What Is Retail Arbitrage On Amazon?
Updated: Apr 26, 2019
You may have heard of Retail Arbitrage on Amazon and want to know if this is a legitimate way for you to make money. Recently, we looked at "What's The Best Way To Make Money On Amazon?" Retail arbitrage on Amazon ended up being a method to making a quick buck but not a way to build a real long-term business.
Retail Arbitrage on Amazon is buying stuff in small quantities from close out racks, retail stores, and unauthorized re-sellers. Usually, people doing retail arbitrage on Amazon will buy products from stores like Costco and then list and sell those products through Amazon's FBM (Fulfilled By Merchant) selling option.
The good thing about retail arbitrage is that almost anyone can do it. For example, you can buy a Nerf toy at Target for $20 and then sell it on Amazon for $30 instantly. That's right, you can get started with just $20! Of course, you need to know how to find products that you can sell for a profit and how to list those products on Amazon.
The Challenge With Retail Arbitrage on Amazon is that it's very difficult to expand past a couple hundred dollars per week in profit. That's because you can only find a few products to sell at a time. Remember, in most cases you need to physically visit retail stores that might only have two or three profitable items. Using the Nerf example above, you would need to visit 15 different retail stores every week to make $500 in weekly profit. That's a full time job and the most you can make is $26,000 per year.
Watch this video to learn What's The Best Way To Make Money On Amazon
Retail Arbitrage is also in a bit of an Amazon "grey area" because you are not buying from and Amazon authorized supplier (retailers like Walmart are NOT authorized suppliers). You can't use Amazon's FBA services for Retail Arbitrage so you are stuck doing warehousing and shipping products yourself which becomes even more expensive and time consuming.
So, how do people make thousands in weekly profit on Amazon? It's not with Retail Arbitrage! It's with other strategies. The simplest strategy to make real money on Amazon in what's called Wholesaling.
Wholesaling is where you buy well known brand name products in bulk from authorized US based suppliers. You ship those products to Amazon FBA warehouses (so they can warehouse, ship, and do customer support for you) and sell the products on the brand's primary Amazon listing.
In short, if you don't have the money to do any of the more profitable Amazon business models, arbitrage might be a good place to save up some money so you can start to invest in a strategy like wholesaling.
Are you ready to build a real Amazon Business? If yes, our team will be hosting a FREE online workshop where they will show you exactly how to Start, Source, Sell, & Scale an Amazon Business the right way.