As business models go, Online Arbitrage is simplicity itself…..buy cheap goods online and sell for more. What’s more, you get to use the biggest marketplace the world has ever seen.
That’s right…in the US, Amazon accounts for nearly 50% of all ecommerce purchases
If you’re here there is a good chance you’ve seen an ad for a course, or someone flashing the cash they’ve earnt through Amazon. There are a handful of terrific courses and support groups out there, but the worthwhile ones won’t be flexing to sign you up.
At BuyBotPro Towers we don’t really believe in “get-rich-quick” opportunities, but we do believe in getting rich smart.
Now, we’re not saying you need to be a genius to make a success of Online Arbitrage, but if you work smart, you’d be hard pressed not to profit from it.
You’re in the right place here, though. We’re going to break it right down to the stuff you actually need to know before you take the leap.
Is Online Arbitrage Really As Simple As Finding Cheap Goods And Selling Them On Amazon?
Yes….and no. It’s a huge organization and, probably surprisingly, their online marketplace is one of the least profitable of their many arms. However, many sellers are finding it profitable for them.
So, let’s talk about Amazon. By now you will probably know that Amazon themselves sell a very small proportion of the products on their marketplace. That’s because it is what they call it…a marketplace.
Amazon don’t sell on every listing, and even if they do there will usually be more selling the same product. This listing has 15 different sellers, and Amazon isn’t one of them.
Think Delboy and Rodney selling in Peckham market, but online. And worldwide. And without the cheeky sales patter….
YOUR opportunity is to sell products on your own stall….well, store. Yes, other stall holders might sell the same products, but you have your own stall and can set your own prices. We’d recommend not buying video players from the local pub car park, though!
Beware….not every bargain is going to make you money on Amazon.
Whilst you can build new listings on Amazon, when you are starting out, you’d be well-advised to stick to products already being sold in the marketplace.
All of these products are at least half of their normal selling price, but that doesn’t mean you’ll be able to sell them at a profit on Amazon!
Online Arbitrage relies on finding stuff that sells.…if it’s not there already you’ll be blindly listing products, with little idea if it sells.
In fact, there’s an important lesson here. Just because YOU think it will sell, doesn’t mean it sells on Amazon or, if it does, if you’ll make profit.
So, You’ve Heard There Are Different Ways To Sell On Amazon?
You’ve heard right. Online Arbitrage is a great way to get started with your reselling business – reselling being buying a product from one retailer and selling it on. This is how Online and Retail Arbitrage works. You are reselling items on Amazon.
Even the biggest retailers have sales and clearance sections online – you’d be hard pushed to find a single retailer without a product that sells for more on Amazon.
The only difference is where you source your deals.
For Online Arbitrage (OA) you are sourcing at online retailers - even if they have bricks and mortar stores too.
With Retail Arbitrage (RA) you’ll be going to stores and finding lines of products they are selling whether on sale, end of line or simply at a cheap price. You’re then determining if you can sell them for more on Amazon while in the store.
Chances are, a lot of the ads you’ll have seen bragging about the millions someone has made on Amazon, are Private Label (PL) sellers.
Whilst selling a PL product on Amazon can be very profitable, it comes with much more risk and upfront cost.
Discovering markets to design and produce successful products in is time consuming, and as many fail as succeed.
If you see listings like this, with brand names you don’t recognise and only one seller, the likelihood this is a Private Label product.
Understanding how Amazon works through an Arbitrage model will be much lower risk, and for some a way to build some capital to investigate PL in future.
Selling Wholesale is similar to Online Arbitrage, though as an authorised seller you’d not be a reseller….just a seller.
Without a history of selling in an ecommerce setting, it isn’t easy to open accounts with wholesalers. As with PL, if you learn how Amazon works through OA or RA, you’ll build up knowledge, and a history of selling online.
Wholesale business models on Amazon will often run at a lower profit margin, but you’d largely expect to sell a higher volume.
You’ll also have to consider some practicalities….do you have space to store thousands of units? How much time can you commit to your business? How much can you afford to invest?
Online Arbitrage is the lower risk, less time intensive and, frankly, easier way to get started with selling on Amazon.
What Are All These Words And Phrases I Don’t Know?
Before we go any further, there are a fair few words and phrases you’ve probably heard or read, and plenty more you will come across on your journey you don’t recognise. Let’s break some of the jargon down….
ASIN – a code Amazon give to every individual listing. You have five different sizes of a pair of trainers to sell? Each pair will be allocated a separate ASIN by Amazon.
BSR – best sellers rank on Amazon ranks every listing in its category, based on historical sales data. This will change frequently, but is a general guide as to whether a product sells.
Buy Box – Amazon allocates this depending largely on price, but also availability, seller account health and a combination of several factors. When you see an Add to Basket or Buy Now box on the Amazon listing, there is an active Buy Box.
Look out for the Buy Box on listings. If there is one it raises the chances of a customer purchase, but does mean you might find yourself competing for it.
Deal Sheet – a source for deals that the producers of the deal sheet, and their VAs, have found. Most are sold as spreadsheets, but more advanced software like Online Arbitrage Deals deliver daily deals in a slick website format.
