Amazon Arbitrage or also knows as Retail Arbitrage is referring to the act of buying products at your local store and then selling them online for a profit.
Looking for clearance racks or items at Walmart, Target, Home Depot or others and then selling them at a higher price or regular price online. You can sell on Amazon or eBay, Facebook, craigslist or what ever online marketplace you prefer. Today we will cover the Amazon platform as it has some unique passive qualities.
How does Amazon Arbitrage work?
As explained above, you find a discount product and sell it for more on Amazon. For example:
You find an item that’s on clearance and costs $9 at your local Target or Walmart. That same product is selling on Amazon for $24.99. You list your item on Amazon, and when somebody buys the item, Amazon takes its fee, you ship the item and the rest if profit for you! In this case you could make a profit of around $14, sounds great right?
Another even better option is Amazon FBA, in this case you ship your item to the Amazon warehouse. They store the item until its purchased and once purchased will pack the order and ship it for you! Now that is great and semi passive!
Interested in starting with Amazon FBA? Chekout or posts:
How to get Stated with Arbitrage
Alright, the first step of course would be to set up a Seller account. Again, we have a post about how to start Selling on Amazon with more details about the fees and costs involved.
Once the account is set up we can start with the Amazon Arbitrage!
How to find items: There are a variety of Apps available to help you find items, the best one is the Amazon Sellers App itself! It’s free, shows all your sales and has an awesome scan tool built in.
The App allows you to use your cellphone camera to scan the barcodes of any product in your local stores. Then it will show you how much its selling for on Amazon, fees, and other pieces of information that will help decide if its a good fit for you to sell.
Amazon Sellers App
Now that you got the App lets find some profitable items that we can sell on Amazon.
The best products are items with a good ROI (Return On Investment). These will be products you really need to hunt for. Lets look at a book for an example. You find Gary Vaynerchuck’s book on a shelf, you grab your app and find the camera button and scan the barcode.
Click on the listing and this window below will show you some important information. The very first thing you should check is the eligibility. So you can actually sell it on Amazon(Green). Second check out the current sales rank(yellow).
The rank shows you how quickly this item has sold in relation to other categories. For example this rank is 1488, so there are 187 items in the books category that have sold since this item was last sold.
The lower the rank number the better. A great start is to look for ranks below 200,000. and with time adjust this. If you find sales or clearance items with a rank as shown in the example then you are doing awesome!
3rd check before deciding on an item is the ROI. The red arrow shows the FBA calculator. This will show the expected fees, shipping, your cost and profit.
Once you enter all the details on the calculator you want to make sure you are making at least $5 profit. Some people may recommend $3 or $4 as a minimum but you would have to sell a lot of products to make decent money. $5 and better is a great start and worth your time.
- Make sure items is eligible to sell on Amazon
- Rank is below 200,000
- Profits are $5 or better
To be continued…