Is online arbitrage Legal? All you need to know!

Nobody is unaware of the Ecommerce world in this era. Currently most of the businesses have either completely or partly transformed themselves into online stores. People are involved in almost all types of businesses online, with some businesses producing and selling their own products and services while others using the reselling model even if just via wholesale.

The question that arises when we talk about online arbitrage is that people wonder if reselling products from an everyday store such Walmart to online marketplaces like Amazon or eBay is legal or not. 

So lets clear the air just now that yes it is legal to be simple but lets explore this further as we progress through this article.

Who is an Arbitrager?

An arbitrager is a person that finds a product somewhere else like in wholesale or any other stores like Walmart and then sells it on a margin using an online marketplace like Amazon or eBay.

To give an example, let’s say a person buys a product from Walmart at a price of $5 and then sells the same product on Amazon for $10, then that person is an Arbitrager. Arbitrage is not a new concept by any means but only in recent history has it become very popular online! Now arbitrage is further of two types, one is online arbitrage, and the other is the retail arbitrage, which we will discuss next.

Retail Arbitrage

Someone who gets products from retail stores on bargain deals, discounts and sometimes even full price products and then tries to sell it on an online marketplace is using the Retail Arbitrage business model. This involves a part of research from your end if you want to successfully carry out this type of strategy. You need to identify the products that will sell profitably online and then buy them from Walmart, Costco, etc ensuring that you get the best deals to increase your profit margins.

Online Arbitrage

On the contrary, online arbitrage is someone who buys products from other online stores and then sells them on the more mainstream platforms like Amazon or eBay.

You will also try to go to stores that are cheaper and offer discounts in bulk and other such deals so that you can keep your markup and sell it well elsewhere. So, in essence the process is the same. The difference is whether you prefer to do it Online,  in stores or even both. To learn more about online arbitrage check out our article https://oahunt.com/what-is-online-arbitrage

Other Types of Reselling

Now there are three other types of reselling apart from the arbitrage model. We have discussed them below so that you have further clarity on what we mean when we say reselling and whether it should be legal or not.

1 Private Label

This model refers to where you get the products from the manufacturer and then try to brand these products into your own brand and then sell it online like on Amazon or eBay. In this type you just get the products from the manufacturers and the placement, marketing and packaging are all dependent on you.

2. Wholesale

This model involves buying the product from the manufacturer or supplier in bulk quantity and then selling it on online marketplaces.

3. Dropshipping

This model is a bit different from others because of the fact that you don’t need to hold inventory in this method and it's completely done online with little or no physical work. In Dropshipping you take orders from customers and then buy the product from the manufacturer or another party online and get it delivered to the customer by the manufacturer or the 3^rd party directly. Of course, you keep a markup while doing this.

Is Online Arbitrage Legal - Can It Be Done?

So, to put it simply, yes, it is absolutely legal and fine to resell products online on marketplaces like Amazon and eBay but there are certain twists to this. It is recommended to do your research before selling a product on any marketplace as each marketplace has its own rules, regulations and policies.

For example, it is legal to resell products of certain brands on Amazon like Nike, Adidas, and Samsung. However it does not mean Amazon will allow you to start selling them right away. 

Conclusion - The Bottom Line! 

To wrap it all up, reselling is fine, but you need to be careful and keep certain things in mind before trying to resell a product online. First of all, avoid reselling products of brands that have a strong legal presence and strictly follow the intellectual property laws. Apart from that, consider whether arbitrage is actually beneficial to you or some other platform can be better.