Prep Centre – a company who will receive, check, poly-bag, label, pack and dispatch items to Amazon your products for you for a fee.
Profit Margin – the profit percentage the sale price produces.
ROI – return on investment is the percentage of the purchase price you will make in profit. For example, you buy a bottle of shampoo for £1 and you make 50p profit, your ROI is 50%.
VA – Virtual Assistants have become widely used by more experienced Amazon sellers and can be a cost-effective way to build an online business. They can be hired and/or trained for a variety of tasks from sourcing to accounting to inventory management.
How Much Money Do I Need?
Ok, brass tacks time. If you have ventured into any Amazon seller Facebook groups, this is the most asked question by prospective new sellers. Hands down. And rightly so.
The problem is that there is no definitive answer. With Private Label you could probably set a lowest investment requirement, as most suppliers will have a sizeable minimum order.
Sourcing products for private label will require minimum orders, and likely much more than quoted in order to customise and to make shipping cost effective.
Same issue with Wholesale…if you manage to find a wholesaler who will deal with you there will usually be significant minimum order sizes.
As for Online Arbitrage, there is no real minimum investment to get started….and no, this is not clickbait!
If you find a bar of soap in your local superstore that you can sell for four times the price on Amazon, then you will make profit on it. And right there, you have a profitable business!
Now, if you were to start that small, you’d find growth would be slow. Very slow.
Depending on what you have got to start with, be it three figures, four….five maybe, will define how big, and how quickly, you can make your business.
Plenty of sellers have grown a business, with three figures to invest, into a five-figure-a-year business in the space of months.
No promises here….it will depend a lot on how much time and effort you put in, and what advice you heed. You’ll find a rich, and free, set of resources in our BuyBotPro articles when you get started.
What Products Can I Sell On Amazon And Where Do I Find Them?
Honestly, virtually anything. Don’t limit yourself. The temptation early on, especially if you are choosing a store name on Amazon, is to focus on one category.
Yes, toys sell well, and yes, beauty products are popular all year round, but don’t fall into the trap of being a niche seller.
There are millions of products for sale on Amazon. Don’t discount any category to sell in….you’ll be missing LOTS of profit-making opportunities.
Initially, you’ll be restricted from selling in some categories, but there’ll be more than enough products you are eligible to sell to get started. Your chance to access these “gated” categories and brands will come.
Amazon will ask you to apply to sell in some categories, and for some brands.
Make a note of the categories you are restricted in as ones to ungate as you progress. Avoid wasting time sourcing in that category in the meantime.
You can source for products to sell on Amazon at ANY retailer. From national superstores to your local pharmacy….they will all have deals you can exploit.
Open a new tab now, find an online store and go to their clearance and sale sections. You WILL come across some bargains.
We’ll cover how you decide what a good deal is, but get in the habit of finding where these deals are on websites or instore.
If you’re struggling for time - yes, sourcing can be quite a time commitment - then there are alternative ways to source.
Certainly, when you are starting out, paying out for a Virtual Assistant (VA) might be a stretch but, signing up for a deal sheet or deal-sourcing software could be a worthwhile investment.
Online Arbitrage Deals has moved deal sheets on from basic spreadsheets that result in listings being flooded with sellers. These open sheets often have no restriction for how many see each deal.
Online Arbitrage Deals has turned the deal sheet into a user-friendly website with customised deals hitting your account every weekday.
Instead, you get a slick webpage with deals being added daily by a team of VAs. Online Arbitrage Deals also curate the deals you get, so you aren’t getting the same deal as other subscribers.
This dramatically reduces the chance of you being on a listing that suddenly has lots of competition – the main cause of price-tanking….and loss of profit.
Not only will you save a LOT of time sourcing, but you will find deals you are very unlikely to have found otherwise.
It’s also worth noting this - Amazon will often ask for proof of purchase of goods if you are using the Fulfilment By Amazon (FBA) service.
Taking the Only Fools And Horses approach to sourcing deals will soon get you into trouble.
By using Online Arbitrage Deals, you’ll be getting deals from suppliers that will provide the documentation you will need, if Amazon do ask you for proof of purchase. And, if you are smart, they could be suppliers for years to come. Read about the head start you’ll get are here.
Even with this help, you will still need to decide whether a deal is really a deal for you…..
Can you find a toy on sale at less than half the price it is selling on Amazon? Yes.
Can you find out from Amazon what the fees are to sell it on Amazon? Yes.
Can you find out from Amazon what it has sold at over the last few months? No.
Can you find out from Amazon how much stock other sellers hold? No.
Can you find out from Amazon if they think you have a good deal? Definitely not.
There are ways to find out this information, and get guidance what is a good deal. A deal analyser might do this but, with BuyBotPro, you’ll get a whole lot more.
BuyBotPro analyses thousands of data points to help you decide if a deal is really a deal. It takes the guesswork right out of your sourcing.
It’s nearly impossible to get, let alone decipher, all the information there is about a listing without BuyBotPro.
With details of the entire history of the listing, your eligibility to sell it, calculating margins and return on investment, and an actual rating on the deal, it covers every question you will ever have about a deal.
