Amazon Retail Arbitrage: A Guide to Profitable Reselling

Amazon retail arbitrage has become a prominent way for sellers to tap into profitable opportunities on the Amazon marketplace by sourcing products at lower prices and reselling them for a great margin.

This ensures that sellers maintain steady profits while keeping their risks low.

While the process seems to be simple and straightforward, success with this Amazon business model requires a solid understanding of sourcing products, pricing them, and managing your inventory properly.

If you are worrying about how to get started, then fret not.

That’s why we have created this article. It will help you understand Amazon retail arbitrage, how it works, whether it is profitable, and whether you can also leverage it as a business model.

By the time we reach the end of this blog, you’ll have the knowledge and tools needed to start your journey into the world of Amazon retail arbitrage with confidence.

Let’s then quickly start.

What is Amazon Retail Arbitrage?

Amazon Retail arbitrage is a business model where you buy or source products from different sources, such as retail stores, other marketplaces, etc., at a lower price and sell them on Amazon for a profit.

Yes, you are right. It’s about leveraging the price difference that exists between two different marketplaces.

Example:

You buy a pair of sneakers from a local shop for $30 and then resell that pair for $40 on Amazon. After subtracting Amazon’s fees and other costs, you earn a profit from the difference.

How Does Retail Arbitrage Work?

Retail arbitrage on Amazon is a simple process. It revolves around finding price gaps between retail stores and Amazon.

• First, sellers scout retail stores, online marketplaces, etc., to find products that are priced significantly lower than their prices on Amazon.
• Then, they check the same product’s price on Amazon and compare it with its retail price. This is done to ensure that the product has a profitable margin.
• Once they find such an item, they purchase it and list it on Amazon at a higher price.
• When a customer buys that product, the seller ships it. And after deducting Amazon fees and other costs that they would incur, they keep the profit they make from the price difference.

Is Amazon Retail Arbitrage Legal?

Yes, it is. The first-sale doctrine (a legal concept that allows the resale of copyrighted works after the initial authorized sale) says that you can resell products that you buy legally as long as you haven’t altered them.

But while talking about the retail arbitrage model’s legality on Amazon, there are some other important things that you must know:

• Amazon’s policies must be followed to avoid account suspension or banning.
• Avoid inaccurate listings, as misleading customers can result in complaints and account suspension.
• Respect intellectual property laws. Do not sell products that violate copyrights or trademarks.
• Do not sell prohibited items.
• Warranties might not apply to resold products, so be cautious when selling items with manufacturer warranties.

Difference Between Amazon Retail Arbitrage and Other Business Models

Each business model has its own strengths and weaknesses. Here’s a quick breakdown of how Amazon retail arbitrage compares to other models based on key criteria:

Criteria	Retail Arbitrage	Private Label	Wholesale	Dropshipping	Handmade	Online Arbitrage
Definition	Buying products from retail stores at a discount and reselling them on Amazon for profit.	Creating your own branded products and selling them on Amazon.	Buying products in bulk from manufacturers and reselling on Amazon.	Amazon dropshipping allows selling products on Amazon without holding inventory; suppliers ship directly to customers.	Creating and selling handmade products directly on Amazon.	Buying discounted products from online platforms and reselling them on Amazon.
Initial Investment	Low (<$500)	High ($2,000+)	Moderate	Low	Low	Low (<$1,000)
Time to Launch	Fast (weeks)	Slow (months)	Moderate	Quick (days)	Varies (production time)	Fast (weeks)
Control Over Products	Low	Full	Limited	None	Full	Low
Profit Margins	Low	High	Low	Low	Varies	Low
Inventory Management	Manual, constant sourcing	Full control	Bulk inventory	None (handled by supplier)	Self-managed	Manual, regular sourcing
Fulfillment Method	FBA/FBM	FBA/FBM	FBA/FBM	Supplier ships directly	FBA/FBM	FBA/FBM
Scalability	Low	High	High	Moderate	Limited	Low

Why Choose Amazon for Retail Arbitrage?

Let’s also understand why Amazon, as a marketplace, is ideal for retail arbitrage.

