According to SellerApp, 89% of online shoppers prefer to buy products from Amazon than any other website. If you’re looking to get into online business and have your eyes set on Ecommerce, becoming an Amazon seller is a great way to go!
However, you’ll first need to decide which Amazon business model you want to get started with. There are a few options you can choose from, like doing private label to create your own branded products or working with distributors to buy another brands products in bulk and sell as a wholesaler on the Amazon Marketplace.
One of the most popular, especially for new sellers, is retail arbitrage. In the following retail arbitrage guide, we break down what it is, the benefits of selling this way and how to do it profitably on Amazon. Plus, a game changing hack that allows you to get ungated from selling any brand’s product!
What is Amazon Retail Arbitrage?
Retail arbitrage is an Amazon sourcing method where you buy products at a discount, usually from a retailer, and then resell them on Amazon for a profit. Products for retail arbitrage can be found by visiting retail stores in person or online, online marketplace other than Amazon, or anywhere else you can find discounted products in new condition.
For example, you walk into a Walmart and find a calculator on sale for $30. After searching Amazon, you find the same calculator is being sold for $100! Now, you’ll have to take into account some selling expenses like shipping and Amazon fees, but you’ll still likely realize a solid profit.
Say you find 20 such calculators being sold at the retail store and, after all expenses, you’re left with a profit of $50 per unit. That’s a quick $1,000 for minimal hassle and the reason many Amazon sellers choose this method.
Is Amazon Arbitrage Legal?
Although some sellers have received cease-and-desist letters in the past when selling the product of another brand, the US Supreme Court has ruled that selling legally acquired products is not an illegal act. However, many brands are restricted on Amazon and you will be unable to sell them unless you get authorization from Amazon.
Pros and Cons of Amazon Retail Arbitrage
Low startup capital required
Potential to earn a quick profit
Easy to get started
Income opportunities are only temporary
Ineligible for Amazon Brand Registry benefits
Can't differentiate yourself other than on price
Step 1 - Find Products to Resell
When looking for Amazon arbitrage opportunities, you can either go shopping in-person at the store or find products online. You can find excellent opportunities with either sourcing method and increase your potential by incorporating both into your strategy.
Where To Go for In-Store Products
Chain stores like Walmart, Target, or Home Depot are go-to sources for a retail arbitrage business. Walmart is the everyday low price store and you can find some great sales and clearance items for toys and sporting goods specifically. Target has a clearance sale section that they usually place right in the front of the store so you don’t have to spend too much time browsing to find some excellent deals on holiday decorations, toys and small accessories. At Home Depot, you can find big-ticket items like grills and outdoor heaters that have the potential to generate some major profits.
Thrift stores like Goodwill or Salvation Army are great places to find one-off items like clothing, shoes, household items and furniture. Although you’re likely not going to find any items in bulk, you will find rock-bottom prices that should make reselling the item a breeze on Amazon.
Liquidation stores have contracts with different retailers to take non-selling products of their hands at a steep discount. Simply search Google for liquidation stores in your area and check out what products they are offering. You will be able to purchase larger quantities of the same product here at low prices.
Visiting an outlet mall allows you to hit a large quantity of stores in a short period. Each store specializes in its own niche so you can find a variety of opportunities. You never know what kind of sales you’re going to find when visiting an outlet mall.
How to Look Up Arbitrage Products You Find In-Store
Amazon makes looking up items in its marketplace extremely easy for arbitrage sellers. The Amazon Seller app has a scanning feature that allows you to scan the barcode at the store to see how much the item is selling for on Amazon. It even tells you if your Amazon Seller account is authorized to sell the product!
Make sure you scan the actual barcode embedded into the products packaging, and not accidentally scan the clearance barcode the retailer may put on the product. If this sell button on the right allows you to enter the product detail page, you are eligible to sell the item.
Where to Find Items for Online Arbitrage?
Although it may seem strange to buy products from one third-party marketplace and sell it on another, there are opportunities for arbitrage between the two platforms.
While you’ll certainly find deals when visiting chain retailers like Walmart in person, you can usually find those same discounts online as well!
Online Discount Tracker Websites
Online discount tracker sites like Brickseed allow you to easily compare discounted products from multiple marketplaces.
How to Look Up Arbitrage Products You Find Online
Because you aren’t able to directly scan the barcode on the product's box, you’ll have to go about finding the arbitrage product on Amazon another way. Start by copying the products keyword from the online source and pasting it into Amazon. Search through the Amazon product listings until you come across the product. Make sure to click into the listing and see if there are variations of the product so you can find the exact match.
