Picture this: You’re sitting in your recliner after a hard day at work, your laptop is open and you’re shopping online. Sounds like just what the doctor ordered at the end of a long day, right?
Now imagine that you are getting paid to do it, anytime you want! Doesn’t that sound like it’s not really possible? BUT IT IS!
In the reselling world we call this Online Arbitrage. How does online arbitrage work? I’m glad you asked. Simply put, online arbitrage is buying a product from a source site online (such as Target, Walgreens, Best Buy, etc…) and selling it for a profit on another site like Amazon.
Online arbitrage is 100% legal and if you learn the correct sourcing methods and techniques, online arbitrage is really worth the time and energy you put into it. With programs like Fulfillment By Amazon (FBA) you don’t even have to ship the products to the customer. You can send them into an Amazon warehouse and let Amazon take care of the rest.
Here’s a shortened step by step of how online arbitrage via FBA works:
- Scour your favorite shopping destinations online for items that are also listed on Amazon but can be bought for about half the price from your favorite store (YES, they really do exist)
- Use the Amazon Calculator or a tool like RevSeller (get $20 off using coupon code HUNT20) to calculate the profitability of that product
- Order that product and have it shipped to your house or a prep center who will handle your shipping for you.
- After you or the prep center receive the product, list it on Amazon using Seller Central and send it to the FBA warehouse.
- When your product sells Amazon will ship it to the customer and handle the customer service. You will get paid the sale price minus the fees Amazon charges and, if you did it right, make a profit!
There’s definitely a lot of depth that was left out but you get the big picture now. But mastering online arbitrage is no walk in the park. It will take a lot of time, practice, and dedication but thanks to some of the automated tools that are now available (like Tactical Arbitrage) at relatively inexpensive costs, you can quite literally find profitable products while you sleep.
How much money do I need to for online arbitrage?
You’ll be surprised to hear that you probably already have most of the basic supplies you’ll need to get started and you can really start with as little or as much money as you feel comfortable with investing. There’s no right or wrong answer to this question but you know the saying “the more you spend the more you make”....oh, that’s not the saying? I’ve got it all backwards?
What do I need to start selling on Amazon?
First thing you will want to do is open an Amazon Seller account. There are two types of accounts- Professional and Individual. The professional account will cost $40 per month but doesn’t cost to list any items. The individual account will cost about $1 per item listed. I personally recommend the professional account to everyone wanting to get into online arbitrage.
Once your seller account is active here’s what I recommend you have at a minimum:
- Computer with internet access
- A reliable printer with 4x6 shipping label sheets and address label sheets
- A shipping scale
- Shipping boxes and tape
- Polybags (as needed)
That’s really all you need to get started. Of course, the more tools and equipment you have the easier life will be but these are the minimums. Here’s some optional items that are nice to have when you start:
I’ve got the account and supplies ready to go, how do I find products?
The cheapest way for you to find products is the tried and tested manual sourcing method. Manual online arbitrage sourcing is when you put on your astronaut suite, tie yourself to the metaphorical space shuttle and swim through the vastness of the internet while manually searching for products that are profitable for you to sell on Amazon. Be sure to have that Amazon calculator handy so you can punch in the numbers as you are going. The calculator will also give you the fee’s you can expect to absorb when selling on their platform. Here’s what to be on the lookout for when considering the if your find is profitable:
- FBA Fees
- Monthly storage costs
- Shipping costs
- Cost of goods sold (COGS)
I know, it sounds a little more complicated than what some people have told you. It’s a lot to take in and I haven’t even warned you yet about the heavy amount of restrictions that new sellers are under when they just get started.
Seller Restrictions (Gating)
Amazon sellers who are just starting out are going to be faced with a lot of challenges. But Amazon isn’t making it any easier to get started so don’t wait!
The biggest hurdle you’ll face as a new seller is product restrictions, also known as “gating”. This is when you’re not able to sell a product because the category, brand, or product itself is restricted for you. There are 2 known ways to overcome this and only one of them is relatively quick.
- Purchase 10 of a product in the category or brand you are restricted in from a distributor or manufacturer. Amazon walks you through what you’ll need and there’s a lot of free tutorials and information all over Youtube about this.
- Become auto approved to sell the product. Everytime you find a restricted product, push that apply to sell button and see what happens, maybe you’ll get lucky and they’ll auto approve you.
Don’t let the restrictions defeat you though, the long game is worth the fight! There are also several categories that you can source from that aren’t restricted to new sellers. Some of these categories are:
- Baby Products (some certain sub-categories may require approval though)
- Beauty (some brands will require approval though)
- Books (many sellers start with used books from thrift and library sales)
- Camera & Photo
- Cell Phones & accessories
- Grocery & Gourmet
- Health & Personal Care (some sub-categories may require approval)
- Home & Garden
- Industrial & Scientific
- Musical Instruments
- Tools & Home Improvement
- Video Games (some brands may require approval)
Unfortunately the list of restricted categories is longer than this one but there’s still a lot of great products out there to find. You can view the full list of categories with which ones are restricted and which aren't here. The Green lead list that I offer has 8 completely unrestricted leads every weekday for you to review and potentially purchase.
Another great way to find products is using the UPC scanner tool within the seller central mobile phone application to scan products at your local stores. This is called Retail Arbitrage and I’ll make a blog post soon about that!
In conclusion, you can make a solid income by mastering the art of online arbitrage but this is not a get rich quick scheme. You’ll need to dedicate a lot of time, patience, and a little cash to get started but you can do it!
Please make sure to check out my other blog posts and my discounts page while you visit oahunt.com
Don’t be afraid to reach out and ask questions. I’m happy to help and will personally respond to every email I get.