• Large Customer Base: Amazon has over 300 million active users. This offers you access to a large base of buyers, which can help you increase your Amazon sales.
• Prime Eligibility: If you are using Fulfillment by Amazon (FBA), then your products are eligible for Prime shipping. This can be helpful to attract those customers who are seeking fast, free, and reliable delivery.
• Better Fulfillment: Again, if you are using FBA in place of FBM, then Amazon will handle the storage and shipping of your products. This means that the whole process of fulfillment gets streamlined.
• Low Barrier to Entry: As a beginner, you can start your Amazon retail arbitrage business for an amount as low as $500.
• Existing Demand: You benefit from selling popular products that already have demand, so you don’t need to create new demand.
• Flexible Work Schedule: Retail arbitrage on Amazon allows you to work on your own time, making it a good side hustle or full-time business option.

Step-by-Step Process to Get Started with Amazon Retail Arbitrage

As we saw in the previous section, there are plenty of benefits to running a retail Arbitrage business on Amazon. But how can you start? 

Below, we have discussed the step-by-step process to help you out. 

STEP 1: Set Up Your Amazon Seller Account

To start off, you will need to create your Amazon seller account through Amazon Seller Central. To do so, go to sell.amazon.com and follow the registration process.

You will have to provide your business details, select your business type, along with other important identity proof such as valid ID, and billing information.

Once you complete the process, Amazon will verify your account by connecting with you through a video call. Once the verification process is complete, you can list your products on Amazon.

STEP 2: Choose Your Fulfillment Method

The next step will be to choose your fulfillment method from the two options every seller has:

• Fulfillment by Amazon (FBA): Amazon handles everything from storage to shipping and customer service. Your products become Prime-eligible, which can increase Amazon sales.
• Fulfilled by Merchant (FBM): You manage the storage, shipping, and customer service yourself. This gives you more control but requires more work.

STEP 3: Research and Source Products

The next step will be researching and sourcing profitable products. There are different ways through which you can conduct market research and find such high-demand, low-cost products.

One of the simplest ways is to visit local stores or online retailers to find discounted items. Inside the store, you can use the Amazon Seller App to scan barcodes and check the product’s price on Amazon.

The app will also help you to:

• Analyze the sales rank of that product
• Whether you can sell that product or not
• Determine its profitability by entering its buy cost

And more.

Bonus: Read more about sourcing products for Amazon retail arbitrage here.

STEP 4: Listing Your Retail Arbitrage Products on Amazon

Once you are done with sourcing products, you will have to create Amazon product listings. There are two ways to do so: 

Using the Amazon Seller App

The Amazon Seller App is a mobile app that allows sellers to manage their Amazon stores on the go. Any changes made within the app will automatically reflect on the Seller Central dashboard.

1. Add a Product: Inside the app, go to the home page and then click on “Add Product”. Use the search to find the item by name or barcode. If you don’t see the product in the results, then click on “Create New Listing”. 

Source: Cona Content Youtube

2. Enter Product Details: Provide all relevant details such as Product ID, Title, Manufacturer, and Brand Name. 

For items with variations, include size, color, and any other specifics. Upload high-quality product images (up to 9) and write a clear product description. Include relevant keywords to improve searchability.

3. Set Price and Condition: Then you will have to enter its MRP and the number of units you have. Also, you will need to specify if the product is new, used, or just refurbished. 

Once done, select your fulfillment method from Amazon FBM by clicking on “I will ship this item myself” or FBA by clicking on “Amazon will ship and provide customer service.”

Pro Tip on Pricing: Whether listing your products through desktop, or the Seller app, you need to leverage some effective pricing strategies, so that you can gain a competitive edge and maximize your profits. Consider analyzing the prices of similar products to price your products and use tools like the Amazon Revenue Calculator to accurately estimate your total costs and potential profit margins. For more detailed advice, check out this section on pricing strategies for retail arbitrage products.

4. Submit for Review: Once you have added all the details, submit your product for review. Your listings will appear in the Manage Inventory section, once they are approved by Amazon. 

Using Seller Central on Desktop/Laptop

1. Search for the Product’s ASIN: Log in to your Seller Central account, and then go to the Inventory tab. There, in the search bar, find the product by adding its ASIN or product name. 