Step 2 - Analyze If It Make Sense To Resell On Amazon
Just because you have found an item on discount does not mean you should rush to buy it. Beforehand, you need to determine if you can sell the product, if there is a satisfactory profit margin, and will Amazon shoppers buy it?
First and foremost, you need to see whether you are even able to resell the product on Amazon. Amazon restricts sellers from selling many big name brands unless they receive authorization. Just because you see a Star Wars Lego set that is 67% off, doesn’t mean it’s an opportunity to make a nice profit on Amazon. Make sure to check Amazon’s restricted brands list before purchasing products to resell. Later in the article, we’ll outline how you can receive Amazon’s authorization to sell almost any brand.
Use the Amazon Profit Calculator
Amazon makes it easy to analyze profit potential accurately with its calculator built into Seller Central. If you’re scanning products in-store with the Amazon Seller app on your phone, Amazon automatically populates the calculator and provides expected profit as part of the process. Simply click into the product details and then choose whether you’re selling as FBA or FBM.
If you’re doing online arbitrage, you’ll have to grab the product’s ASIN from the product listing and enter it into the Amazon Revenue Calculator.
Amazon shows you the profit comparison between selling FBA and FBM. Enter the amount you can buy the product for under cost of goods sold to see your estimated net profit for reselling the product.
Of course, if you're fulfilling the order yourself, you'll need to figure out how much shipping and packaging the items are going to cost you. Include those details in the calculator to get an accurate profit estimation.
Will Customers Buy the Arbitrage Product?
Once you have determined you can sell the product and that it's a profitable item after selling related fees, you need to analyze the market to see if Amazon shoppers are even interested in buying the product.
The free way to do this is to scroll down to the product information on the product’s Amazon listing to look at the sales rank (BSR). The lower the number, as in the closer to #1, the better the item is selling compared to the competition. Popular Amazon tool Helium10 notes that any BSR between 1-10,000 is good.
While the Amazon sales rank is a great indicator, it does not provide the specific sales data sellers may want to see before committing to a product. That’s why many Amazon sellers elect to use a product research tool like JungleScout or Helium10. These tools provide browser extensions that can accurately predict sales data so you can get a clearer picture of how many units of the product are selling per month.
Step 3 - Add the Product to Your Seller Catalog
Unlike private label, retail arbitrage sellers don’t need to spend the time and resources to create a new product listing. Instead, you just need to add the product that already exists on Amazon to your catalog. If you are planning to ship the product yourself and you have scanned your item in-store with the Amazon Seller app, you can just add your product then and there. However, FBA sellers will need to complete this on the actual Seller Central website regardless, so we’ll review adding the product the desktop way.
Start by navigating to the exact listing of your product and take the ASIN. Go to your Amazon Seller Central account and go to the Inventory tab, then Add Product.
Paste the ASIN into find products search bar and bring the product up. Select “New” condition and then “Sell this product” to bring up your offer.
Here, you list the price you want to sell the item for and decide whether you will ship the product yourself (FBM) or have Amazon complete fulfillment for you (FBA). Then, simply “Save and finish” and the product will show up in your "Manage Inventory" section within an hour. Next up, shipping!
Step 4 - Ship Your Product
Once you're done adding the product to your catalog, it's time to prepare them to be ready for delivery to Amazon customers. Start by removing any stickers placed on the item by the retailer. The product and factory packaging it comes in should be like new and without any evidence of third-party handling.
Shipping Plan for Amazon FBA Seller
In Seller Central again, go to “Manage Inventory” and find the item you need to create a shipping plan for.
Once you find the product, click “Edit” to open a drop-down of options and choose “Send/Replenish Inventory”.
On this page, you outline how your products will be organized when arriving to the Amazon warehouse.
Individual products: Use when you want to send multiple unique items to Amazon with their own individual Stock Keeping Unit's (SKUs). Example: Various colors of the same product.
Case-packed products: Use when all items are the exact same (same SKU).
You also need to enter the address you’re shipping the products from in this section. With retail arbitrage, you are usually shipping items from your house. Put down your home address if that is true in your situation or put wherever the products are going to Amazon from. Then, “Continue To Shipping Plan”.
In the next step, you let Amazon know how many units you are packaging in each case and how many cases they should expect to receive.