Managing Inventory To Make A Profit In Online Arbitrage
So, let’s say you’ve sourced and sent in your new inventory to Amazon. As we’ve discussed, there may well be sellers already on your listing….and being as dynamic as Amazon is, let’s be honest, more sellers could jump on the listing.
Amazon have their own app for sellers, the Amazon Seller App. As free apps go, it’s a great piece of kit, and all sellers use it….period. It’s great for the fundamentals of selling on Amazon.
It has its limitations, though.
In order to take control of your inventory, and remain competitive on listings, you will need a repricer at some point.
Repricers are designed to react to the prices of competing sellers and, using artificial intelligence, follow the pricing instructions you set.
Luckily, you’ve come to the right place. With Profit Protector Pro you’ll also get an increasingly long list of strategies to choose from. Which you choose will depend on factors such as how aggressive you want to compete, whether you use FBA or FBM, or if you want to steal the Buy Box from lower priced sellers.
Profit Protector Pro has developed a looooong stable of strategies to suit any business.
That’s right, there is some magic in the strategies Profit Protector Pro have designed, and they are unlike any other software out there.
So, don’t worry about how you might grow your inventory and continue to stay competitive in all of your listings. Profit Protector Pro solves that in one piece of software…well two, if you count the app that’s included!
What Do I Need To Make A Success Of An Online Arbitrage Business?
Other than the extensions, apps and websites that BuyBotPro, Online Arbitrage Deals and Profit Protector Pro offer, there will be some practical things you’ll need. So, what essentials would help you when you get started?
A computer! – whether a desktop or laptop, you can’t run an arbitrage business without one. Tablets are pretty and all, but don’t quite measure up…yet.
Boxes – in order to send inventory into Amazon you will need some solid cardboard boxes. You’ll possibly get some useable boxes from your online purchases but, at some point, you will need to purchase some.
Box cutter – underrated. It’ll save time and cut hands! You’ll be able to re-use more boxes too.
Packing tape – don’t buy the cheapest. It probably doesn’t stick.
Packing tape dispenser – ok, not essential, but you will save tape, time and lots of swearing with a sturdy one.
Printer – personal choice here, whether a specific label printer or a proper printer. The latter will be more useful for box labels and general use. A laser printer will reduce the chances of ink running when delivering boxes in the rain!
Labels – normal address labels will do….be careful to make sure the size of your labels match your settings on Seller Central! You can also get larger labels for shipping, though A4 paper is just as acceptable.
Sticker remover – another underrated purchase, especially for RA. A scraper and a bottle of solution will save time, and potentially products, when the retailer has covered items with their stickers.
Poly bags – start with a variety of sizes as you’ll need them all. Plush toys, liquids, powders, bundles all need them, and they will all come in different sizes. Make sure they have suffocation warnings on them.
Scales – many a seller has just used their bathroom scales. Buying some purpose-built shipping scales could be a good investment though. One way or other, you’ll need to weigh your shipments.
Sign Me Up! How Do I Get Started With Online Arbitrage?
You’ve already got the information you need to be prepared for the start of your journey. Now it’s just up to you to sign up with Amazon. To get your Amazon Seller Account setup, just go to the seller website for the country you plan to sell in and follow their lead.
Pick your marketplace and carefully follow the required steps for your chosen country and you’ll be ready to sell!
Starting as you plan to go on is advised so, unless you are just expecting to sell a dozen or so books a month, sign up for The Professional plan.
Depending on where you are, and how big you expect to grow to, you will need to set up as a business entity before or soon after starting your business. Each country has its own requirements regarding tax and registering, so do some research.
Where Do You Get Help And Guidance To Start An Online Arbitrage Business?
Once you’ve taken the plunge (if you’ve read this far we’re pretty sure it’s for you!) it’s the real time for learning. Yes, it’s a simple business on the face of it….but as with anything you are going to learn loads on the road.
Your first port of call, even before you sign up for BuyBotPro, Profit Protector Pro or Online Arbitrage Deals, is to join our Facebook groups.
BBP and PPP have their own super-active groups which are full of sellers discussing the software, but also general Amazon seller subjects.
In fact, if you join the groups now you won’t fail to see posts about a new thoroughbred in the stable. Recently launched, Sumfully will change the level of control sellers have over their business. The response from members who have signed up is there to see on Facebook and, overwhelmingly, it’s a massive hit.
Keeping on top of how your inventory is performing after you’ve sourced, analysed, purchased and shipped to Amazon is no easy task, and almost impossible to do so accurately.
Sumfully is changing this. Join the Facebook groups and get the lowdown now, though. Getting the chatter from the people who use these tools day-to-day will help you make some good decisions before you even start.
Both Facebook groups have thousands of members sharing their Amazon experience.
You’ll also make contacts, friends and learn from some real power-sellers. They’ve become real Amazon Seller communities.
If you then feel you need further help, or even mentoring, there are walkthrough videos for our software, weekly live calls with guests, and resources recommended by genuine Amazon sellers who will have gone through the same process you will.
Heard enough yet? Well, you’re missing out on profit as we speak!