2. Add the Product: Once you find the product, click Sell This Product. If you’re listing a new item, you’ll need to enter all product details manually.

3. Create a SKU: Once done, you will need a seller SKU. If you don’t have one, you can leave it blank, and Amazon will create one for you. 

4. Finalize Details: Lastly, just like we did in the Seller App, add all the product details. Then, set its price, and select your fulfillment option. 

5. Submit your Product for Review. 

6. Once done, Amazon will generate a listing in your Manage Inventory section. Allow about 15 minutes for it to appear, and then you can proceed to create a shipment.

In your Manage Inventory, you will notice that the status appears as “Inactive,” which indicates that you currently have no inventory stored at Amazon’s warehouse.

Pro Tip: When searching for products by ASIN or barcode, some items might not be listed as new because they already exist in Amazon’s system under another seller. This means you will be competing with other sellers for the same product listing.

STEP 5: Calculating and Monitoring Profit Margins

To be profitable with this retail arbitrage business model on Amazon, you must calculate your profit after subtracting Amazon’s fees and other costs from your selling price.

Note: It is advised that you at least aim for a 20% or higher return on investment. That will help you maintain healthy margins.  

Review your profit margins regularly. This will help you adjust your product sourcing and pricing strategies as needed. 

STEP 6: Handling Customer Service

Great customer service is important to maintain positive reviews and keep your seller rating high. 

1. For FBA Sellers, Amazon handles customer service issues. This includes product inquiries, returns, refunds, etc. 

So they can shift their focus to monitor customer feedback so as to improve their products and ensure customer satisfaction. 

2. FBM Sellers need to manage all aspects of customer service themselves. This includes responding to customer concerns, processing refunds, etc. 

In that case, responding promptly to all customer queries and offering high-quality assistance can help you prevent negative reviews and improve customer satisfaction! 

Types of Products You Can Resell on Amazon

When engaging in retail arbitrage on Amazon, choosing the right type of products to resell is crucial. Here are some categories that are popular and often profitable for arbitrage:

Category	Description	Examples
Seasonal Products	Items in demand during specific seasons	Halloween costumes, Christmas lights
Discontinued Products	No longer produced, sought after by collectors	Vintage video games, old-model smartphones
Overstock and Clearance	Discounted items with high-profit potential	Clearance clothing, overstock electronics
Books	Includes novels, guides, and textbooks	College textbooks, rare books
Toys and Games	Popular with children and families	Limited edition toys, board games
Electronics	High-demand tech items and accessories	Headphones, portable chargers
Brand-Name Fashion	Well-known apparel and accessories	Designer handbags, branded shoes
Home and Kitchen	Appliances and utensils for home use	Coffee makers, blender sets
Health and Personal Care	Wellness and health products	Organic supplements, fitness trackers
Pet Supplies	Items for pet care and entertainment	Gourmet pet food, interactive pet toys
Sporting Goods	Equipment and gear for sports	Yoga mats, basketballs
Beauty Products	Makeup and skincare products	High-end skincare products, organic makeup
Garden Supplies	Tools and decor for gardening	Landscaping tools, decorative planters
Automotive Parts	Essential and enhancement car products	Car covers, specialty oils
Office Supplies	Items used in office settings	Ergonomic chairs, high-end pens

Restricted Products and Brands

When reselling products on Amazon through the retail arbitrage model, you must also be aware of restricted products and brands. These require approval before you can list them.

Amazon’s Restricted Products Include:

