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Selling or Re-selling products online is a great way to make money, and it’s under-rated. People that haven’t tried it think that it’s far too much hassle, or that you need your own private label product in order to make any money.
This just isn’t the case though; I sell items that you’d find in a local Sainsburys, Ocado or Superdrug. In fact, I source from these quite a lot!
If you’re going to decide on a Marketplace, I would definitely advise you to focus on Amazon. Whilst I do use an eBay store for ‘collectibles’, the market is nowhere near as active as Amazon. There’s many more benefits to list, but I have a whole section on that later.
You might be wondering if it’s as easy as I’m making out, afterall I’m an Amazon seller myself.
The truth? You certainly won’t become a millionaire overnight, and you will have to put some effort in with sourcing the items and packing them up. However, over the course of a week, the wage that you’ll pay yourself is pretty good.
What is Online Arbitrage?
Online arbitrage is the process of buying something online, with the intention of selling it on another marketplace for a profit. Items are typically bought from any online storefront and sold on Amazon.
For example, you would purchase an item from a website such as Argos, Boots, Sainsburys and sell this on Amazon. At first it might sound really difficult, but it’s actually easy (and strangely quite fun, too!).
It’s been referred to as a Professional Form of Scalping, which is where resellers buy high demand items such as Playstation 5, Xbox consoles
Online Arbitrage is a professional form of scalping. You might have heard of ‘scalpers’ before, in fact I still do a little bit of that on the side with collectables.
I think OA is more professional because we are a registered business, sending items in to Amazon and letting them do the work for us. This is a significant step up from selling on eBay or Facebook Marketplace.
OA is an easy business to set up too. You don’t need any licences like you would as a shop owner or market trader. All you need to do is create your Amazon Seller Account, source some inventory and send it into Amazon.
It works in the exact same way as Retail Arbitrage; except you’ll be sourcing from the comfort of your office chair & not running around stores all day!
You can combine Online Arbitrage with Amazon FBA and make a low-stress, high earning environment.
How hard is it to purchase items online? Not very!
What is Amazon FBA?
FBA stands for Fulfilment by Amazon. This is the process where you physically send in your items to an Amazon warehouse. The products are managed by Amazon, from receiving the item to shipping it out. You don’t have to do anything, once you’ve sent the items in. It’s an auto-pilot business once you’ve sent the item in.
Amazon also manages the Customer Support queries, so whilst sellers may be asked specific questions about an order, after-sales support is provided by Amazon. This includes shipment tracking, receiving the order or refund requests.
This is completely different to eBay, where you’re at the peril of the buyer. If there’s an issue, it’s coming back to you and you’re paying the return postage. There’s also constant chargebacks etc, in addition to less sales. It doesn’t make for the perfect marketplace for these items. However, I do still use eBay myself for collectibles such as Sports Trading Cards and other niches not available on Amazon.
In order to sell on Amazon, you simply need a product to sell. This doesn’t have to be something that you have created. Let me show you.
At first look, you’d see that an item is eligible for Prime shipping and think nothing of it. You think that Amazon get all this supply in and have billions of pounds worth of inventory.
Take a look at the above image, note what I’ve circled. It’s a third party seller, but fulfilled by Amazon. Typically when you buy on Amazon, you may not even notice that you’re buying from FBA Sellers. This is what makes it so effective!
On eBay you receive a feedback system, and it actually works quite unfairly that it supresses new sellers listings in favour of older sellers with more feedback. However, because the seller isn’t actually handling any of the shipping queries etc, Amazon acts in a fairer way and shares the Amazon Buy Box around FBA Sellers.
The above picture also shows a Nintendo Switch game. I didn’t make this, neither did the FBA Seller. He’s purchased this somewhere for cheap and decided to list it on Amazon. There are multiple avenues for selling on Amazon such as:
- Private Label: Creating an item with your unique logo and packaging etc.
- Retail Arbitrage: Going into store and purchasing items to sell online.
- Reselling & Online Arbitrage: Buying Items through retail stores when discounted and selling on Amazon.
- Wholesale: Buying huge numbers of items in bulk and selling on Amazon
- Dropshipping: Getting a factory to fulfil an order that’s been placed, to ship directly to customer.
Today we are going to be focusing on Online Arbitrage, a popular choice amongst the above. Quite often, it gets put to the sword against Retail Arbitrage, but they certainly have their differences.
How Online Arbitrage Works
I’ve created a little tl;dr process for how Online Arbitrage works.
