Best Amazon retail arbitrage categories for beginners include:
- Home and Kitchen
- Beauty and Personal care
- Clothing, Shoes, and Jewelry
- Toy and Games
- Sports and Outdoor
- Pet Supplies
This article will break down the top items for beginners within each category, including the demand, profit margins, and accessibility that will give you an edge to step up to your competition.
After all, Amazon retail arbitrage is extremely saturated and requires you to drive to physical stores, house your own inventory, and other efforts that make this stream of income not very passive. But if this business model doesn’t sound right for you and you want to explore a different business model offering a more passive income stream, you can check out local lead generation. But first, let's get started on the top 6 categories for Amazon retail arbitrage beginners.
Top 6 Amazon Retail Arbitrage Items for Beginners
The top 6 Amazon retail arbitrage items for beginners are under the categories of home and kitchen, beauty and personal care, clothing, shoes and jewelry, toy and games, sports and outdoors, and lastly pet supplies.
1. Home and Kitchen
This category is one of the best sellers on the Amazon marketplace. These items are often essential for day-to-day living, such as cookware, bedding, home appliances, and decorative items like wall art and sculptures.
Home and Kitchen category has taken the lead at 35% according to the State of the Seller report. This category includes essential items such as cookware, home appliances, bedding, and decorative items such as wall art and sculptures.
Home and Kitchen item is a significant starting point for beginners in Amazon retail arbitrage for several reasons:
- It’s an unrestricted category for new sellers that leads to a lower barrier to entry.
- Product ideas are simple to come up with.
- Products in this category have simple requirements.
Profit Margin:
It has an average profit margin of 23%.
Accessibility:
Home Depot is a great store to source product from this category because they offer a wide range of products and is also known for home repair and maintenance.
Best-selling items:
2. Beauty and Personal Care
Beauty and Personal Care is projected to grow to $756 billion by 2026, making it a lucrative market for Amazon FBA sellers.
According to WWD, health and personal care products had a 45% increase in 2021 with 23 billion in sales, and Amazon currently owns a 32% market share of all beauty and health products purchased online.
According to Google Trends, Peel-off face masks have seen a significant increase in search volume over the past few years, showing a rising interest in this product. Additionally, designer nails have also witnessed a considerable surge in popularity, with the global nail polish market expected to reach a staggering $15.6 billion by 2024.
Profit Margin:
It has an average profit margin of 23%.
Accessibility:
Walgreen offers a great selection of beauty products on sale.
Best-selling items:
3. Clothing, Shoes, and Jewelry
The Shoes, Clothing, and Jewelry category is one of the most popular and best-seller categories for Amazon sellers, with JungleScout ranking third out of over 21,000 sellers. This category has a strong market because of the high demand for trendy items, and these products are easily found in various stores. The clothing industry is valued at $12 billion, with the average American family spending over $1,700 on clothes per year. Shoes are also in demand, with almost half of the American consumers purchasing them online in the past year.
If you're interested in selling in the shoes and clothing category, there are a few things to keep in mind:
- 84% of them focus on price.
- 78% of consumers read ratings and reviews before making a purchase.
- 56% of shoppers look at images submitted by customers
- 51% consider the exchange policy.
Profit Margin:
It has a profit margin of 20%.
Accessibility:
Thrift stores like Goodwill can offer good profit in this category. Nasty gal started a business using retail arbitrage by going to thrift stores like Goodwill then suddenly transitioned it into her own website and grew up it crazy, where now they do 98.8 million a year.
Best-selling items:
4. Toy and Games
During the COVID-19 pandemic, Amazon Retail has seen increased demand and sales for toys and games. Over 99% of toy sales on Amazon retail come from third-party brands rather than Amazon's private label brands.
The toy and game category is well-suited for the shift in consumer behavior towards indoor activities, resulting in increased demand. Board games, puzzles, and other indoor activities have become more popular as people look for ways to spend time at home. The toy industry had a revenue of $73 billion last year and is expected to continue growing, eventually reaching $150 million in revenue.
Profit Margin:
It has 20% sales up from 19% to 2021.
Accessibility:
Dollar store is a great place. You must check the toy section first when you go here. Also, Target and Walmart offer a wide selection of kid’s products.
Best-selling items:
5. Sports and Outdoor
It is an excellent category to start with. The pandemic has led to the closure or strict regulation of gyms and fitness studios, making people work out at home. As a result, there is a growing demand for fitness equipment and apparel, such as dumbbells, leggings, yoga mats, and resistance bands.
You can make money if you find these items for less money, add them to your product listing, and then sell them on Amazon for more money.
Profit Margin:
It has an average profit margin of 20%.
Accessibility:
Walmart is the perfect store for this category. They offer big-ticket items like sporting goods, making them good for clearance rack hunters.
Best-selling items:
6. Pet Supplies
Pet ownership has increased in recent years, particularly during the pandemic, leading to Pet Supplies becoming a prosperous category on Amazon in 2021. This growth is expected, as there are over 80 million pet-owning households in the United States alone. On average, dog owners spend more than $1,000 per year on their pets, while cat owners spend nearly $700 annually.
Profit Margin:
It is a thriving Amazon category since 2021, with a 23% average profit margin
Accessibility:
Big-box store like Walmart and Target are the most popular shopping locations for pet products.
