Either you have seen a promotional video or heard from an acquaintance about buying something at a lower cost than on Amazon and then selling it on the platform.
You may have thought about it a few times when you see a deep discount at your local box store with hundreds of the same item at a discount and considered flipping it on Amazon yourself. But how does Amazon Arbitrage work, and are there any restrictions to Amazon Arbitrage?
What is it exactly?
The concept behind it is to go anywhere retail (or even wholesale in some cases) and get bulk items discounted from their retail price. This discount is typically a heavier discount hovering around at least 50% off or more. Then it’s about collecting those items and preparing them to be sold directly on Amazon, and the arbitrage is the revenues that can be made.
The best way is to find a product already being sold on Amazon, as it’s possible to utilize the same product posting but simply offer more competitive pricing. Without this, those doing Amazon Arbitrage will have to create a product from the bottom up, wait for approval to launch it by Amazon, and build up the rapport and branding of that product.
How does Amazon Arbitrage work?
First of all, there’s a few steps that you need to implement when it comes to considering this option. There are two options for selling on Amazon as an Amazon Seller. One has a fee per item, and one is an all-in monthly subscription.
On top of that, a lot of other costs are also associated with selling on the Amazon Platform as a seller. First, the best option would be to go with FBA or Fulfillment by Amazon, which helps to store, pack and ship these goods, but comes at a percentage cost of the value of the goods (usually around 15%) and the cost of shipping.
After all that is set up, it’s quite easy to have Amazon simply store the items, and through the platform, the sales can directly happen. However, keep in mind that even with good prices, needs to come good customer support. While Amazon FBA helps with most of this through the shipping and handling portion, other issues may arise, so it’s smart to be aware of these comments and still focus on five-star reviews, as this will attract more sales.
How to maximize revenues with Amazon Arbitrage
Before buying heavily discounted items, it’s important to have the right platform and tools available. There are various tools out there, such as Amazon Scanner or Jungle Scout, that helps to find out which products make sense to sell on Amazon as it will quickly check for current pricing. Another thing to consider is speed, as there’s no guarantee that the pricing or margins will be lucrative for long. At the same time, it’s a highly competitive market out there, so it’s important to find the right balance between research and taking action.