Retail arbitrage is when one gets products in local stores and sells them later on online marketplaces like Amazon. The price can be higher online, so you make profit. Usually, people search for such products in large stores like Walmart, Target and Home Depot. This scheme is opposite to the one when you need to look for wholesale products online or order them in China.
This article is the right place where you can learn everything you need about retail arbitrage to start making money with it. This scheme still works in 2019, you can choose from two options: searching for products offline and online and both of them work well.
As it was mentioned above, it means buying products from retailers (of any size and specifics) and selling them with profit on Amazon. Still, to make more profit, you should find discounted products, as no one is going to purchase the same item online for a higher price, people visit stores daily and they are aware of their pricing.
Amazon is not the only place where you can sell such items, however, it is the most popular one. Nevertheless, you can take advantage of selling those goods on eBay, Walmart.com, Jet, Craigslist, Etsy, Facebook and many other platforms.
Amazon is just the easiest platform to get started and gain experience. If you are going to use FBA, your work will be minimized just to searching for items and shipping them to Amazon, plus optimizing listings and performing marketing activities. Sounds great, doesn’t it?
First, if you are new to Amazon, learn everything about FBA business. Our article on this topic will help you to start. It tells how to do research and find a perfect product in a perfect niche, and also how to choose the right product for selling via FBA with lowest commissions.
Also, you’ll have to open a seller account on Amazon, set it up, and once you’ve chosen your ideal product, search for it in local stores, on sales, and other physical places.
Keep in mind that a product you want to sell has to cost much less than you’re going to sell it. Take into account shipping fees and FBA fees.
Our article with the Profit margin calculator will be in use on this stage. Find out how much money you’ll make by selling, for instance, a book that costs $5 in a store for $15 on Amazon.
First and foremost, you need a seller account. There are two types of accounts: Individual and Professional, better start with the first one. You won’t have any monthly fees for selling on Amazon, instead, you’ll have to pay them $1 for each product sold.
Visit this link and sign up as an Individual seller.
Fill out the necessary forms, which takes around 7-8 minutes and get started!
For doing retail arbitrage business on Amazon, you’ll need some apps. For example, this can be Amazon Seller App that allows your phone to scan products’ barcodes, as Amazon won’t let you sell products without them. You can use the app while visiting stores or scanning some goods you already have at home.
Another useful source to use is the Profit margin calculator we mentioned above. Don’t hesitate to use it, cause it is really difficult to take into consideration ALL the fees without a spreadsheet. Any miscalculation can lead you to losses.
First of all, don’t try to find multiple profitable products. Better start with one, and proceed with another one after several success sales, after you have established the ‘supply chain’.
Once you are sure what is your ideal product for selling on Amazon, scan it with Amazon Seller App. It will calculate approximate fees for the product so you can make the final decision. Once the app shows you the details, find the information on whether the product can be sold on Amazon (some items are sold exclusively, so resellers have no rights to sell them). You can find this data under the ‘Selling eligibility’ section.
After that, check the sales rank for the item. This indicated how well the product is sold on Amazon. The number has to be low, everything under 250.000 can be a nice choice.
If your product doesn’t match these 2 criteria (eligibility and the sales rank under 250K), find another one to consider.
If it does, check your possible return on investment. Click on the arrow to the right and select ‘Amazon Fulfilled’ (or ‘Seller Fulfilled’ in case you’re going to manage order fulfillment yourself). The app shows you an approximate price for the chosen item.
If you see that you’ve made the right choice, purchase at least 5-6 pieces of the product. Amazon sellers have to keep an eye on their inventory and this is the minimum to start with. So, you won’t risk much, if few people buy your retail arbitrage product.
Anyway, bear in mind the following things while searching for products for Amazon FBA retail arbitrage in local stores:
Once you’ve bought your products of choice, list them for sale on the Amazon online marketplace. If you use FBA, these products have to be sent to the company’s warehouses.
We have an extensive guide on how to send your first order using Amazon FBA program. There is a step-by-step guide, just follow the main points and your products will appear in Amazon’s warehouses soon! ;)
Experts share their tips throughout the Internet, so here are some of them for you to keep in mind:
All in all, retail arbitrage on Amazon is still a working scheme in 2019, hundreds of entrepreneurs make money on it. You can use this method independently or together with online arbitrage or Private Label business. By the way, we have already mentioned the benefits of retail arbitrage for wholesalers here.