, there are Amazon seller scanner apps available that automatically show you your potential profit with a product. Yes, there are tools to help sellers with online arbitrage, but they’re not as accessible or easy to use, plus you have to purchase most of them.

 

How to get started with online arbitrage

You don’t need much — just an internet connection, an Amazon Seller account, and a couple of free tools to get started. You can purchase online arbitrage tools to help you source products more efficiently, but if you are on a limited budget, they’re not necessary. 

An essential factor to succeed in online arbitrage is to purchase products that will profit on Amazon. Many new sellers make the mistake of buying items without analyzing the numbers and calculating their potential profit. 

 

Three free tools to help you get started

  1. Amazon FBA Revenue Calculator

This free tool from Amazon will give you an accurate profit calculation based on your cost of goods, Amazon fees, and more. 

 

  1. Jungle Scout Sales Estimator

Also free, the Estimator tool will give you an estimate of average monthly sales for specific Amazon categories. You’ll get a good idea of how many units of a product you could potentially sell each month. 

 

  1. Brickseek.com

This website is like a cheat sheet for online arbitrage sellers. Brickseek will find online (and even in-store) deals. Many times, it will also compare prices with competing websites such as Amazon.

 

Another powerful tool to help you find products is Jungle Scout Extension. While looking at the sales rank using the free Estimator is a plus, it doesn’t tell you the whole story — it only shows you the estimated sales for that current sales rank. 

With the Extension, you’ll see a historical data chart that shows sales and price history over time, so you can purchase inventory with complete confidence that it will consistently sell at a certain number of times per month, and at the price point you want. 

The Extension also shows you the estimated sales, net price, Amazon fees, and more. 

 

According to the chart above, this particular product sells at a pretty consistent price year-round. This information is compelling because you want to be sure to sell a product at a profitable price. If the price is not constant over time, you may not want to sell this product.

 

Types of products to resell on Amazon 

Below are the 10 most popular Amazon product categories for arbitrage sellers. These categories are good places to start but you don’t have to limit yourself to them. 

  1. Home & Kitchen: 47% of arbitrage sellers sell here
  2. Toys & Games: 41%
  3. Books: 34%
  4. Beauty & Personal Care: 33%
  5. Grocery & Gourmet Food: 27%
  6. Health, Household, & Baby: 27%
  7. Kitchen & Dining: 26%
  8. Baby 25%
  9. Office Products: 25%
  10. Pet Supplies: 25%

 

How to analyze products to resell on Amazon

I’ll use a real-life example to show you how to analyze products to resell on Amazon. To do this, I will use the free tools mentioned above. 

Using BrickSeek, I came across a deal on a child’s toy that looks promising. The MSRP is $39.99 and is on sale on Walmart.com for just $5. 

 

Now let’s search for this same product on Amazon. 

 

The same product is on Amazon for $28.89! Even without calculating the fees, I know this will be profitable, but let’s check anyway: 

First, enter the ASIN of the product into the FBA Revenue Calculator. Find the ASIN under the Product Information section on the Amazon listing. 

Next, enter the selling price and cost of the product. 

 

After Amazon’s fees, your potential profit for the product is over $12! Now that we know this product sells at a profit, let’s look at the estimated monthly sales. 

Note: The estimated profit does not include taxes and shipping costs. Make sure to include that in your estimations. 

The current Best Sellers Rank is over 160,000 in Toys and Games. It’s not the best rank, but there’s still the potential for sales.

Using the Jungle Scout Sales Estimator, let’s plug in that sales rank and choose the Toys and Games category. 

 

According to the sales estimator, this product still sells an estimated 60 times per month! I would consider this product a buy. 