• Restricted products
• Alcohol
• Animals & Animal-Related Products
• Art – Fine Art
• Art – Home Decor
• Automotive and Powersports
• Composite Wood Products
• Cosmetics and Skin and hair care
• CPAP Cleaning and Disinfecting Devices
• Currency, Coins, Cash Equivalents, and Gift Cards
• Dietary supplements
• Drugs and drug paraphernalia
• Electronics
• Explosives, weapons, and related items
• Export Controls
• Food & Beverage
• Gambling & Lottery
• Hazardous and prohibited items
• Human Parts & Burial Artifacts
• Jewelry & Precious Gems
• Laser products
• Lighting
• Lock-picking and theft devices
• Medical devices and accessories
• Offensive and Controversial Materials
• Other restricted products
• Pest control products and pesticides
• Plant and seed products
• Postage meters and stamps
• Recalled products
• Recycling electronics
• Refrigerants: Ozone-depleting substances and Substitutes
• Strike anywhere matches
• Surveillance Equipment
• Tobacco & Tobacco-Related Products
• Warranties, Service Plans, Contracts, and Guarantees
• Upholstered furniture, bedding, and other quilted products
• Federal Emissions – Products requiring EPA Certificate of Conformity
• Children’s footwear
• Children’s apparel
• Automotive tires, wheels, and rims
• Washington State expanded polystyrene

Commonly Restricted Brands:

• Adidas
• Chanel
• Disney
• Nike
• Sony

How to Get Ungated on Amazon?

Getting “ungated” on Amazon means obtaining permission to sell in categories that are restricted.

The Process to Get Ungated on Amazon

• Log into Seller Central: Access your account where you manage your listings.
• Navigate to the Add Products Section: Use the ‘Category’ tab to locate the product or category you wish to sell.
• Request Approval: Find the item you want to sell, click on ‘Show limitations’ next to it, and then click ‘Request Approval’ to start the application process.
• Submit Required Documents: You might need to provide invoices, compliance documents, and photographs of the product. Ensure these documents meet Amazon’s criteria.

Tips to Ensure A Seamless Approval Process Ensure Compliance: Verify that your products adhere to Amazon’s specific requirements for the category. Prepare Documentation: Have all necessary documentation ready, such as genuine invoices and compliance certifications. Understand the Process: Familiarize yourself with the unique requirements of each category before applying.

How to Source Products for Amazon Retail Arbitrage

In the section above, we looked at the different product categories you can resell on Amazon. But there’s another question that we must answer.

How to source these products?

There are multiple options to do so:

Option 1: Through Retail Stores

One of the first options is to visit local retail stores (one of the reasons why this business model is also called retail arbitrage). 

1. Scan Products: Once you are inside the store, open the Seller app and use it to scan products. Open its camera and simply scan the barcode of the product. 

2. Choose the Correct Listing: You will get to see multiple results pop up in the search results (after scanning the barcode), along with their prices, sales rank, etc. Click on the one you want to sell. 

Pro tip: Avoid clicking on restricted items.

3. Analyze Key Metrics: After you click on the Amazon product listing you wish to sell, you will get to see some important data that you should analyze. Those key metrics would include:

• Features & Details: Understand exactly what you’re selling, whether it’s a single item or a multipack.
• Sales Rank: Ideally, it’s recommended that you go with a product with a Best Sellers Rank (BSR) under 100,000. This is to ensure high sales frequency for that product.
• Sellers on the Listing: You will also get to see how many sellers are on that listing (including FBA and FBM sellers).

Also, you will be able to see if Amazon is selling that product. And if that is the case, we advise you to skip that product as winning the Featured Offer (earlier known as Buy Box) will get difficult.

• Price and Gross Proceeds:

These metrics will help you identify if selling a particular product will be profitable.

In the pricing section, you will have to input your buying cost of the product. And then, the app will break down all the costs and show your potential earnings (if any).

Example: You purchase an item for $6.50. After entering this cost into the app, it deducts Amazon’s fees and your buying price from the current listing price on Amazon. If it shows that your net profit would be $8.30, you’re looking at a return on investment (ROI) of roughly 128%. This indicates a strong profit margin and suggests that the product is a good candidate for resale.

It’s simple. Check the total monthly sales of that product and sellers. Then, divide the sales figure by the total number of sellers.

For example, if you see 4800 monthly sales and 20 FBA sellers, the calculation will be:

4,800 / 20 = 240 units per month.

This means you can sell around 240 units of that product monthly.

Pro Tip: Start small with 5-10 units to test the product’s performance before buying in larger quantities. Keep in mind that new sellers entering the listing or changes in the sales rank can impact your sales.

As we discussed earlier, use the Amazon Seller App to input your purchase cost and assess the ROI (return on investment).

