How to sell on amazon retail arbitrage: Buy discounted products from local stores and resell them at a higher price on Amazon. This quick-and-easy approach can help you earn a profit with minimal investment.
Are you looking to make money by selling products on Amazon without dealing with suppliers or buying large inventories? Retail arbitrage might be the perfect strategy for you.
Retail arbitrage is a method where you buy products at low prices from local stores and sell them higher on marketplaces like Amazon. It’s a legal way to leverage price differences between marketplaces to profit. Anyone—with the right strategy—can take advantage of this and start making money with a relatively low capital investment.
Here’s a quick look at how to sell on amazon retail arbitrage:
- Sign Up for an Amazon Seller Account: Choose between an individual or professional seller plan.
- Do Product Research: Use tools like the Amazon Seller App to check product viability.
- Visit Local Retailers: Scout for discounted products in stores like Walmart, Target, and Home Depot.
- Scan Products: Ensure profitability by scanning barcodes with the Amazon Seller App.
- Determine If You Can Sell: Check for restrictions on certain brands or categories.
- Decide How Much to Buy: Gauge inventory based on demand and budget.
- List Your Items on Amazon: Create compelling product listings with keywords and high-quality images.
I’m Will Mitchell, with over 20 years helping entrepreneurs like you crack the e-commerce code, including mastering how to sell on amazon retail arbitrage. My experience ranges from consulting giant companies to leading successful Amazon businesses. Let’s get ready to dive deep into turning retail finds into remarkable online profits!
What is Retail Arbitrage?
Retail arbitrage is a straightforward concept: buy products at a low price from one marketplace and resell them at a higher price on another. This strategy leverages price differences between various retail outlets and online platforms to make a profit.
Buying Low and Selling High
The core idea of retail arbitrage is to purchase items at a discount from local stores or online retailers and sell them on platforms like Amazon, eBay, or Facebook Marketplace for a higher price. For example, you might find a toy on sale at Walmart for $5 and resell it on Amazon for $20.
Local Stores and Online Platforms
Local Stores: Retailers like Walmart, Target, Home Depot, and others often have clearance sales or discounts that create opportunities for retail arbitrage. Visiting these stores and scanning for discounted items can yield profitable finds.
Online Platforms: Online arbitrage follows the same principle but eliminates the need to visit physical stores. You can find discounted products on websites like Walmart.com or Target.com and resell them on Amazon or eBay. This saves time and effort, allowing you to source products from the comfort of your home.
Why Choose Amazon?
Amazon is a popular choice for retail arbitrage for several reasons:
- Large Customer Base: Amazon has millions of active users, increasing the chances of selling your products quickly.
- Fulfillment by Amazon (FBA): With FBA, Amazon handles storage, shipping, and customer service, making it easier for you to manage your business.
- Higher Selling Prices: Products often sell for higher prices on Amazon compared to other platforms, maximizing your profit margins.
Case Study: Success with Retail Arbitrage
Ryan Grant from Online Selling Experiment has built a successful business through retail arbitrage. He started by sourcing products from local stores and reselling them on Amazon. Over time, he scaled his operations and now teaches others how to replicate his success.
Quote: “Retail arbitrage is a great way to start an Amazon business at low cost. You can find products at local stores, list them on Amazon, and start making money without a huge investment.” — Ryan Grant
Retail arbitrage is a viable way to enter the e-commerce world with minimal upfront costs. By buying low and selling high, you can turn everyday shopping trips into profitable ventures.
Is Retail Arbitrage Legal?
First-Sale Doctrine
Retail arbitrage is completely legal, thanks to the first-sale doctrine. This legal principle states that once a product is sold, the original manufacturer loses control over how that product is resold. This means you can legally buy products from retail stores and resell them on platforms like Amazon.
Brand Regulations
While the first-sale doctrine protects your right to resell products, you need to be aware of brand regulations. Some brands have agreements with Amazon that restrict who can sell their products. Always check if the brand requires approval before listing their products.