Another thing to consider is the number of sellers on the listing. When you’re an arbitrage seller, you will likely be competing against a few other sellers on the same product detail page

For example, this product currently has two sellers. I would take the estimated sales number and divide it by three (the two sellers + you.) This number will give you a realistic estimate of how many units you could sell each month, assuming all three sellers share the Buy Box

 

Where to source online arbitrage products to resell on Amazon

Pretty much anywhere you can purchase products online! Here are a few websites you can start your product search on:

  • Walmart
  • Target
  • CVS
  • Walgreens
  • Rite Aid
  • The Home Depot
  • Best Buy
  • Big Lots
  • Dick’s Sporting Goods
  • Vitacost
  • Disney Store
  • Sierra 
  • Christmas Tree Shops
  • Academy Sports + Outdoors
  • Ulta
  • DSW

Think of smaller websites that you could shop on as well. The more niche and less well-known, the better the deals you could potentially find.

 

Start making money from home with online arbitrage

Whether you are a complete beginner or have been selling on Amazon for years, online arbitrage is a fantastic way to make some money online. Now, don’t just limit yourself to sourcing products online. You can still find great resale opportunities in-store. 

Do you have any questions about online and retail arbitrage? Let us know in the comments!

 

72 comments on “How to Make Money on Amazon with Online Arbitrage in 2022

  1. Can we open account on Amazon seller center? If yes than which bank is best for it.
    Can i start with 500$?

    1. Yes, you can open an account and sell on Amazon. You can start with $500 if you resell items versus launching a new item.

  2. Hello, my name is Brett I’m just starting on Amazon trying to resell and don’t know how to begin, i set up a seller account already and I can’t understand the best way to get going.

    1. Hi Brett,

      Take a look around our blog and keep learning everything you can before jumping in. Arbitrage or selling used books is great way to get started with just a little bit of money.

  3. My question as someone who is just starting is regarding shipping….is there a tool that helps estimate shipping? And what is your thoughts about buying bulk in the beginning? Do you recommend just testing 1 or two items at a time until you find what’s selling? I guess I’m asking how much shipping is a factor in the overall profitability of OA?
    Thank you so much for this article!!

    1. Hi Andrea,

      It is hard to estimate without knowing more details. I like to test around 5-10 units of a new product to get an idea of how a product sells. The more you ship to FBA at a time, the cheaper the shipping will be per unit. The test shipment to give you a good indication of what it will cost. However, shipping products into FBA using their partnered carriers are fairly cheap.

  4. Hello Brian,

    Thank you so much for your article. It was a great read, very informative, and I understand everything you explained. I have a question, if I purchase a brand online and try to resale it, do I need permission from the company before selling? Do you have a list of brands you recommend to use that doesn’t require permission to sell? I hope this makes sense

    1. Hi Neesha,

      No, you don’t need to get the brand’s approval unless Amazon requires it. Before buying a product to resell, try to add the product to your seller account. Amazon will tell you if you can sell the product or not.

  5. Hi Jungle Scout

    This article is great. it helped me greatly. I have a couple of questions.

    1) How many the number of units are preferred to resell in online arbitrage?
    2) Can we buy directly from the brand website instead of the retailer?

    Thanks

    1. Hi Amina,

      It depends on the product’s monthly sales and how many other sellers are selling it. You can start small and just purchase 5-10 units to test the product out.

      Yes, you can purchase the product directly from the brand. You can see if the brand has wholesale opportunities so you can purchase the product at a cheaper cost.

    1. Hello,

      Amazon can sticker the products for you for a fee. Or you can print the labels and stick them to each product.

  6. Hello, Brian! Thank you for the article, it helped me learn more.

    I just don’t understand one thing. I bought a product from Walmart store, and I see this one: “2021 Walmart Inc. *** is a trademark of Walmart Inc. All Rights Reserved”. I also saw the same product with the same ASIN on Amazon.

    Is it allowed for resale on Amazon this type of product?

  7. Hi Brian

    I feel like I’m missing a step and need clarification. Here is what I understand, but feel lost..
    1. Find product.
    2. Purchase product, then ship to me.

    Now, here is where I’m confused..

    1. If I’m buying a product already listed, wount Amazon make me list my product under an existing listing?
    2. If so, wouldn’t it be hard to make sales if someone else is on the buybox?
    2. Where would I go to get the individual stickers for each product to attach before shipping to Amazon?