Note: Always aim for at least a 20% ROI to ensure profitability, though higher ROIs, like 50%, give you better flexibility in case prices drop or competition increases.

Option 2: Big Box Retailers (Walmart, Target, Costco)

You can also consider big box stores like Walmart, Target, Costco, etc., to source your products.

These stores often have clearance and bulk-buy deals. And moreover, these stores are also great avenues for finding high-demand items with a solid reselling potential at heavy discounts.

We advise you to focus on buying products from categories like Electronics, Household Items, etc.

Pro Tip: Use their apps or websites to monitor daily deals and flash sales. Timing is key to grabbing profitable products.

Option 3: Discount Retailers

Ever wondered where discontinued items go?

They mainly go to discount retailers. Such stores carry overstocked and discontinued products from major brands. And as a seller participating in Amazon retail arbitrage, you can buy these products at a heavy discount and flip them for a profit on the platform.

Stores like,

• TJ Maxx
• Ross
• Marshalls
• Burlington

are great examples of discount retailers.

Look for: Brand-name items and high-demand categories like clothing, beauty products, and home goods. These often sell well due to brand recognition and demand.

Option 4: Niche Stores and Clearance Sections

Smaller, niche stores or the clearance sections of big retailers can be a goldmine for finding profitable products for your retail arbitrage business on Amazon. These stores often stock unique or specialty items at a discount.

Pro tip: Explore seasonal items, specialty products, or local brands. These can have less competition on Amazon but still offer great margins.

Option 5: Online Arbitrage

Instead of visiting a physical store for sourcing products, you can also check other marketplaces like eBay, Overstock, etc., for buying discounted products in bulk.

This gives you an advantage: you can source products from the comfort of your home, and that too by browsing a variety of items.

Pro tip: Use a tool like Tactical Arbitrage so that you can easily compare prices across different platforms and find profitable items.

Option 6: Thrift Stores and Liquidation Sales

Thrift stores or liquidation sales are often overlooked. But these are also great sources for finding products at cheaper rates. Ensure you don’t miss out on them.

Product Sourcing Tools

Let’s look at some product sourcing tools that can help you find products for reselling on Amazon.

Tactical Arbitrage

Tactical Arbitrage is a tool that helps Amazon sellers with product research. It scans over 1,000 online retailers to help sellers find profitable products by comparing prices across platforms.

Pricing:

A 7-day free trial is offered.

• Flip Pack: $59/month – Designed for book-flipping enthusiasts.
• Wholesale Pack: $69/month – Focused on finding wholesale deals.
• Online Arbitrage: $89/month – Tools for sourcing profitable online products.
• Online Arbitrage + Wholesale: $109/month – Combines both online and wholesale features.
• Full Suite: $129/month – Access to all Tactical Arbitrage tools for complete sourcing​

Source Mogul

Source Mogul is an automated online sourcing tool designed for Amazon FBA sellers. It helps users find profitable products by conducting reverse searches across various retailer websites.

Pricing:

• Monthly Plan:
  • $67/month (7-day free trial).
  • Features: Supplier search, Amazon category search, profit analysis, stock availability, and Chrome extension access.
• Annual Plan:
  • $388/year (includes 8 months free).
  • Same features as the monthly plan, with lifetime Chrome extension access.

BuyBotPro

This tool offers real-time analysis of potential buys and calculates profitability considering all expenses. Pricing is as follows:

Pricing:

A 30-day free trial is offered.

• Lite Plan – $17.95/month
  Features: 1,200 scans/month, 3 device licenses, deal analysis, BSR charts, Chrome extension.
• Advanced Plan – $39.95/month
  Features: 10,000 scans/month, 10 device licenses, auto-ungating, BuyBox statistics.
• Professional Plan – $54.95/month
  Features: Unlimited scans, 15 device licenses, Suspension Safeguard, BuyBotVA.
• Enterprise Plan – $129.95/month
  Features: Unlimited scans, 32 device licenses, all premium features including BuyBotWholesale.

Arbitrage Hero

This software provides features for both online and wholesale sourcing, identifying profitable products with ease.

