Armed with the right information, you can decide whether it’s the right choice for you.
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If you’re just starting out, retail arbitrage is an easy business model to follow. Retail arbitrage is the process of buying goods from retail shops and then selling them via an online platform for a profit.
The attractive aspect of this type of business model is that you can run it from the comfort of your own home and as a side hustle in your spare time. Very little upfront investment and monetary risk is required.
It’s not uncommon for people to buy their goods from clearance racks, bargain bins, and discount aisles and then either sell them at their original price or at a slightly higher price.
It’s not uncommon for well-known retailers such as Walmart, Macy’s, and Hasbro to be selling off surplus inventory or running a seasonal sale. These are great retail arbitrage opportunities.
In the eCommerce world, there are two main types of arbitrage you might consider engaging in: retail arbitrage vs. online arbitrage.
Finding Products to Arbitrage
- Personal account: You’re limited to selling up to 40 items per month and pay $0.99 per item sold.
- Professional account : You can sell more than 40 items per month and pay a monthly fee of $39.99.
- FBA seller: If you want to sign up for Fulfillment by Amazon (FBA), you’ll need a professional account. For FBA sellers, Amazon takes care of customer support, storage, packaging, and shipping.
Which one you should choose depends on your plans. For example, consider what you plan to sell and the value of those items.
It’s also possible to list products directly, monitor your sales, answer customer messages, manage orders and returns, and more.
Here are 9 more tools you can use include:
- Jungle Scout Chrome Extension: Use this tool to get a quick snapshot of how well a certain product sells on Amazon. You can view price history, sales history, product profitability, and more.
- AMZScout’s Online Arbitrage and Dropshipping Extension: Use this tool to help you find the best-performing products.
- Pacvue Commerce: This total eCommerce management platform is equipped with price tracking and profitability calculation capabilities. You can use it to find underpriced products and figure out the right selling point for new products.
- Helium 10: This all-in-one Amazon software gives you access to a suite of tools you can use for product research, keyword research, listing optimization, and more.
- PriceBlink: This browser add-on helps you find the lowest prices and coupons.
- Rakuten: This discount site offers a downloadable browser extension that makes price comparison more convenient.
- Tactical Arbitrage: Use it to search up to 1,000 stores and their respective categories to compare rates and find products you can sell.
- Keepa: Use this tool to access Amazon’s bestseller and top seller lists. You can also use it to track any increase in price using alerts.
- SourceMogul: This toll is a specialized search engine for online arbitrage. It regularly scans millions of products to help you get the best and most profitable deals first. Real-time analysis of a product’s sales performance and rank on Amazon is another useful feature.
Sourcing Products for Arbitrage
Walmart
Walmart recently added support for third-party sellers, and this has made it one of the largest online marketplaces in the world. Products are available in a wide range of categories and there’s the added bonus of flexible fulfilment options. Items can be shipped to you, or you can pick them up in-store. While you’re there, you could check out the latest store promotions.
EBay
Check out eBay for a range of products from all sorts of product categories. There are a lot of third-party sellers which makes this marketplace very competitive. The benefit of this is that it can lead to lower prices for many items.
Alibaba and AliExpress
AliExpress is an online marketplace that caters to consumers. Alibaba, on the other hand, is geared more towards B2B buyers and bulk purchases. Many products are shipped from China so delivery times can be longer.
Retail Stores
Another place to look for arbitrage products is at physical retail stores, however, you won’t find the same wide selection as looking for products online.
Walmart is often the best place to find products, however, there are other options, for example:
Shopping malls
Home Depot
Marshalls
Dollar stores
Kohls
Staples
Lowes
Find the listing for a product you want to sell
Scroll down until you find the ASIN, and copy it
Open your Seller Central account, go to Inventory > Add a product
In the search field, paste the ASIN and click Sell this product
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Selecting the Right Products
One of the most important aspects of arbitrage selling is finding the right products. Many of the tools mentioned above will help you but we can’t stress how critical it is to evaluate your options before choosing to sell something.
It’s not just a case of finding the right product, you also need to ensure its pricing allows for a profit. Quick flips on discounted options are a good source, but you also need to look for something you can sell for a long period of time that you can build your business around.
Pricing Products Competitively
A big challenge for arbitrage sellers is winning the buy box. As a reseller, you’re always going to be competing with other sellers.
To get the best share of the buy box, you must price your products competitively. Having the lowest price option helps you get more exposure but watch your competitors to ensure nobody undercuts you. In addition, you must ensure your prices are not so low that they’re unprofitable.
Ensuring Stock Availability
Much like any other selling strategy, arbitrage has both pros and cons.
In-Demand Products with High Sales Volume
Arbitrage products have the potential to generate high sales volumes via multiple marketplaces.
Easy Listing Process Due to Existing Amazon Listing
Products are easy to list because they are already present on Amazon.
Low Startup Investment and Low-Risk Entry
To get started requires minimal upfront costs and only a few items are needed.
Low Risk
Little capital is needed which makes arbitrage very low risk.
Challenges in Scaling the Business
An arbitrage business can be challenging to scale and hard to handle large numbers of orders.
Limited Control Over the Product Being Resold
Arbitrage selling involves reselling items which means you have no direct control over the product itself.
Low Margins
When sourcing products from other retailers, you don’t always get your inventory at favorable prices which cuts overall profit margins.
Is Arbitrage And Dropshipping The Same?
Dropshipping is different to retail arbitrage because you don’t have to buy and store inventory. You only pay for what you sell. With retail arbitrage, you must buy your products first, which increases the risk.
Arbitrage is based on buying at a low price and selling for a profit, so it is still a profitable business model. However, it is attracting more interest which makes the market more competitive.
