Online arbitrage (OA) is a new and optimized form of one of the oldest business models. Online arbitrage has recently received a boost, thanks to Amazon. Technology has finally caught up with buying low and selling high.
Online arbitrage is nothing more than the classic resale of products. Online arbitrage is just a financial term for buying cheap and selling more expensive to make a profit.
Here, the products are not purchased from wholesalers but from online retail stores. The price difference between online shops and Amazon is used here. So, if you buy goods cheaper than what is usually traded, you can make a decent profit from the sale.
As with any other business model, online arbitrage has its challenges. You need to know enough to find the right products and differentiate yourself from competitors.
You can start your business, make mistakes, and learn along the way, or you can trust the experts in this field and use their knowledge and expertise to your benefit.
We will discuss OA and different sources for finding OA deals in this article.
What is Online Arbitrage?
Online arbitrage is the act of buying products at a low price and then selling them on another marketplace such as Amazon, eBay, etc., for a profit.
This business model shares many similarities with retail arbitrage, except that it doesn’t require you to shop and source your products from brick-and-mortar stores physically. Instead, you can do all the shopping online.
The most crucial factor that makes online arbitrage great is that you don’t need a wholesale license or business entity to get started. Here is how online arbitrage Amazon works in detail:
- First, you shop online and look for discounted products sold for a lower price than what they’re going for on Amazon.
- You buy these items and have them shipped to your home.
- Once the products arrive, you can repackage them, list them on Amazon and ship them to an Amazon fulfillment center (if you are using Amazon FBA).
- Once the product is sold, you get to keep the profit (minus any Amazon selling fees, which are usually around 15%).
What Are Online Arbitrage Deals?
Online arbitrage deals are the products that sellers can buy for a low price on eCommerce websites and then can resell on Amazon for a higher price. This allows sellers to free themselves from having to deal with distributors or managing a warehouse full of products.
As already mentioned, with online arbitrage, you can handle everything from the comfort of your home.
For example, imagine you find a Walmart product that is sold for $100. As an Amazon seller, you can buy this product and sell it on Amazon for $180.
This is an example of online arbitrage deals that enable you to earn a considerable profit while managing everything online.
It is similar to what retailers do – buy many from wholesalers at a lower price, sell a single item for a higher price – but the difference is that you don’t need to buy a huge number of products, and you can do the whole process online.
How to Find Profitable Online Arbitrage Deals
There are many ways to find online arbitrage deals. The simplest way is to start looking for discounted products on websites such as Walmart, Target, eBay, etc. But since this is very time-consuming, here are some more ideas you can put into practice:
Participate in auctions on eBay – In auctions, you can buy products on average 30% below what you would pay in direct purchase format. The point is to start looking for products that allow you to buy them at a reasonably low price.
Then you have to be attentive until the last moment. Many submit their previous bid in the last 3-5 seconds, so don’t think you’re a winner until it’s all over.
Buy on Wallapop – Wallapop is more of a site for buying than selling. The vast majority are looking for bargains. Sometimes as a seller, you get offers that are 80% below what you ask for. As with eBay, it is a matter of investing time to search.
Buying lots makes the price much cheaper. It is a good buying strategy for all types of platforms.
Offers on Amazon – In theory, Amazon is the best place to sell. Depending on the niche and products that cost between 3-10 dollars on other sites, you have here, despite important commissions, the most relevant margin.
There are trendy products that may be on sale from time to time. Many times, there are purchase opportunities to later resell them again on Amazon. It is a practice that they do not like too much, so you have to do it carefully.
That said, finding profitable online arbitrage deals is not that easy. You need to invest a lot of time and know correctly about the tools you’ll be using. But don’t worry because there are easier ways to find online arbitrage deals, which we will discuss later in this article.
Best Stores for Online Arbitrage
Here is a list of top retailers (both online and offline) for sourcing your products. Many of these stores have daily or weekly newsletters with discount opportunities that you can sign up for and quickly jump on relevant sales.
Thrift Stores (Salvation Army, Goodwill)
Thrift stores are the best sources for finding online arbitrage deals. Although it needs a little bit of patience and a keen eye, you can easily find lucrative deals at your local thrift store.
They are usually open to negotiation (especially if you are a known customer), and in addition to that, they have items in every category imaginable.
Liquidation Stores
Liquidation stores are trying to turn excess, overstock, or obsolete goods into cash. These are excellent for online arbitrage because you can find lucrative deals on their website.
You just need to Google “[your city] liquidation store” to find 3-4 locations. They usually have a website where all their inventory is visible, so you won’t necessarily need to take a trip to the stores.
Dollar Stores
Dollar stores – especially those that maintain a $1 price on everything, such as Dollar Tree – are great places for sourcing products for online arbitration. However, be careful not to buy “gated” or restricted items.
These are the products that Amazon forbids, so by selling them, you risk getting gated on Amazon.
Outlet Malls
Malls and outlet malls are great places for sourcing your products because they give you the benefit of hitting a dozen retailers quickly without having to drive to multiple stores. Plus, they usually have hidden gems that can earn you a considerable profit if sold on Amazon.
Walmart
If you have ever gone shopping in Walmart, you probably know that this is the best place for clearance rack hunters and, therefore, a prime spot for sourcing online arbitrage deals.
However, you need to know which products are gated on Amazon if you are going to source your products from Walmart.
Best Tools to Find Online Arbitrage Deals
Once you’ve laid the groundwork, you can start listing your products and selling them on Amazon. You can use online arbitrage tools to help optimize your listings and allow you to track your product’s performance as well as your competitors’ prices.
Here are some of the best tools you can use:
Amazon Assistant
Amazon Assistant is Amazon’s built-in online arbitrage tool. It helps you compare prices and minimize costs with its low-price badge and 30-day price tracking feature. It can be downloaded as a browser extension, allowing you to compare prices, ratings, and reviews.
OABeans
OABeans is an expert company with years of experience in selling on Amazon. They provide you with a list of great online arbitrage deals daily that contains the most profitable products you can sell on Amazon.
These items are handpicked via special tools and then checked against specific criteria to ensure they are viable. For example, all their OA deals have checked for IP claims, no hazmat or fragile are included in their lists, and all items have great BSR and many other criteria.
PriceBlink
PriceBlink is a browser plugin that allows you to find the lowest prices and coupons, allowing you to save. It works by scanning over 4 thousand merchants to find offers with the best prices. You would also have access to free shipping alerts and discount coupons.
Rakuten
Rakuten is a discount site that offers a downloadable browser extension and makes comparing prices more convenient. It works on a commission structure, where stores allow customers, through Rakuten, to get discounts in the form of cashback through PayPal or check.
RevSeller
RevSeller is a Chrome extension designed to help you make faster and more informed decisions. It displays a real-time calculator on the page and lets you see ROI and profit margins.
Final Thoughts
Amazon Marketplace is continually expanding. This, in turn, leads to more income opportunities for entrepreneurs. Whether a beginner or a seasoned eCommerce seller, online arbitrage is a great way to gain experience selling on Amazon.
When you partner with Amazon FBA and online arbitrage tools, it becomes a more viable business model that can help you scale your business in a relatively shorter period.