Counterfeit Goods
Avoid selling counterfeit goods at all costs. Selling fake products is illegal and violates Amazon’s policies. Always keep your receipts and proof of purchase to verify the authenticity of your products. Reselling counterfeit items can lead to severe penalties, including account suspension and legal action.
Amazon Policy
Amazon has specific policies for sellers engaging in retail arbitrage. Make sure to comply with these rules to avoid any issues. Here are a few key points:
- Restricted Brands and Categories: Some brands and categories require approval to sell. Check Amazon’s list of restricted brands and categories before purchasing inventory.
- Condition Guidelines: Ensure that the products you sell meet Amazon’s condition guidelines. Items should be listed accurately, whether they are new, used, or refurbished.
- Receipts and Invoices: Keep all receipts and invoices as proof of purchase. This documentation is crucial if Amazon requests verification of your inventory’s authenticity.
By understanding and adhering to these guidelines, you can confidently engage in retail arbitrage on Amazon without legal concerns.
Pros and Cons of Retail Arbitrage
Pros
You Can Start with a Small Budget
One of the biggest advantages of retail arbitrage is that you can start with very little money. Unlike other business models that require significant capital, retail arbitrage allows you to invest as little as $100 or even less. According to a study, about 49% of retail arbitrage sellers start with $1000 or less, making it accessible for almost anyone.
No Suppliers Needed
Dealing with suppliers, especially overseas ones, can be daunting. With retail arbitrage, you simply purchase products from local stores. This removes the need to negotiate with suppliers or worry about minimum order quantities.
Learn How to Sell on Amazon
Retail arbitrage is a fantastic way to get your feet wet with selling on Amazon. You’ll learn how to create listings, optimize keywords, collect reviews, and manage your inventory. This hands-on experience is invaluable if you decide to scale up or switch to other business models like private labeling.
Beginner-Friendly
The simplicity and low-cost entry make retail arbitrage perfect for beginners. You don’t need a lot of technical knowledge or experience to get started. Just find discounted products, list them on Amazon, and you’re in business.
Cons
Time-Consuming
Retail arbitrage can be very time-consuming. You’ll spend hours driving from store to store, scanning products, and researching prices. This can be exhausting and may not be feasible if you have a full-time job or other commitments.
Difficult to Scale
Scaling a retail arbitrage business is tough. Because it’s so time-consuming and often yields lower profit margins, you may hit a ceiling quickly. Automation is also challenging, making it hard to grow beyond a certain point without switching to a different model, like working with wholesalers or manufacturers.
Lots of Competition
Competition can be fierce. Many sellers are looking for the same deals, and you’ll often find yourself sharing the buy box with others. This can drive prices down and reduce your profit margins.
You Don’t Own Your Brand
With retail arbitrage, you’re selling other people’s products. This makes it difficult to build a loyal customer base or a recognizable brand. If you want to create a lasting business with a strong brand identity, you’ll eventually need to move to private labeling or another model.
Next, we’ll walk you through the steps to start your retail arbitrage journey on Amazon.
How to Sell on Amazon Retail Arbitrage
Ready to dive into retail arbitrage on Amazon? Follow these steps to get started:
Step 1: Sign Up for an Amazon Seller Account
First, you need an Amazon Seller account. You have two options:
- Individual Account: Free to sign up, but you pay $0.99 per item sold. Ideal if you’re selling fewer than 40 items per month.
- Professional Account: Costs $39.99 per month, but you can list unlimited items without the per-item fee. This account also gives you access to Fulfillment by Amazon (FBA).
Pro Tip: If you’re serious about scaling, the Professional account is worth the investment.
Step 2: Do Product Research
Before you go shopping, you need to know what to buy. Use tools like the Amazon Seller App to research products.
- Amazon Seller App: Scan barcodes to see how much items sell for on Amazon.
Look for products with high demand and low competition. This will increase your chances of making a profit.
Step 3: Visit Local Retailers
Now it’s time to hit the stores. The best places for retail arbitrage include:
- Walmart
- Target
- Home Depot
Also, check out clearance sales and liquidation events. Stores moving or closing often have great deals.
