You have heard from many Amazon sellers about Retail arbitrage and read their case studies. So, do you want to know what it is and how it works on Amazon?
Here, I have prepared a complete content to explain RA business model to give you a detailed idea.
What is Retail Arbitrage?
Retail arbitrage is a business model of selling products purchasing it from local retail stores (Walmart, Target) and sell them online at high prices. You can sell it through your own website or marketplaces (eBay, Jet, and Amazon etc).
I got a product for $10 in a local store and it is selling on Amazon for $35. I will list it on Amazon and start reselling. This way I am making good money.
Why would someone buy discounted items on full price online at Amazon?
Local stores are limited to the city or a region. They list unsold stock on clearance because people are not buying in their location. But, selling it online covers a complete country. May be the product is popular in other states and cities. So, there is a room for getting it sold at full price online.
Why Amazon for retail arbitrage?
Top eCommerce platform
Amazon is the world’s largest and highest traffic generating eCommerce website. You will get a big and massive audience to display and sell your product.
Pre-existing listing
Amazon is a home of millions of product. You will find an already created listing on Amazon for the retail arbitrage. Add your inventory to the pre-existing listing and start selling.
Amazon allows multiple sellers to sell a single product on the same listing. Check above picture, 13 sellers are selling the same product. Though you cannot sell every item listed on Amazon. You need to check whether the manufacturer or brand is allowing to sell on the listing or not.
Look at the above listing screenshot. Here, when i go to list a Nike product, it is asking me to apply for sell. It means you need to be an authenticated retailer to sell Nike products. So, check whether you can sell the product or not before buying the stock.
How retail arbitrage business works with Amazon?
Go to a local store
The first step to retail arbitrage is giving a visit to the near by local retail stores. Search clearance deals and discount offers by the store. Remember, Amazon does not allow you to sell all category products, there are certain categories where you will need permission from to start selling.
So, search for products that falls under approved Amazon categories. Once you find the product, look for its price on Amazon.
To make your task easy, you can use Amazon seller scanner apps. Turn back the product box, you will find a barcode. Scan the barcode and it will take you to the Amazon listing page of the same product. Check the Amazon selling price and compare the profit margin.
You can compare prices of same product on different stores as well. It will help you grab the best deal.
Do check the FBA fees before purchasing the stock from the local store. This way you can calculate approx profit margin. Go for products leaving at least 100-150% profit per sale.
List the product on Amazon
You have scanned the product listing of Amazon through scanner app. Its time to list your product on the same listing. Copy the UPC/ASIN code and input it into add catalog section. Add fulfillment type “Fulfillment by Amazon” and inventory details.
Make a shipment plan to send your bulk inventory to Amazon. Provide shipping carrier details, cartoon details etc to Amazon and they will allocate their warehouse address to send your products.
Prepare product packaging
Amazon has a standard guidelines for product packaging to send orders to the customers. Pack each and every unit in an individual box. Add barcode labels to each unit box and shipping labels to every cartoons.
Make a shipment order on carrier website (UPS, USPS etc). They will land your inventory to the Amazon warehouse. Hurray! within two-three days, you will start selling on Amazon.
How to win buy box?
Similar to you, many sellers are doing FBA retail arbitrage. Might be your product listing have multiple sellers. So, the question is how you win sales over them.
You will need to check competitor’s pricing and need to low down selling price to certain cents for winning the buy box. You need to monitor pricing on the listing everyday.
Look at the above picture, here “Fullstar Houseware” has the buy box and it is doing FBA. So, any customer who purchase the product at the moment, Fullstar will get sales.
You will need to compete with the seller on price.Low down your price to some cents and get buy box. Use Amazon price tracker tools to get price drop alerts from competitors. This way you will get instant notifications when another seller drops the price for winning the buy box.