Did you know that you can make money from the comfort of your home with online arbitrage?
Online arbitrage is a popular business model that allows you to scale as you grow. And what makes it so popular is that it only requires a small investment, and you can use providers like Amazon FBA to run your business.
It is the modern version of retail arbitrage but with way more benefits. And the good thing is that anybody can do it. All you need is a computer and a provider.
In this post, I’ll show you exactly what you need to do to run a profitable online arbitrage business with Amazon.
Let’s dive in!
What is retail arbitrage?
To understand online arbitrage better, let’s start with retail arbitrage. Retail arbitrage consists of buying a product at a lower price and reselling at a higher price.
Although this might sound like the typical business model for wholesalers, it has a difference- With retail arbitrage, sellers look for clearance stock or massive deals that they can sell later with a margin profit.
For instance, you might buy a 50″ LED TV on sale for $600 in Walmart and re-sell it for $1,100 on another platform like Amazon FBA for a profit.
What is online arbitrage?
With online arbitrage, instead of sourcing inventory from physical locations, you get the products online.
Basically, you’re doing online shopping with the intent to resell your items for a profit on Amazon or any other platform.
The clear advantage of online arbitrage vs. retail arbitrage is that you don’t need to get your products physically. Instead, you can get your products online. It also allows you to look for deals more efficiently since you don’t need to visit physical locations.
How to get started with online arbitrage?
The first thing you will need to start your online arbitrage business is an Amazon selling account. Click on the “sign up” button.
Next, Amazon will guide you through a series of steps:
Once you go through the whole process, you can start using your Amazon seller account. But to do it efficiently, you will need to know how to find good items to sell and some other tips to make money with online arbitrage.
I will cover all this in the following sections. For now, all you need to know is that as long as you have a computer with an internet connection and some money for the initial investment, you can get going easily.
How to know which products worth selling on Amazon.
Before looking for products that worth selling on Amazon, you should evaluate a few things:
- Will this product make a profit if sold on Amazon?
- Is there a demand for this product?
- How is the competence of this product?
- Are you allowed to sell this product on Amazon?
Although you can do this manually, some tools can help you do all this more efficiently. If you are serious about creating an online arbitrage business, these tools will help you finding the right products and saving you time. Some of the tools I recommend you are:
For now, let’s analyze each of the four points mentioned before in detail.
To calculate your profit, you need to know.
- Product acquisition cost.
- Amazon fees.
- Shipping cost.
- Selling price.
Typically, you should be able to find this information easily.
Selling Price – (Product acquisition cost + Amazon fees + Shipping cost) = Profit.
You can also use a free tool to calculate your profit, like the Amazon FBA Revenue Calculator. All you need to do is to search for a product and fill in the blank fields:
Make sure to use the “Amazon Fulfillment” column if you’re planning on using FBA.
Once you fill out the fields, click the “Calculate” button to see your profit.
Once you know your product is profitable, you need to make sure there is a demand.
Although I describe in the next section four methods that will help you find products with demand, the tools I mentioned before are great to find demanded products. So I will refer to them again to make this step much easier for you.
These tools are:
They will help you identify the right products to sell with minimal effort. You don’t need the three of them. Simply find out which one works best for you.
In any case, I will show you how to do this manually in the next section. Just bear with me.
It does not matter how good your product is if there is fierce competition.
The most efficient method to do this is keyword research. You want to choose the most profitable keywords with the lowest competition. To do this properly, you need an online tool that will help you gather the data and get you ready to sell on Amazon.
Keysearch offers a free plan that analyzes keyword difficulty and competition. I suggest you check this guide to keyword research to make sure you always find good keywords.
Lastly, you will need to know if you are allowed to sell the selected product through Amazon.
You can check each product individually in Seller Central using the “Add a Product” tool. But you have to remember to do it for each item you’re considering buying.
However, there is a chrome extension that can make this work much more straightforward: CheckPermission.
Restrictions vary from each seller, so it’s essential to know them before you buy inventory.
How to find products the best products to sell on Amazon.
There are various techniques you can use to find profitable products to sell on Amazon. I will show you how to find them manually, and I will suggest some tools you can use for this purpose.
One of the best methods to develop product ideas that sell is using Amazon’s bestseller categories.
Since you are planning on selling your products through Amazon, it makes sense to see what people are buying on the platform. All you need to do is to head to Amazon bestsellers. Here you will see all the best sellers by category.
You can, and you should, niche down and find specific products for your niche. You just need to click on the left menu categories to keep finding best sellers for each subcategory.
The more specific you go, the less competence you’ll have when selling products.
Knowing what items are selling best on Amazon will help point you in the right direction as you select your inventory to sell on Amazon.
Amazon reviews can be a powerful resource to find good products to sell. It’s essential to get a feel for what the customer wants.
Most vendors might have performed market research to find out what works and what does not. So checking existing reviews could help you to take advantage of that.
Moreover, checking customer reviews is a timely and cost-efficient way to decide what you should be selling on Amazon and why. To do this, navigate through the categories where you want to find products. Then, look for items with a lot of good reviews.
For instance, looking into camera & photo> tripods, I can see this tripod really stands out.
Not only it has plenty of good reviews, but you can also find in the comments what people like about it and what they don’t like.