    Thanks

    Shay

    1. Hi Shay,

      1. yes, if you buy an existing brand, you must list it under an existing listing.
      2. If you are priced similarly, (and have a pro seller account,) you will share the Buy Box.
      3. When you create a shipment in Seller Central, you’ll have the option to print individual product stickers

  8. Hi. I am living in Hawaii and doing retail one is so hard for me since shipping to Maryland Amazon warehouse is like $550/ 100lbs 😑
    When you do online Arbitrage, do you still buy online and ship to your house to do label for each of your product then ship back to Amazon warehouse, or you just ship directly to Amazon warehouse and pay the fee for them to do label for you?
    I am thinking of this way to avoid crazy shipping cost from Hawaii. Thanks.

    1. Hi David,

      You cannot ship online arbitrage items from other retailers to Amazon fulfillment centers. What you can do is hire a third-party prep center to send all of your items and they handle the labeling and packaging (per item fee). We have an article on that topic, check it out!

  9. Hi Brian,
    Thanks for amazing information but I have one question.For example ,I purchased the product from walmart and possessed it now i want to dispatch my order to send in amazon warehouse.Did I need to generate labels of amazon for such product selling on amazon as a fba wholesale?
    Thanks for your response

    1. Hi,

      You will need to label the items you purchased with an Amazon FNSKU and create a shipment within Seller Central. After you create a shipment, you can print a shipping label to send to Amazon.

      Do not ship in a Walmart box or with any Walmart markings on the product.

  10. Hi Brian,

    I’m from australia wanting to do OA but worried as I am not sure if I need an ABN Australian business number or an LLC.. I’ve heard that these are things you have to apply for before starting but also hear tbat you don’t need it so just wanted clarification. What is the point of an LLC and is it needed for online arbitrage or wholesale?

    1. Hi Nav,

      You do not need an LLC to sell products on Amazon. You’ll likely need it to purchase wholesale products from brands or distributors though.

  11. I would like to thank you, Brian, for taking the time to create this extremely informative article. It is easy to understand, even for someone who has no idea what is involved in selling online. The information you provided here is invaluable, and I greatly appreciate it. I only hope I can do this, as it seems to be the way to make money nowadays. I just hope I am not too late to jump in and join in on online entrepreneurship. (Not certain that is even a word. Lol). Thank you, so much, again.

    1. Hi Patti,

      Thanks so much for reading and the kind words. I am glad you found value in this article.

      It is certainly not too late to start selling online and on Amazon!

      Good luck.

      Brian

  12. Which seller plan should we choose? Individual or professional as a beginner in online arbitrage? Considering the fact that with Individual seller account we won’t be able to win buy box?

  13. Imran Afridi
    Sir if I bought an item from Walmart online and Walmart itself Dispatch it to Amazon warehouse
    Than I listed it on Amazon FBA
    Is it legal or not?
    And 2nd for Brand I need approval or not in online Arbitrage?

    1. Hi Imran,

      You cannot do that. If you purchase an item from Walmart to sell on Amazon, you must have possession of the product first and ship the items to an Amazon fulfillment center.

      For some brands, you may need approval to sell.

  14. This info was awsome thank you. I just watched a webinar about retail arbitrage for Amazon and at the end they asked for $300 for additional needed info to be profitable, is this really necessary to pay or can I figure this out myself with the infooo you shared???

    1. Hi Debra,

      All information about retail arbitrage can be found for free on the internet, including on our blog and Youtube channel. Be wary of people who ask for money or try to sell you a course.

    1. You are allowed to resell products from other retailers on Amazon but you cannot dropship directly from Walmart to an Amazon customer.

  15. HI Brian,
    Very precisive article and good to understand all things by reading your article.

    My question is

    If we buy product and fba it and brands comes in and don’t allow us to sell that product on amazon. What to do with the inventory and what will it has impact on amazon account health?

    1. Hi Amir,

      Before purchasing a product to sell on Amazon, make sure that you are allowed to sell that brand. Try to list it and Amazon will let you know if you are restricted or not.

