Amazon Arbitrage: How to Find Products and Sell Profitably
Amazon Arbitrage: How to Find Products and Sell Profitably
Selling on Amazon doesn’t necessarily require you to build your own product or set up complex supplier relationships. In fact, you can have success simply reselling items that you find at other marketplaces. Flipping and arbitrage are allowed and can be an effective way of sourcing products.
Below, we will examine how Amazon arbitrage works and how you can start using it for your business.
Table of contents
What is Amazon Arbitrage?
Arbitrage is the process of finding gaps in prices for identical items on different marketplaces. When you find a difference in prices, you buy the product at the lower price and flip it on the market where you can sell it for more. With Amazon arbitrage, you get items through various sources and resell them for a higher price on Amazon.
There are two arbitrage methods for sourcing products to sell on Amazon: online arbitrage and retail arbitrage. With online arbitrage, you source products from other online marketplaces such as eBay, walmart.com, or target.com. With retail arbitrage, you source products from brick and mortar retail stores.
Here is a quick illustration of how Amazon arbitrage works:
You see that product A is being sold for $40 on Amazon but costs $25 at the local store. You go to the store, buy some of the product and list it on Amazon for $40. When the product sells you keep the difference between the prices as profit (minus seller fees, shipping costs, etc.).
How to Start with Amazon Arbitrage
Next, we will detail how to sell arbitrage products on Amazon. There are three steps you must take to get your Amazon arbitrage business off the ground:
Find products to arbitrage: First, you need to find products that you can sell successfully. This means analyzing demand, profitability, and the competitive landscape.
Source products: After you find in-demand products, you must determine where to source the products. This is a critical part of an Amazon arbitrage business as you need the ability to procure your items for less than the current Amazon price.
Sell products: Once your products are on Amazon, you need to optimize your listings for sales by setting competitive prices, offering promotions, and running paid advertisements.
Below, we will break down each of these steps in more detail.
How to Find Products to Arbitrage
The first step to selling with Amazon arbitrage is to know how to do product research. This will help ensure you source items that you can actually sell so that you don’t end up with slow-moving inventory.
Using the AMZScout Online Arbitrage & Dropshipping Tool for Sourcing Products
You can use the AMZScout Online Arbitrage & Dropshipping tool for product sourcing. This tool ensures you will find the excellent products that people want to buy. Here are the steps you can take to get started:
2. Start your free trial. No credit card is required for your free trial; just enter basic information.
3. Browse Amazon to get product ideas. Access Amazon.com and search for a few niches. They can be:
Products or niches you find interesting.
Niches that are popular on other websites
The search results will show boxes with additional information on each product; this information will help you narrow down the top-performing products.
4. Check the most profitable products. There will be a built-in window on each Amazon product page as long as the extension is active. You should also check if the item is private label, ungated, or hazmat. You can read more about these three categories here.
5. Find out how much potential profit it offers. Enter the price into the on-screen calculator to predict marginality trends. This information will help you determine whether the item is profitable.
Narrowing Your Product List Using The AMZScout PRO Extension
Once you’ve created a list that meets your criteria, you’ll need to narrow it down by determining its competition level and profitability. Using the proven AMZScout PRO Extension is the one of the ways to track this information. Here’s how you use this second tool:
1. Install the AMZScout PRO Extension.
2. Open the extension:
You will see Amazon.com open after the installation. This indicates the extension is automatically active.
Those who aren’t registered will need to start a free trial by entering basic information. You will not need to enter payment information to begin.
Search for what you found on AMZScout’s Online Arbitrage and Dropshipping Extension.
Open the extension again, click the AMZScout icon in the lower-left corner of your browser after results are displayed.
3. Review product information. You can analyze these factors to get started:
The number of sellers (More than 20 sellers means the product has high competition. However, two or more sellers might mean the product is open for arbitrage. One seller usually means it is an unavailable product.)
A net margin of over 50% means you have a higher chance of profits.
When the product was first available on Amazon
4. Check the Product Score for reselling. The Product Score uses existing factors (high demand, low competition, and good margins) to determine how easy your target item will sell. Make a note of Product Scores over seven.
5. Evaluate the product sales performance. To the left of any product, you will see an arrow showing sales and prices change over a period. This information will help you stay informed on seasonal vs. consistent deals.
When evaluating different products, here are the qualities to look for in a good arbitrage item.
Analyzing the competition before selecting a product is critical. You need to evaluate both other sellers of the same product and other products from competitors. If too many people are selling the same item as you, it will be challenging to win the buy box to get your offer in front of customers.
Few Amazon sellers
It is also important to know whether Amazon sells the item themselves. You want to avoid products with many Amazon sellers as they tend to reward the buy box to their product, making it harder to earn sales.
Amazon has a mix of gated and ungated categories. If a category is restricted, you are not able to list products without first getting approved by Amazon. Examples of restricted categories include fine art, fine jewelry, music & DVD, and collectibles.