Step 4: Scan Products
While shopping, use the Amazon Seller App to scan barcodes. This will show you the item’s selling price on Amazon, estimated profits, and Best Sellers Rank (BSR).
Tip: Look for items selling for at least twice what you’re paying. This leaves room for Amazon fees and still allows for profit.
Step 5: Determine Whether You Can Sell the Product
Not all products can be sold on Amazon. Some brands and categories are restricted. For example, you might need special approval to sell brands like Adidas, Sony, or Fisher-Price.
Step 6: Decide How Much to Buy
How much inventory to buy depends on several factors:
- Budget: Only invest what you can afford to lose.
- Demand: Use tools to gauge how quickly items sell.
- Risk: Start small to minimize risk and scale up as you gain experience.
Step 7: List Your Items on Amazon
Once you have your products, list them on Amazon. Here’s how:
- Create Product Listings: Use high-quality images and relevant keywords. The AMZScout Keyword Search tool can help you find the best keywords.
- Set Up FBA: If you choose Fulfillment by Amazon, send your products to Amazon’s fulfillment centers. They’ll handle storage, shipping, and customer service.
Pro Tip: Optimize your listings to improve visibility and sales. Use clear titles, detailed descriptions, and professional photos.
By following these steps, you’ll be well on your way to mastering how to sell on Amazon retail arbitrage.
Tips for Successful Retail Arbitrage
Once you’ve got the basics down, it’s time to refine your strategy. Here are some essential tips to help you succeed in retail arbitrage:
Check Flyers and Websites for Deals
Always be on the lookout for sales and discounts. Review flyers from local stores and check their websites regularly. Websites like StartupBros suggest keeping an eye on seasonal sales and special promotions.
Pro Tip: Set up email alerts for your favorite stores to get notified of sales instantly.
Check the Condition of Your Products
Just because an item is new doesn’t mean it’s in perfect condition. Always inspect products carefully for any signs of damage or defects.
Example: Brian Connolly, an experienced Amazon seller, emphasizes the importance of checking every product before purchasing to avoid customer complaints and returns.
Ask About Clearance Items
When you visit a store, always ask if they have any clearance items. These sections often have deeply discounted products that can yield higher profit margins.
Pro Tip: Clearance sections are usually at the back of the store or in less trafficked areas.
Visit Multiple Stores
Don’t limit yourself to one store. Visit various retailers to compare prices and find the best deals.
Stores to Consider:
- Walmart
- Target
- Home Depot
- Local boutique shops
Analyze Your Competitors
Understanding what your competitors are doing can give you an edge. Check out what other sellers are offering and at what prices. Tools like the AMZScout PRO Extension can help you analyze competitor data, including estimated monthly sales and average revenue.
Case Study: Some sellers focus on niche markets because they have less competition and higher profit margins. For instance, selling discontinued products can be highly profitable as customers are willing to pay a premium for hard-to-find items.
Be Patient
Retail arbitrage can be exhausting and sometimes frustrating when you’re not finding profitable items. Patience is key. Keep scanning and researching; eventually, you’ll find products that will make you money on Amazon.
Pro Tip: Start small to get used to the process. As you gain experience, you can scale up your operations.
Base Your Buying Decisions on Data
Use tools like the Amazon Seller App and the StartupBros Extension to make informed decisions. These tools provide valuable data such as price history, sales rank, and estimated profits.
Important: Prices can change instantly if another seller lowers their price. Always check the price history before making a purchase.
By following these tips, you’ll be well-equipped to steer retail arbitrage and maximize your profits on Amazon. Next, we’ll address some frequently asked questions to help you get started.
Frequently Asked Questions about How to Sell on Amazon Retail Arbitrage
How to Get Started with Retail Arbitrage?
Getting started with retail arbitrage on Amazon is straightforward but requires some essential steps:
Create an Amazon Seller Account: First, sign up for an Amazon Seller account. You can choose between an Individual account (pay $0.99 per item sold) or a Professional account (pay $39.99 per month). If you plan to sell more than 40 items a month, the Professional account is more cost-effective.
