Are you planning to sell on Amazon but don’t know where to start? Or maybe you know how to begin but don’t yet have the budget to launch a more structured business?
Well, a great way to start your commercial initiatives on Amazon is through arbitrage. But what is it? And how can you take inspiration from what happens in America?
What is Arbitrage?
Let’s start with the basics. Arbitrage is a practice that involves taking advantage of price differences between two or more markets, purchasing products in markets where they cost less and reselling them where they cost more.
Theoretically, you can sell on Amazon by leveraging arbitrage, and with little capital tied up, you could achieve rather interesting profits.
Let’s take a simple example. Imagine that you can buy a product online or at the department store down the street for 5 euros, while on Amazon, you can sell it for 7 euros.
But is this legal?
Of course, yes. Once you legally purchase a product, you have the right to resell it however you like.
Similarly, if you buy a new product and intend to do arbitrage, it’s clear that you’ll need to resell it in the same condition.
Arbitrage on Amazon vs. Other Business Models
How does arbitrage on Amazon compare to other typical marketplace business models?
Let’s first put them side by side in a simple comparison table and then examine the pros and cons in detail.
| Business Model | Characteristics |
| Arbitrage | Purchasing a product in a market where it is available at a lower price and reselling it in the same condition at a higher price in another market (Amazon). |
| Private Label | The seller creates their own product label/brand. It’s the most common way to sell on Amazon if you have some capital available. |
| Wholesale | Buying products in bulk directly from a brand or distributors, then reselling them retail on Amazon. |
| Dropshipping | Buying products directly from a manufacturer who fulfills the order and ships it directly to the customer. The seller handles only promotion and marketing. |
| Handmade | Products are handmade, creating unique items to sell on Amazon. |
Is Arbitrage Worth It?
Advantages and Disadvantages of Arbitrage
As mentioned earlier, arbitrage on Amazon can be a good way to generate profit.
Naturally, like any business model, it’s essential to carefully evaluate the pros and cons of arbitrage.
Advantages
Let’s start with the advantages:
Low costs: To start arbitrage on Amazon, a capital of just a few hundred euros is sufficient. Typically, starting a business with the other models listed above requires a larger investment.
Speed: Arbitrage allows you to launch your business very quickly, often within a few weeks.
Abundance of options: Sellers looking to engage in arbitrage on Amazon usually have plenty of opportunities to find profitable products to resell.
Convenience: You can find items for your arbitrage strategy by checking out physical department stores, but if you prefer, you can do it comfortably from home (or anywhere) without leaving your couch.
Packaging reuse: Another way arbitrage helps you save money is by reusing packaging materials. Purchases you make will arrive at your home with bubble wrap, packing paper, and other materials that you can reuse.
Disadvantages
However, be mindful of the disadvantages:
Time commitment: Arbitrage on Amazon requires a significant amount of time to select and source products at the desired conditions.
Uncertainty: Even if you manage to find desired products at profitable prices one week, there’s no guarantee the same deals will be available in the future, as prices may increase.
Risk of complaints: Since you’ll be reselling branded products, you may face complaints about counterfeit products from brands that don’t want resellers.
Competition: Since anyone can shop on the same websites from anywhere, arbitrage creates opportunities for increased competition. This could mean competing with many other sellers purchasing online rather than those sourcing from local physical stores.
Monotony: For some sellers, the biggest risk is monotony. Online arbitrage involves constantly browsing different websites, comparing prices with Amazon, and negotiating better conditions. This means you’ll spend a lot of time on repetitive tasks.
How to Do Arbitrage on Amazon: Complete Guide
Now that we understand what arbitrage is, its characteristics, and its pros and cons, let’s explore how to do arbitrage on Amazon with this complete guide.
Create a Seller Account
The first step is, of course, creating a seller account on Amazon. We’ve covered this topic extensively, so we invite you to check out our guides on opening an Amazon seller account for more details
Choose the Order Fulfillment Method
You can decide whether to handle order fulfillment yourself using the Fulfillment by Merchant (FBM) approach or let Amazon take care of everything with Fulfillment by Amazon (FBA). With FBA, Amazon will also handle customer service
Use the Amazon Seller App
Familiarize yourself with the Amazon Seller app, which allows you to scan products and gather valuable data for your arbitrage efforts, such as:
- Selling price
- Estimated profit
- Number of sellers
- Best-seller rank
- Sales conditions.
Leverage ZonWizard Tools for Better Selling
Once you’ve completed the initial steps of this guide, take advantage of our tools to sell more effectively.
Our tools not only make it easier to find the most profitable products but also help you understand sales trends over time and how to maximize your margins.
For more information, we recommend taking a look here.
5 Must-Know Tips for Arbitrage on Amazon
If you believe arbitrage on Amazon is the right fit for you, don’t miss these five final suggestions.
Focus on Niche Products with Consistent Demand
To start, it’s advisable to focus on niche products with consistent demand but limited competition. Seasonal items can offer great opportunities; for example, you can buy Christmas decorations in January when prices are low and resell them during the holidays.
Carefully Calculate Costs and Potential Margins
It’s crucial to calculate all costs carefully: in addition to the purchase price, consider Amazon fees, shipping costs, VAT, and other expenses.
Only after evaluating all these factors can you determine whether an opportunity is truly profitable.
Maintain a Good Reputation
Seller reputation is critical: you must maintain high customer service standards and properly manage returns and complaints.
It’s also essential to verify that your products are authentic and comply with Amazon’s policies to avoid potential issues.
Diversify Your Supply Sources
A strategic aspect is to diversify your supply sources: beyond regular retailers, you can find interesting opportunities during store liquidation sales or on less-known online marketplaces.
However, it’s crucial to always ensure the authenticity and quality of the products.
Don’t Underestimate the Importance of Timing
Timing is key: you need to be ready to act quickly when an opportunity arises, as prices on Amazon can change rapidly.
At the same time, it’s important not to rush and always carefully evaluate every purchase!
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