These categories are generally not good options for Amazon arbitrage. As you wait to complete the approval process you may find that the arbitrage opportunity for your product has diminished, limiting how much profit you can make from sales.
How to Source Products for Arbitrage
Once you find good arbitrage targets, you must check to see if you can source the product for a lower price than the current Amazon floor. When looking at the cost to source your products, it is important to factor in all the extra costs associated with selling on Amazon. This includes the referral fee that Amazon takes for each sale as well as the cost it takes for you to fulfill the orders.
Let’s examine the different places you can go to source products for Amazon arbitrage.
Online marketplaces provide a convenient medium for finding arbitrage products. You can browse online markets in your home and can easily compare prices with those on Amazon. Plus, there are several global eCommerce marketplaces that are able to compete with Amazon on price. This includes:
eBay features products from all sorts of product categories. The marketplace is competitive as there are a lot of third-party sellers. This leads to lower prices for many items as sellers look to gain an advantage.
Since adding support for third-party sellers, Walmart’s online marketplace has grown to become one of the largest in the world. You can find products from a wide range of categories and there are flexible fulfillment options. Many items can be picked up in-store, allowing you to potentially take advantage of store promos.
AliExpress and Alibaba
AliExpress and Alibaba are two other effective online marketplaces for finding arbitrage products. AliExpress caters to consumers, while Alibaba is geared towards B2B buyers and bulk purchases. Keep in mind that if you source products from either of these markets the delivery times can be longer as many of the products ship from China.
The other place to find arbitrage products is physical retail stores. If you use retail arbitrage to source your products, you won’t find the same breadth of selection that you would when looking for products online.
However, you can still find a lot of good products, some of which you can get for a steep in-store discount. Many stores also have trade-in programs you can use to find used products at extra low prices. Used items on Amazon often face less competition and can be an effective way to get early sales.
If you have a Walmart in your area, it is often the best place to find products for retail arbitrage. The store features a massive selection of products and offers competitively low prices for most items. Target is another solid option although their prices tend to be higher than Walmart’s.
Here are some other stores you can use to find products to resell on Amazon:
How to Sell Amazon Arbitrage Products
After you source your products, you must get them listed on Amazon. The fastest way to do this is to use the ASIN from the current listing when adding the product in your seller central account.
Find the listing for the product you want to sell.
Scroll down, find the ASIN, and copy it.
Open your Seller Central account go to Inventory > Add a product.
Paste the ASIN in the search field. This will grab the product which you can continue listing by clicking the Sell this product.
You can also use the Amazon Seller app to list your products by scanning the barcode.
When you create your listing, you will need to set a price for the product. Your price plays a big part in whether you win the buy box. Amazon wants to maximize the chances of converting the customer and therefore will prioritize the lowest-priced option. This doesn’t mean you should instantly jump to undercut all your competitors. You still want to make sure you earn high enough margins on your sales.
In addition to creating your product listings, you also need to determine how you will fulfill your orders. You can use Fulfilled by Amazon (FBA) to have Amazon handle order fulfillment for you, or you can choose to handle order fulfillment yourself. Another option is to dropship your products directly from the source. If you dropship, make sure to brush up on Amazon’s dropshipping policy so that you don’t run into any issues.
Once your products are live, you need to drive visitors to the listing in order to start seeing sales. If you researched a product with a manageable level of competition, you should be able to gain the buy box for organic traffic over time. If you want to get even more visitors, you can consider running an Amazon advertising campaign.
Pros and Cons of Arbitrage Method
Like other selling methods, Amazon arbitrage has its strengths and weaknesses. Here are some of the key pros and cons you should be aware of:
In-demand products: Arbitrage products have strong demand, generating high sales volume through multiple marketplaces. When you sell these items you don’t have to worry about having an adequate customer base.
Easy to list products: Because arbitrage products are already present on Amazon, you do not have to manage optimizing the product listing yourself.
Low startup investment: Amazon arbitrage has minimal upfront costs. Because you source products from other retailers and marketplaces, you can start by buying a small number of items to list.
Low risk: Because of the low startup costs, Amazon arbitrage is a lower-risk method of selling. If your products end up not performing well, the sunk cost from unsold products won’t be as high because you did not have to source as many.
Low margins: Because you are sourcing your products from other retailers, you do not get your inventory at favorable prices. This cuts into your overall profit margins.
Hard to scale: Amazon arbitrage businesses can be difficult to scale. Whether you source your products in person or get them from an online marketplace, these channels are not meant for bulk procurement. The resulting inefficiencies make it hard to prepare for and handle a higher number of orders.
Lack of control over product: Because Amazon arbitrage involves reselling other items, you do not have direct control over the product itself.
Arbitrage is a simple, and quick way to source products for selling on Amazon. While increased competition has made it more challenging to profit from arbitrage, sellers that know how to find winning products can still find success with Amazon arbitrage.