Once you find the item, go inside and check the reviews. Focus on the 5 starts reviews to understand why people love this product and on one-star reviews to learn why they hate it.
By putting all this together, you can come up with some excellent ideas. Also, this method can help you confirm if a product you choose to sell is as good as you thought by reverse engineering.
If you want to increase your chances in Google, you should target products with low competition.
Arguably, one of the best methods to find keywords with low competition is by using any of the keyword research tools such as AHrefs, SEMrush, or Keysearch. The technique is the same regardless of the tool you use.
For the sake of this example, I am going to use Keysearch. This tool is not only the most affordable for keyword research, but it also features an “Amazon Suggest” filter. You can also try Keysearch for free.
To look for a keyword, in the top menu, click on keyword research, type your keyword and click search. You will get a result with the keyword difficulty and search volume. This tool will even allow you to include the “Amazon Suggest” filter.
Depending on the tool you use, there are a few values you should focus on:
- Search Volume: number of searches per month
- Difficulty: How competitive is the keyword. In Keyserch, anything below 40 is ok. But more than 40 can be very competitive and hard to rank.
In this example, “shower brush for back” has a very decent volume with an easy to moderate competition. Which could make this a good product keyword.
There are so many different ways you can use these tools to brainstorm or even filter the results. I suggest you check my Keysearch review post to find out how to do this and much more.
If you have some budget, investing in a dedicated online arbitrage tool will make a difference.
These tools will help you with Amazon product & keyword research, listing optimization, Amazon PPC management, Amazon SEO tools, and much more. They will do the heavy lifting for you.
Any of these tools can help you find demanded products before your competitors. But the main advantage of using this is the time they will save you from finding the best products to sell, to tracking and selling them.
Some of the apps I can recommend you are:
The SellerApp tool will help you with keyword identification for Amazon product listings and PPC campaigns. It has an impressive database of more than 100 million keyword suggestions.
It offers some free tools like:
But the full potential lies in the SellerApp paid version for Amazon Sellers. Where you have access to more complete tools and resources like:
- Product Research
- Product Trends
- Keyword Research
- Listing Optimization
- Profit Dashboard
- Chrome Plugin
- PPC Analyzer
- Keyword Tracking
- Index Checker
- Priority support
- Team Members
- Dedicated Success Coach
Jungle Scout is the perfect tool to uncover high-demand, low-competition keywords and find products with maximum profit potential.
You’ll be able to identify trends and filter opportunities using AI-driven insights so you can confidently craft your product strategy.
Also, you can narrow your search with comprehensive product research filters, as well as a profit calculator to help you compare price, revenue, and FBA fees for each product opportunity.
If I had to choose a tool to start selling faster, this would be my preferred option. Moreover, you can try Jungle Scout risk-free for 14 days.
SourceMogul is an automated online sourcing software that searches hundreds of retail websites and compares those items to matches on Amazon.com. It simplifies the process by finding deals before anyone else so that you can stay ahead of the competition and grow your business faster.
One of the main advantages of using tools like this is the amount of time that will save you. And to me, time is the one thing that does not have a price.
So being able to perform a search and find the best deals before my competitors make a sweet deal.
There is a reason why SourceMogul is one of the favorite sourcing tools for online arbitrage.
Getting your inventory to Amazon FBA.
The last part of the online sourcing process is getting your inventory to Amazon FBA fulfillment centers.
You should know that you cannot ship directly to Amazon- Remember, you’re ordering this inventory from regular retail suppliers.
Most of the online arbitrage sellers have their inventory directly shipped to their homes. And although selling on Amazon allows drop shipping, there are many rules attached to this type of selling.
- Be the seller of record for your products.
- You must identify yourself as a seller on all product packaging.
- Not identify any third-party drop shipper on your packaging.
- Be responsible for all customer returns.
- Comply with all of your Amazon seller terms
With an Amazon FBA business, you store your products at the Amazon fulfillment centers. The Amazon team will pick the products, pack them, ship them to your customers, and provide customer service for these shipped products.
Also, Amazon FBA offers all-in-one sales assistance and makes it easy for sellers to entrust many sales duties to others. When you entrust these tasks to the Amazon FBA team, you’re using a method that can be carried out efficiently by those in the know.
Seller Tips for online Arbitrage on Amazon.
If you want to sell on Amazon, there are a few tips you should know:
- Move your inventory-if you don’t, you’ll lose money due to the product costs and storage fees.
- You might be required to provide invoices for items sold under “new” conditions on Amazon.
- Brand owners may insist on arbitrage stock being sold as “like new.”
- Focus on evergreen products over trendy products.
- Research before investing your money.
- Implement performance-based marketing based on revenue projections.
Selling using online arbitrage on Amazon can be a lucrative side hustle. But it takes some work and research to make it work.
I recommend using a tool like Jungle Scout to make your work much more manageable. It will just save you time and headaches.
Lastly, I’d suggest you also check dropshipping as an option. You don’t need an initial investment for this business model other than the website and can be very profitable. Check this post with the best dropshipping niches.
Now is your turn!
Will you start an online arbitrage business after reading this guide?
Leave a comment with your answer in the comments below.
Don’t forget to share this article!