How to Smash Retail Arbitrage on Amazon (FBA Sellers Guide 2021)

Do you wish to sell on Amazon but are unsure how to get started or lack the funds to introduce a private label product? Retail arbitrage is a fantastic way to get started. You may get started with as little or as much money as you feel comfortable with, and you can even do it online. For a step-by-step summary of how to get started, watch this video or continue reading to discover more about how to retail arbitrage on amazon.

Retail arbitrage – what is it?

Arbitrage, often known as reselling, is the process of profiting from a price discrepancy between two or more markets. Retail arbitrage in this context refers to the process of purchasing things at a discount from merchants (including online merchants) in order to resell them on Amazon. An illustration of this would be to identify a product at Walmart that sells for $5, buy it, and then sell it for $20 on Amazon. 

In a practice known as online arbitrage, some sellers also purchase items they discover online. The strategy is the same: buy low, sell high (on Amazon). Is retail arbitrage legal, you may be wondering, thankfully, it is? The first-sale theory states that if you legitimately purchase a product, you have the right to resale it as long as it is sold undamaged. Therefore, the item must be in brand-new condition if you acquire it and sell it as new.

How does Amazon’s retail arbitrage stack up against the other business models?

  • Private labeling is the process of developing your own product label or brand, typically by changing an already-available product. For instance, you might build a garlic press from a manufacturer that is of higher quality than the ones sold on Amazon and add your logo to it. Although it is the most popular form of selling on Amazon and has the potential to be very lucrative, most sellers require some initial funding.
  • In order to sell goods in bulk directly from a brand or through wholesalers with additional stock on Amazon, you must first invest in start-up capital. This does not entail placing a purchase order with a retailer. Since you can replace orders every month and you are an authorized reseller, you don’t have to worry as much about false claims; wholesale is a more sustainable business strategy.
  • Dropshipping is the practice of purchasing goods directly from a manufacturer who then ships them to the client after processing the purchase.
  • When you make or design your own things to sell on Amazon, they are considered to be handmade.

Why would you pick arbitrage over different Amazon selling strategies?

  • Less expensive to start: According to a research by Jungle Scout of more than 1,000 Amazon sellers, 33% of arbitrageurs were able to start their enterprises on Amazon for less than $500, while roughly 49% did so for under $1,000. Contrarily, 75% of private label dealers launched with a launch budget of $1,000 or more.
  • Faster start-up: According to retail arbitrage merchants, less than six weeks were needed to commence their Amazon enterprises for 2 out of 5 (41%) of them. Only 25 percent of private label vendors concurred.

Arbitrage is a terrific, low-risk way to sell on Amazon if you don’t already have a product to sell or the funds to buy things in bulk.

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