3 Secrets To Start Earning From Amazon Retail Arbitrage

If you are thinking about getting into e-commerce, here’s what you need to know to become successful with retail arbitrage on Amazon.

What Is Retail Arbitrage?

Retail arbitrage is not a new concept. Throughout human history, people have been doing it. Retail arbitrage is a basic business model in which you buy products from a retailer for a lower price and then resell them for a profit.

With more online platforms such as Amazon, eBay, and Facebook Marketplace, it is becoming even more popular. Perhaps you have thought about trying it yourself. Why not buy discounted products and take advantage of the price difference? And with more people shopping online, there are more opportunities than ever before.

What Are the Advantages?

Before launching any new venture, it’s essential to have a sustainable business model. Here are a few advantages that retail arbitrage has over other selling models.

It has proven to be profitable. A recent study provided some interesting data about online retail. It surveyed over 2,000 sellers on Amazon and discovered that 89% of Amazon sellers show a profit. Of these, 75% have profit margins over 10%, and more than half reported returns above 15%. Numbers like this inspire confidence for new entrepreneurs.
The startup costs are lower. In the same report, the data indicated there are lower startup costs for retail arbitrage on Amazon than other models. From the pool of respondents, 12% started with less than $500, and 32% launched their business with less than $1,000.
You see a faster turnaround. It takes an incredible amount of time and effort to start your own business. But, some take more time to establish than others. With online retail arbitrage, you can get much faster returns on your investment. Over 33% of sellers from the study launched their businesses in less than a month, offering a much faster turnaround than other selling models.
You have more scalability. Selling online offers more scalability since you can start with as many products as you are comfortable with and grow when the time is right for you.

How Can You Make a Profit through Retail Arbitrage with Amazon?

There are many strategies for making money through retail arbitrage on Amazon.

However, seasoned sellers like Cosmic Deal Heather and Nikki Kirk share their most successful strategies and tips to help you increase your profit margins.

1. Target items that are low in stock but high in demand.

The first strategy focuses on the fundamentals of supply and demand: target items that are low in stock but high in demand. Product shortages may occur for many reasons from supply chain issues to unexpected TikTok trends to discontinuation. Whatever the reason, it creates earning opportunities for those in retail arbitrage.

When you have products that are high in demand but not widely available, you can greatly increase your profit margins, especially when it comes to discontinued items. These products are often sold for huge discounts when retailers need to move inventory. However, many loyal customers who still love these products are willing to pay premium prices when they are no longer available.

2. Buy low and sell products at or above retail price.

This strategy is one of the most straightforward ways for sellers to make a profit through retail arbitrage on Amazon. When you visit local retailers, look for clearance or discounted items that you can sell at or above retail. This will provide you with significant returns on your investment. And if you have the space to store products, you can incorporate aspects of the first strategy to help you earn even more.

3. Buy and hold inventory to generate more profit.

This last strategy is riskier, but it can also lead to huge payouts. Some sellers buy and hold products to try and time the market for maximum profits. Although no one can predict the future, you can identify trends to help you know when demands will increase for certain items. However, if you choose this route, you want to make sure that you aren’t selling damaged or expired products.

And most importantly, you have to strike a balance since you can’t hold everything. Windows of opportunity may close quickly, so you will have to learn which products are worth holding back until conditions become more favorable. Ultimately, experience will be your best teacher and there will always be a certain amount of trial and error as you are learning what products work best for you.

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Jenny Smedra

Jenny Smedra is an avid world traveler, ESL teacher, former archaeologist, and freelance writer. Choosing a life abroad had strengthened her commitment to finding ways to bring people together across language and cultural barriers. While most of her time is dedicated to either working with children, she also enjoys good friends, good food, and new adventures.