Retail Arbitrage is buying products from your local retail stores and then selling those same products on Amazon,eBay, and similar platformsto make a profit. The most reliable source of products is generally the new discount stores, dollar stores, and places you can find discounted products.
You might be wondering if it is possible to make money with retail arbitrage. The answer is yes. Hundreds of entrepreneurs live from this business model. Many stories in the USA mention their successes, so why don’t you start doing the same?
This article will tell you more about how retail arbitrage works in general and how you can start making money using these strategies.
What is Retail Arbitrage?
Retail arbitrage is a simple concept: first, you buy a product from a local outlet that sells it for a low price, then you sell that same product for a higher price, thus reversing it for a profit.
You can sell items through marketplaces like Amazon, Craigslist, Facebook Marketplace, eBay, Jet, Walmart.com, and many more.
While there are many options available to retail arbitrage sellers, Amazon is one of the best places to sell for those just starting this business model.
The reason is that Amazon allows you to do something called “Fulfillment by Amazon.”
Amazon FBA is a great program because it allows you to purchase products and then send them directly to Amazon for fulfillment. This means there is no need to manage customer emails, calls, or even feedback.
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Is it Still Profitable to Do Retail Arbitrage?
Retail arbitrage makes you money when you buy items at a significantly lower price than you are bound to make a profit. But don’t forget that you need to consider marketplace fees and shipping costs.
For example, let’s say you can buy an item for $9 off your local retailer, and it sells for $23.99 on Amazon. After all shipping fees and costs, Amazon will pay you $17 after a customer purchases your item. In this example, you would make a profit of €7 on your initial investment of €9.
So, you could say it’s a profitable business for those who have the right skills and knowledge to hunt down great deals and keep a happy customer base.
Pros and Cons of Retail Arbitrage
Thanks to retail arbitration on Amazon you no longer need to:
- Create your online store and you can benefit from the notoriety of Amazon. The platform takes care of finding you a clientele and managing logistics or suppliers.
- Waste your time to manage each order, nor provide the labor for it.
- Manage your inventory, you only have to ship the physical products from Amazon warehouses. You fill in the product sheets of your items for resale. The platform allows you to do this on the sales site.
- Advertise, Amazon is well known for this. You benefit from the number of visitors to the site which continues to grow.
- Process returns, Amazon takes care of this as well as shipping your products internationally.
But this does not prevent retail arbitrage from having drawbacks, because as you know, no system is perfect. In fact, by marketing your products on Amazon:
- You will not be able to retain your customers with every offer. You won’t be able to supply the same products every time. In addition, the liquidations of stock with your stores will not be done on a periodic basis.
- In this case, you must renew your customer panel with each new product put up for sale on Amazon.
- Also, you risk losing your notoriety as a seller on Amazon if your products are of poor quality. Conversely, if you provide quality products, the brand will benefit, not your name.
Know that these are the risks of the trade if you engage in the adventure of retail arbitrage. Yet, for a minimal investment, there is little risk involved.
How Much Can You Make from Retail Arbitrage?
Retail arbitrage 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!
Most users are able to make more than $1000 a month, even as beginners. Like we said before, it’s mostly up to you to offer the best products and stay on top of trends. By sourcing the right products, paying attention to your product listings, and giving the best customer service, you can surely earn more than $1000 a month as well.
How to Do Amazon Retail Arbitrage?
Retail arbitrage is still one of the most profitable ways to sell on Amazon for 2022. Here is a step-by-step guide to getting started with retail arbitrage.
Step 1: Register as a Seller on Amazon.
If you haven’t already, register with Amazon and create a seller account.
Step 2: Decide Between shipping the products yourself vs AmazonFBA
Fulfillment byAmazon (FBA) is the service offered by Amazon to manage the sale and shipment of your products.
This option is the best because you won’t need a place to store your products. All you have to do is send your products to Amazon and they will take care of the selling for you.
Step 3: Get the Amazon Seller App
While there are dozens of retail arbitrage apps out there, this might be the only one you need to start with. The app allows you to scan product barcodes and check its selling price and also know if the product is selling well on Amazon.
Step 4: Identify the Best Products to Sell
Visit all the convenience stores and big box stores. Try to find lucrative deals and products to sell, then use the app to check how profitable they are. When you’ve found something that’s selling well, go ahead and make a bulk purchase.
Step 5: List the Products on Amazon
Log in to your Amazon seller account and create your product listing. If you’ve opted for Amazon FBA, also make all the necessary arrangements to send your inventory to Amazon’s warehouse.
Once your product listing is online, all you have to do is wait for the orders to arrive.
If you want passive income or are getting into e-commerce sales, retail arbitrage is the ideal Marketplace model. You will generate your margins by buying products at low prices in stores to offer them on Amazon. You just have to create your seller account on the sales site, find and buy the products that work on the platform.