Facebook Twitter

0

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!

 

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

  1. 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.

  2. 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

  3. 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.

  4. 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.

  5. 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.)

  6. 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

  7. 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.

  8. 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.

  9. 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.

  10. 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.

  11. 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,

Leave a Reply

Your email address will not be published.