Amazon is a trusted leader in the global e-commerce industry, with millions of items for consumers around the world and thousands of third-party vendors offering high-quality products at competitive prices.
If you’re interested in Amazon behind-the-scenes, you may be curious about retail arbitrage and how it helps to get started selling. So what is Amazon Retail Arbitrage exactly? Let’s take a closer look!
What Is Retail Arbitrage on Amazon In 2022?
Retail arbitrage on Amazon is the practice of buying products at a lower price and then reselling them at a higher price to profit from them in 2022. This is a common selling tactic on Amazon as merchants stock up on discounted products before marking up the price to generate greater revenue. This practice is legal as long as the product condition is unchanged.
If you want to know more about retail arbitrage on Amazon, including how it works and why sellers do it, then check out the rest of this handy guide!
How Does Retail Arbitrage Amazon Work?
Have you ever heard of the buy low, sell high strategy? That’s how retail arbitrage works on Amazon and other large retailers.
In other words, an Amazon seller will purchase certain items in bulk at a discounted rate and then mark up the price to resell the goods and make a profit.
For example, a third-party seller on Amazon may purchase a box of heavily discounted books, with each copy costing $5.
Then, the seller could participate in retail arbitrage by putting the price up to $10 per book for the Amazon listing.
There are countless more examples of buying low, selling high, and this practice is more common than you may think.
Retail arbitrage sometimes gets a bad rap with consumers who consider it a scam, but the truth is it’s a legal selling practice so long as the product quality is unchanged.
As outlined in the first-sale doctrine, once you legally purchase an item, you have the right to resell it if the product condition is the same.
How Can I Do Retail Arbitrage on Amazon?
To get started with retail arbitrage on Amazon, you first need to identify the goods you wish to sell. If you don’t have an existing seller account, you will need to create one, too.
Next, you need to decide how you want to manage the products, whether that be through Fulfillment by Amazon or merchant fulfillment.
Although some tech tools and software systems point you in the right direction of products to resell, you can just browse the Amazon seller app to scan products from other retailers.
When you scan an item, the app will pop up with related listings and sales rankings. It will also tell you if you are permitted to sell those products.
What’s cool about the Amazon seller app is that it even lets you preview profitability by entering the proposed buy cost.
Don’t forget you can put products up for sale directly through the app, too.
What Products Are Best for Retail Arbitrage on Amazon?
While searching for products to resell through retail arbitrage on Amazon, consider top-performing categories such as home and kitchen, in which 47% of arbitrage sellers are involved.
Toys, games, books, beauty, personal care, grocery, health, baby, household, kitchen, dining, office products, and pet supplies are the other most popular categories.
Considering those categories and the products that work well for retail arbitrage on Amazon, it’s best to look for discounted items at mass merchandisers and big box stores.
Here are a few of the top stores to source goods from for retail arbitrage from Amazon:
- Burlington Coat Factory
- Dick’s Sporting Goods
- Dollar General
- Rite Aid
- Sam’s Club
- TJ Maxx
Online liquidation sites with heavily discounted items often have nice finds for retail arbitrage, too.
Tips for Retail Arbitrage on Amazon
If you’re looking to make more money selling goods on Amazon, then retail arbitrage may be worth looking into.
This selling tactic challenges you to find bulk bargain buys and identify the potential return at different price points on Amazon.
Try these tips for the best chance of success with retail arbitrage on Amazon:
- Use the Amazon seller app to scan physical items in your local retail store.
- Pay attention to the sales rank and use the app to estimate your ROI.
- Consider stocking up on seasonal products like pool toys or holiday décor.
- Prioritize discontinued products that shoppers can’t buy elsewhere.
- Monitor current events to capitalize on product trends.
Retail arbitrage on Amazon is a popular selling tactic where merchants purchase discounted items from other retailers and resell them at a higher price. This is one way in which merchants capitalize on price differences in different markets.
While some shoppers and small businesses are surprised by retail arbitrage, it isn’t exclusive to Amazon. Also, this selling practice is legal so long as the product is resold in the same condition it was purchased in.