  16. Last but not least, LLC is very important for this job or we can do this on our personal account. I think when we send anything to Amazon’s warehouse it includes LLC. It is very important to have. We will convert our personal account into a business account. After that we will purchase any product and send it to Amazon warehouse or change its label and then send it to Amazon warehouse. I will wait for the answer

  17. I don’t understand. Suppose we bought something from Walmart. It is direct. We will send it to Amazon’s warehouse or we will take it to our warehouse and change its packaging and then send it to Amazon’s warehouse.

    1. You cannot ship items from Walmart to Amazon or from Walmart to your customers. You must receive the product first, then ship to an Amazon warehouse.

  18. Hello, thank you for this article. I found it helpful. Is there necessary to have a physical store in the marketing area or we can replace order at the time and ship product directly to customers, if yes what is the process of having physical store from Pakistan.

    1. Hi,

      You do not need a physical store to sell on Amazon, but you cannot dropship items from another retailer and ship them to your customer. If you want to do this from Pakistan, use a third-party prep center to send your items to first, and they can ship the items to an Amazon fulfillment center.

  19. Hi Brian, thank you so much for your amazing articles. My question is, I’m a student and living in the university dorm. I can’t receive the product at dorm. Is there any other way that when I buy a product let’s suppose from Wal-Mart and then send it to another place from where it will be sent to Amazon warehouse?

    Would be quite thankful for your reply!

    1. Hi Dawlat,

      Yes! You can use a third-party prep center. These companies allow sellers to send products to them, and they will prep, package, and ship the items for you to an FBA fulfillment center. Search for third-party prep centers on Google (in a sales tax-free state.)

  20. i made a mistake of stating to register my amazon sellers account using the main “sign-up” link and i dont want a proffesional account yet. and a stuck at the page where they ask you to make payment. is there a way i can change plan to the “0.9$ per unit sales “plan. pls any help

  21. Hi Brain Connelly,
    Thanks for Very informative and useful article please keep writing these kind of articles.
    My question is, is online arbitrage is fully legal to do on amazon? Because I heard and happnd with my friend too , that sometime Amazon asks for invoices and if you don’t provide or provide the purchasing items invoice which is generated by online website , Amazon not accept and suspend your account. Will you please answer this. Thanks

    1. Hi Bilal,

      Yes, it is legal to do. Sometimes Amazon may ask for an invoice, and in that case, you can provide the receipt. Sometimes they accept it, sometimes they don’t. If Amazon does not want you selling that product, you can remove it from your inventory.

  22. Hello, thank you for this article . I found it helpful. I understand that as a beginner am gated in many categories. With OA, how do I check my eligibility to sell the product on Amazon without scanning fast as is the case with RA? Thanks again. Ritah

    1. Hi Ritah,

      You can take the ASIN of the product found on the product listing and try to list the product in your Amazon seller account on your computer.

  23. Hello, once aiming on a product, and did all the steps above, should I purchase this product from the x site, and then creating a shipping plan in seller central, or once I listed the product on Amazon and created a shipping plan it means that I purchased it? Thank you.

    1. Hi Peter,

      Purchase the products first, then once you receive them, you can create your shipping plan in Seller Central. Once your products arrive to Amazon, they will be live for sale.

  24. I appreciate that you explained the process of purchasing things from online retailers with the express goal of reselling them at a higher price for a profit on another online marketplace such as Amazon, eBay, or Facebook Marketplace is known as online arbitrage (OA). My best friend is looking for some info, this should help him. I appreciate that you helped me learn more about Online Arbitrage.

    1. Hello,

      No, you cannot send the product directly from Walmart to your Amazon customer. That is against Amazon’s TOS.

  25. I am a new Amazon seller. Recently joined in Amazon associate program. Online arbitage details will help me a lot. I just learned something new. Keep going dear. It’s really awsome way to provide really helpful information. Thanks a lot.

    1. Hello Sir,

      I am already doing wholesale FBA on amazon. Can I use my UK prep centre address to receive the products Or can I use the amazon fulfillment center address to receive the products. And what’s the best way to match products btw two market places. After receiving the products we add ASIN same like wholesale FBA like me too listing ?

      Regards,

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