- You browse online websites for items that are cheaper than the selling price on Amazon
- You analyse the metrics of the item, to ensure that it sells well (using seller amp or alternatives)
- Place your order via the Online Website
- When the item arrives, place your FBA labels on them and list them in your account
- Send them into an Amazon Fulfilment Center
- Wait patiently for the item to be checked in, made available and then sold
- Take your profit and re-invest, starting the snowball effect of making money via Amazon FBA.
I’ve really stripped that down, but that’s the whole process in a nutshell.
Online Arbitrage vs Retail Arbitrage
The difference between Online Arbitrage and Retail arbitrage is that with OA, you can do this from the comfort of your home. Retail Arbitrage involves a lot of leg-work, physically attending stores in hope that you’ll fall lucky on a product.
Most people don’t have the time to go wondering around local shops looking for a bargain. I certainly don’t! It’s all well and good when you get a high ROI item, but there could be plenty of times that you walk out empty handed, or worse!
It can be tempting whilst your in the shops to pick something else up; something that you might not need. For example, there’s been times I’ve picked up a box of Krispy Kremes, a slice of Pizza from town or something else that I just don’t need.
I used to do this because otherwise it had been a wasted trip, yet all I’d be doing is getting further and further from my goal.
I rarely do any RA now, I’ve become too focused at sourcing items with my favourite music on, from the comfort of home.
Online Arbitrage is my preference, but if you have an ideal location with stores nearby, RA can bring you success.
How can I make money with Online Arbitrage?
You make money with Online Arbitrage by selling an item for more than you’ve paid for it. Now, you need to ensure that the sell price is a little higher than the buy price to ensure that you can cover all of the Amazon Fees. I use Seller amp for calculation of the Amazon fees, purely because it gives me an ‘ideal’ buy price.
You can do this manually too; but working out the fees on every single item you look at won’t be very time efficient. It also tells you if you’re gated or not, which will save so much time.
How can I start doing Online Arbitrage?
Providing that you’ve already set your Amazon Seller Account up, starting is really easy. You just need to buy some products and get them sent in to Amazon!
There are things that make the process so much easier, such as sourcing software and fee calculators. Luckily, there are hardly any running costs with Amazon FBA so you can justify getting these tools from the very start.
Best Online Arbitrage Sourcing Tools
- Keepa. This is for checking the seller metrics to ensure that the item actually sells.
- Seller Amp SAS. This is vital, for checking the maximum price you should be paying for the item.
- Source Mogul. The free trial will be a great opener into the Online Arbitrage world, showing you sites to look at and specific items to buy.
- Profit Protector Pro. I’d hold off on this one until you’re established with multiple listings. It works hard for you, ensuring your prices are at their highest efficiency.
7 Online Arbitrage Tips
- Use Cashback sites wherever possible. TopCashback and Quidco are two of the best websites for this. It only seems like a small percentage, but over the course of a month you’ll be pleasantly surprised when you have £150-£200 of withdrawable cash.
- Sign up to Newsletters for the popular stores. I’ve received plenty of 20% off Flash Sale discount codes, which makes all the difference when you’re restocking popular sellers in your inventory.
- Consider using a deal sheet for automatic item sourcing. Source Mogul is definitely one of the best I’ve found for finding deals and promotions.
- Track your Orders. I know so many people that just buy and buy, without actually keeping track of it. If you keep track of your orders, you’ll be able to tell easily if all the items you’ve ordered have been delivered. (I’ve had plenty of orders over my time that haven’t been shipped out, but the companies haven’t provided a refund until I requested it!).
- Purchase a wide variety of items at first. This will allow you to get multiple sales fast and find out which items work well.
- Reinvest those profits. This is a huge part of scaling up. If you start with £500 and make 20% a month, you’ll have £1,500 within 6 months. Most people will start with more than £500, and do this for years and years.
- Have patience with your listings. Quite often, other sellers have the need for the buy box and to become the cheapest price on the listing. All they are doing here is reducing their own profits. Once they sellout, you’ll be able to continue listing at your desired prices making more profit.
Conclusion: Online Arbitrage Guide
Online Arbitrage isn’t a get rich scheme. You will have to put some work in finding the items and a little more work in preparing them for Amazon. However, it’s a fast-scaling business where you can make 20% a month return on investment with ease. Over a long period, this number really snowballs and your profits elevate alongside it as you continue to re-invest.
There’s lots of sellers that started off using Amazon as a side-hustle, before actually moving this into a full time job. Personally, I don’t do this full time. Whilst I enjoy working on it to get sales, I don’t want to rely on Amazon FBA as my sole income.
Would you benefit from a Live Online Arbitrage tutorial? It’s something I have considered completing to show you how it works in real-time. Let me know in the comments!