You can use several strategies, but doing retail arbitrage on Amazon is one of the most straightforward. In this step-by-step guide, you'll learn everything you need to know about retail arbitrage on Amazon. We'll also give you some tips to ensure you choose the right products and execute this tactic effectively to increase profits.
What is Retail Arbitrage?
Retail arbitrage consists of buying products in retail stores and reselling them for a higher price on Amazon. With this method, you don't need to deal with suppliers and large orders, but you can sell small amounts instead.
Often a product is sold cheaper in some stores than others. When this happens, you can take advantage of the price difference by buying a lower-priced item and selling it on Amazon at a higher price. If the price difference is big enough, you can profit from this simple transaction.
For example, you might find a book in a local store that sells for $5, but when you check Amazon, you see that it’s going for $15. So, if you buy and sell the book on Amazon, you will make a $10 profit.
It is similar to online arbitrage, which involves buying products and reselling them online. The difference is that with this business model, the items are purchased from websites. However, the overall goal is the same.
Retail Arbitrage Profitability in 2023
Retail arbitrage is a great way to make money, especially for those who want to start their own eCommerce business with a small investment and lower risk.
This business model is considered the best way to start selling online for most people. While other sourcing methods like wholesale or private label have their advantages, retail arbitrage offers a very low-risk option to reliably earn profits from the start! Of course, your profits depend on how much you’re willing to invest and how well you source products; product sourcing is a key part of doing retail arbitrage.
Step-by-Step Guide to Start Retail Arbitrage
You must create a seller account and find a profitable niche to sell on Amazon. If you want to have a successful business, you first need to do market research and find profitable products in high demand and with low competition. Follow the steps below to start doing retail arbitrage on Amazon:
1) Create an Amazon Seller Account
The first thing you should do is create a seller account. To do this, go to https://sellercentral.amazon.com/ and click on the Sign-Up button. You must provide various information such as an email address, phone number, first and last name, billing information, and business address. You must provide a viable address because Amazon will send you a postcard containing a verification code to complete the creation of your seller account.
You must also choose between Individual and Professional plans. The Individual plan allows you to sell up to 40 products per month, and you must pay a $0.99 fee for each product. However, the Professional plan allows you to sell as many products as you want for a fixed fee of $39.99 per month. The Professional plan is more suited for people who are serious about this business and want to make huge profits.
2) Choose the Ideal Product to Sell
The Amazon catalog has millions of products listed. To investigate which ones are more successful, you must simplify the search. If you want to find products that are profitable, in high demand, and have low competition, there are a few key elements to keep in mind. Below you can see some of the criteria that you should look at when choosing a product:
Price range: You must find products that can be sold in the approximate range of $20-$60. This price range makes it easy to cover product costs, Amazon FBA fees, and advertising costs.
Low seasonality: Look for products that are sold throughout the year and not only in certain seasonal periods.
Dimensions and weight: The smaller and lighter the items, the less you'll pay for storage and shipping.
Easy to ship: Avoid glass, electronics, or products that are very complex to ship.
Availability: You should only purchase a product if a constant volume of stock can be secured and maintained.
Marketing: When choosing a product, make sure you can visually show its benefits through photos, videos, and texts.
3) Source Your Products
Once you know what niche you want to sell in, it's time to start looking for your products. There are several places to look - you can go to big retail stores like Walmart, Target, etc., dollar stores, thrift shops, and so on.
After listing a product, it can sell out quickly, so be sure to check these and other stores daily so you don't miss any opportunities. When looking for items to sell, you want to find something going for less than half of what it sells on Amazon. This is because Amazon charges some storage and fulfillment fees if you're using the Fulfillment by Amazon (FBA) program. So, you must have enough profit to pay these fees and still have some money left.
4) List Your Products on Amazon
Your product listing is essential for customers to find you and buy your product. Here, we will offer some tips to successfully set up your listing:
Optimize your product description using relevant keywords
Create good SEO titles for your product
Highlight the strengths of your product
Include high-quality images and videos
5) Advertise Your Products on Amazon
Now is the time to start marketing your product within the platform, making your products more visible. Amazon's marketing services put a wide variety of advertising methods at your disposal. One of the most profitable ways to advertise is through pay-per-click (PPC) ads.
Your products will appear in relevant searches as "Sponsored Product," you will only pay when someone clicks on your ad.
6) Get Reviews About Your Products
Product reviews are an essential part if you want to get sales. Some people pay for fake reviews, but we do not recommend them. Instead of buying fake reviews and risking Amazon suspending your account, asking people around you, like friends and family, for real reviews is better. Give them the product in exchange for an honest review. Once you've made some sales, reach out to your customers and ask them to leave a product review.
How to Source Products to Do Retail Arbitrage on Amazon?
If you want to do retail arbitrage and have a successful business on Amazon, you need to source the right products. In addition to the tips discussed above, you must also pay attention to these criteria:
Invest in the right tools: You need the tools to find as much information as possible about your potential product. This includes the Amazon Seller scanner app, which allows you to scan a product's barcode to access more detailed information about the product, including pricing, sales range, and weight.
Compare prices: Typically, you can achieve a decent ROI by finding a deeply discounted item or buying products at smaller discounts.
Check for any restrictions: Next, you must check if you can sell the item on Amazon. Some items are completely forbidden, while some are restricted, and you must meet certain criteria and apply to sell them.
Final Thoughts
Throughout this article, we've covered what it takes to start doing retail arbitrage on Amazon. While there is a lot of competition, money can be made. Selling on Amazon, particularly through retail arbitrage, requires much work. If you like doing it, be aware that you must dedicate hours. Creating an Amazon account and choosing a couple of products is not enough. So, focus on sourcing the right products, maintaining a “healthy” seller account, and optimizing your listings. This way, you’ll be sure to succeed as an Amazon seller.