Then, select the type of product you are shipping and Amazon will tell you if you need to do any special preparation. You can complete the required additional preparation yourself or outsource to Amazon for a small fee. The Amazon fees range depending on how much prep Amazon requires for your product.
Labeling Products To Send to Amazons Warehouse
You can either have Amazon label your items for you for a fee or you can choose to print the labels yourself and stick them on your products. If labeling yourself, load your printer with peel and stick address label sheets. Enter the number of products you need to label and then “Print Labels For This Page”.
Next, Amazon will tell you where you need to ship your products. The default setting is “Distributed Inventory Placement”, which means Amazon can split up your shipment. This means they can split up your products and have you ship them to multiple warehouses.
Unless you’ve already packaged all of your items into one box, this shouldn’t be a big deal and will get you the cheapest shipping price. If you have already packed your items into one box, you can change the setting to “Inventory Placement Service” to send all your items to one location. However, Amazon will charge a per-unit fee instead of an overall fee and your shipping cost will increase.
Finally, confirm your Amazon FBA shipping plan. In this section, you select the shipping date, small parcel delivery as your shipping mode (because you likely don’t have bulk items if selling retail arbitrage), and confirm if you will be sending your products with Amazon’s partner service UPS or another carrier.
With your shipment confirmed, you can print your FBA labels and stick them on your boxes. If you choose to use Amazon’s partner UPS for delivery to Amazons warehouse, you will see two barcodes. Both barcodes should be visible, as one is the UPS barcode and the other is the barcode Amazon uses to identify the contents of your box.
Shipping Your Amazon Products Yourself (FBM)
Unlike Amazon FBA retail arbitrage where Amazon handles shipping for you, as an FBM seller you will need to keep track and fulfill your own product orders. With the Amazon Seller app, you will get a notification when a product is ready for shipment. Once Amazon notifies you of an order, you only have 24 hours to ship the product.
Select a carrier to ship your products for you. Compare shipping rates/times to determine which option provides your business the best solution. Popular options in the US include FedEx, UPS, and USPS.
Use Amazon’s “Buy Shipping” option to ensure your order is on time and has tracking details automatically sent by Amazon to your customer. Just go to Orders, then Manage Orders, and select “Buy Shipping” next to the order you want to ship. Then verify your order, print and attach the label, and send the order on its way!
Shipping Supplies for Retail Arbitrage Sellers
The supplies you need for your shipment really depend on what you’re selling and which carrier you go with. Typical shipping materials for Amazon retail include:
Expert Strategy To Get Authorization To Sell Any Gated Brand
As mentioned, there are many brands on Amazon that are gated, meaning you can’t sell them unless you receive proper authorization. However, popular Amazon retail arbitrage seller Reezy Resells provides an easy solution to this issue!
Amazon wants proof you are purchasing products from a commercial supplier or authorized wholesale distributor. If you show Amazon an order of at least 10 units from an authorized distributor, you can usually get ungated to sell the brand. What you can then do is to create an account with an authorized distributor like EE Distribution. You need to have an official business with proper documentation if you want to work with a wholesale distributor.
Once the distributor accepts you, place a product order of at least 10 units of the brand you want to start selling on Amazon. Submit the order invoice you receive from the distributor to Amazon to get ungated for that brand. Reezy Resells notes that Amazon’s system is automated, so it’s not uncommon to get turned down the first time. Continue to resubmit the invoice until Amazon accepts it and provides authorization for you to resell the products of that brand.
Super Tip: You can submit the same invoice to unlock multiple brands at once. For example, if you buy a Star Wars Lego key chain, you can submit the invoice to get ungated for Star Wars, Lego, AND Disney!
Retail arbitrage is not a bad way to get started on Amazon, especially if you need to make money quickly. However, you'll constantly need to find new product opportunities if you want to keep your business going. Therefore, retail arbitrage is not the best option if you're looking to create a business that will provide passive income.
If you want a scalable business that you can sell, retail arbitration won't meet that goal either. Instead, you can look into creating a private label product. With private label, you create your own branded product. Then, you can potentially sell your business for a lot of money if your product sells well on Amazon. However, Amazon is extremely competitive in 2022. Carving out your share of the market with a private label product won't be easy. It will probably take months or even years before you can safely take money out of your business.
If you want to learn about an online business model that provides passive income AND that you can potentially sell for a high price tag, check out our #1 best online business recommendation for 2022.