Best-selling items:
DISCLAIMER
The list of top Amazon retail arbitrage categories for beginners can provide an excellent opportunity to start your retail arbitrage business on Amazon. It's important to remember that as demand grows, so does competition, so if you use this business model, you'll need to do a lot of research on each product before purchasing.
As Amazon resellers, you ensure that your chosen products are profitable and in demand. Before making any purchase, conduct thorough research on each discounted product to evaluate its potential profitability.
Best Stores for Retail Arbitrage Beginners
Here are some of the best retail stores for retail arbitrage for beginners:
7 Sourcing Tips for Retail Arbitrage Beginners
1. Look for the clearance items
Have you ever noticed that stores often sell off seasonal or old items at a discount to eliminate them? This will give you a grand chance to buy these items at a lower price and then sell them on Amazon to make more money.
2. Check for sales and promotions
Monitor sales and promotions in retail stores like Walmart, Target, and Home Depot in your retail arbitrage sourcing. By buying products on sale when they are on sale, you can make more money when you resell them. Just be careful to avoid getting too carried away and buying too many items, or you may lose money.
3. Use Scanner App
Amazon seller tools can help you find profitable products to sell on Amazon. By scanning a product's barcode using the Amazon seller app, you can learn more about its price, sales rank, rating, reviews, and other vital facts. This makes your product research faster and easier because you will know which is a profitable product. You can check our article about the best Amazon retail arbitrage app here.
4. Research the competition
It's always a good idea to check out the competition before purchasing any item for your Amazon business. This way, you can see if there is a demand for the product and how other seller's price it because 75% or three out of four customers usually check prices and reviews on Amazon before making a purchase. It will help you determine if it's a worthwhile investment and give you an edge over the competition.
5. Focus on high-demand, low-competition items
To find a good retail arbitrage product, target items with high demand and low seller competition. Aim for products with at least 300 monthly sales to increase your chances of making sales and avoid price wars.
6. Consider shipping costs
As retail arbitrage seller remember to factor in shipping costs when determining if an item is worth reselling. Things that are lightweight, small, and easy to ship are typically more profitable.
- Aim for items weighing under 5 lbs. to save on shipping and storage costs.
- Look for products with dimensions below 18" x 14" x 8" to avoid additional storage fees.So, if you want to keep your costs low and have higher profit margins choose smaller and lightweight items.
Keep that in mind when making your purchases.
7. Choose your business niche
Having your own business niche in starting a retail arbitrage business on Amazon will help you find profitable items by enabling you to focus your efforts, become more knowledgeable about your chosen market, develop a loyal customer base, and differentiate yourself from your competitors. Target niches where the top sellers have less than 400 reviews for better visibility because customer feedback is valued by Amazon’s search.
What Can't You Sell on Amazon?
Knowing restricted categories on Amazon is essential when looking for profitable products to sell to start your retail arbitrage business. Here are some restricted categories where you need the approval to sell on Amazon.
- Postage stamps
- Collectible Coins
- Fine Art
- Holiday Selling Requirements in Toys & Games
- Jewelry
- Join Amazon Subscription Boxes
- Made in Italy
- Music & DVD
- Sports Collectibles
- Streaming Media Players
- Video, DVD, & Blu-ray
- Watches
- Sony PlayStation Requirements in Video Games
It's also important to be aware of retail arbitrage Amazon restricted items;
- Alcohol
- Animals & animal-related products
- Art – Fine art
- Art – Home Decor
- Automotive and power sports
- Composite wood products
- Prohibited cosmetics and skin/hair care products
- CPAP cleaning and disinfecting devices
- Currency, coins, cash equivalents, and gift cards
- Dietary supplements
- Drugs and drug paraphernalia
- Electronics
- Explosives, weapons, and related items
- Export controls
- Food and beverage
- Gambling and lottery
- Hazardous and prohibited items
- Human parts and burial artifacts
- Jewelry and precious gems
- Laser products
- Lighting
- Lock-picking and theft devices
- Medical devices and accessories
- Offensive and controversial materials
- Other restricted products
- Pesticides and pesticide devices
- Plant and seed products
- Postage meters and stamps
- Recalled products
- Recycling electronics
- Refrigerants: Ozone-depleting substances and substitutes
- Strike-anywhere matches
- Subscriptions and periodicals
- Surveillance equipment
- Tobacco and tobacco-related products
- Warranties, service plans, contracts, and guarantees
- Upholstered furniture and other quilted products
Also, it is essential for as Amazon FBA seller to know the different products to avoid as a new Amazon seller.
Closing Remarks: Why Local Lead Generation is Better?
Finding the best Amazon retail arbitrage items for beginners is crucial. It is important to do your research and stay-up-date with the market trends to find profitable items to resell. Additionally, keeping an eye out for clearance and discounted items can also lead to profitable flips.
However, instead of relying solely on retail arbitrage, consider the business model of local lead generation, which can provide a more sustainable and profitable income stream. It is not also a high-maintenance business model. By generating a lead for local businesses, you can create a long-term and scalable business that is not reliant on finding and reselling products.
If you are interested in learning the differences between Local Lead Generation and Amazon FBA Retail Arbitrage, read our article about Local Lead Generation vs Amazon FBA.