Download the Amazon Seller App: This is your go-to tool for scanning products in stores. The app provides valuable information such as the product’s Best Sellers Rank (BSR), estimated profit, and whether the item is restricted.
Visit Local Stores: Start by visiting local retailers like Walmart, Target, or Home Depot. Look for clearance sales and discounted items. Clearance sections often have hidden gems that can be resold for a profit.
Scan Products: Use the Amazon Seller App to scan product barcodes. This will help you determine if a product is profitable and check its sales rank.
Check for Restrictions: Not all products can be sold by new sellers. Ensure you are allowed to sell the item on Amazon. Some brands and categories require approval.
Buy Inventory: Once you’ve identified profitable items, decide how much to buy based on your budget and risk tolerance.
List Your Items on Amazon: Create high-quality listings with clear images and relevant keywords. Tools like AMZScout Keyword Search can help you find the best search terms.
Is Retail Arbitrage Profitable?
Yes, retail arbitrage can be profitable, but it comes with its challenges:
Profit Margins: According to industry reports, 48% of retail arbitrage sellers report profit margins below 20%. While this may seem low, the key is volume. Selling many items with smaller margins can add up.
Sourcing: Finding profitable items requires time and effort. Regularly visit stores and check online deals to keep your inventory fresh.
Market Analysis: Use tools like the Amazon Seller App and AMZScout to analyze market trends and competition. This will help you make informed buying decisions.
Competition: Retail arbitrage is competitive. You’ll often compete with other sellers for the Buy Box. Price wars can drive down your profit margins, so consider diversifying your inventory to avoid direct competition.
What Are the Best Products for Retail Arbitrage?
Choosing the right products is crucial for success in retail arbitrage. Here are some categories that often perform well:
Toys: Popular during holidays and special occasions. Look for branded toys and limited editions.
Electronics: Items like headphones, smart home devices, and accessories can yield high profits. Ensure they are in good condition and not outdated.
Home Goods: Products like kitchen gadgets, bedding, and decor items are always in demand. These items often have steady sales throughout the year.
Seasonal Items: Think ahead and stock up on seasonal items like Christmas decorations, Halloween costumes, and summer gear. These items can fetch higher prices during their peak season.
Books: Especially textbooks and rare editions. They have a consistent market and can be sourced cheaply from clearance sales or thrift stores.
Beauty & Personal Care: Items like skincare products, hair tools, and cosmetics. Always check expiration dates and ensure they are sealed and unused.
By focusing on these categories and following the steps outlined, you can build a successful retail arbitrage business on Amazon. For more detailed guidance, check out resources like the StartupBros Retail Arbitrage Business Guide.
In the next section, we’ll dive into some frequently asked questions to help you steer this business model more effectively.
Conclusion
Selling on Amazon with retail arbitrage is a fantastic way to start your e-commerce journey. It’s an accessible business model that requires low initial capital and offers a great learning experience. However, success in this venture depends on your dedication, research, and ability to find profitable products consistently.
At StartupBros, we specialize in e-commerce business training and support. Our mission is to help entrepreneurs like you find and launch your first product successfully. We offer expert guidance from experienced entrepreneurs who have been in your shoes and understand the challenges and opportunities in the retail arbitrage space.
Why Choose StartupBros?
- Expert Guidance: Our team consists of seasoned entrepreneurs who provide practical, actionable advice.
- Comprehensive Training: We cover everything from product research to listing optimization, ensuring you have all the tools you need.
- Community Support: Join a community of like-minded individuals who share tips, strategies, and insights.
Entrepreneurial Success
Many of our clients have built successful businesses using the strategies and tools we provide. By leveraging our resources, you can turn your retail arbitrage efforts into a profitable venture. The key to success is to stay informed, be persistent, and continually adapt to market changes.
Ready to take the next step? Visit our StartupBros Retail Arbitrage Business Guide for more detailed guidance and start your journey toward entrepreneurial success today.
With the right approach and support, retail arbitrage can be a lucrative business model. We hope this guide has provided you with valuable insights and actionable steps to get started. Happy selling!