Pricing:

A 14-day free trial is offered:

• Monthly: $47/month; Online arbitrage, Reverse Search
• Annual: $470/year; Chrome Extension, Repricer

How to Create an FBA Shipment for Retail Arbitrage

Now that we know which products you can resell on Amazon, and how to create their listings on Amazon, let’s also learn how will you create your FBA shipment (send your products to Amazon).

Here’s the step-by-step process that will help you:

Step 1: Locate Your Product
Go to ‘Manage Inventory’ in Seller Central. Find the product you want to ship, click on “Edit,” and select “Send/Replenish Inventory” from the options.

Step 2: Select the Inventory That You Want to Send

In this step, we will have to edit the packing template which includes the template name, units per box, its dimensions, weight, etc.

Once that’s done, we will select how many boxes we will send to Amazon.

For example, you could be sending two boxes with 15 units each. Confirm your choices by clicking “Confirm and continue.”

Step 3: Set Up Shipping Details
Choose your ship date and select a shipping mode, which will depend on the size of your shipment. The mode will be either “small parcel” or “less than truckload.”

Ideally “small parcel” is suitable for smaller shipments.

Once you’ve entered the dimensions and weight, Amazon will provide the shipping cost. If you use Amazon’s partnered carrier, like UPS, you can often benefit from low shipping rates.

Step 4: Print and Attach FBA Labels

After confirming the shipping details, print out the FBA label and securely attach it to your package.

This label contains two important barcodes: the UPS barcode and the Amazon identification barcode, which includes information about the sender and the contents. Ensure both are clearly visible.

And that’s it! Your shipment has been created, and now you are a retail arbitrage seller on Amazon!

How Much Can You Earn Through Amazon Retail Arbitrage?

Let’s try to understand now how much money you can make by leveraging this retail arbitrage business model on Amazon.

As per Amazon seller statistics (related to retail arbitrage) shared by Jungle Scout:

• About 62% report making less than $5,000 per month, while only 25% earn less than $500 monthly.
• About 46% of sellers might take up to six months to see a profit.
• 48% of retail arbitrage sellers mentioned that their profit margins are less than 20%.

What can we infer from this?

• While the retail arbitrage business model can be profitable, it is not an easy or guaranteed path to making quick wealth.
• The majority of the sellers earn a decent amount, while only a small proportion of sellers make a significant income.
• It can take up to months before you start seeing profits. Therefore, be patient in case you choose to go ahead with this business model.

Real-world Insights from Retail Arbitrage Sellers

The statistics that we shared above were based on research. We wanted to gather some real world insights as well to know how much retail arbitrage sellers can earn on Amazon.

Therefore, we looked up some Reddit communities. And here are some insights that we could gather:

• One of the users highlighted that they started their online and retail arbitrage journey by investing $150 and quickly made over $600 in sales! That’s not all. The user was able to do it with a 20-30% profit.

This highlights that even small funds can help you get great returns if you invest your money wisely.

• Starting with an initial investment, such as $1,500, one user grew their business to a level where they could negotiate directly with local distributors for wholesale prices.

This, too, highlights the growth potential of Amazon retail arbitrage.

• Another user mentioned that over the previous month, they made $7,000 in sales. And their profit margin was quite high around 38%. 

They used tools like SellerAmp and Keepa to optimize their sales process and inventory management.

Learn more about Amazon inventory management tools.

• There was another user who highlighted the challenges related to market saturation. 

They mentioned that even big stores sell their products on Amazon, and that too at competitive prices. This can make it difficult for smaller sellers to thrive on the platform.

Pricing Strategies for Reselling Products on Amazon

Below, we will look at some important pricing strategies that you can use for reselling products on Amazon: 

1. Analyze Competitors: First of all start with analyzing what your competitors are charging for similar products that you want to resell on Amazon. 

This is the easiest and fastest way to do market research and set your prices accordingly. 

Pro Tip: Tools like Keepa or Jungle Scout can be very helpful in tracking the prices of your competitors. 

2. Use Automated Pricing Tools: Using Repricer tools can also be a good idea. Why so? Because these tools help to automatically adjust the prices of your product based on the market conditions. This helps you to ensure that you stay competitive and also protect your margins. 
3. Leverage Psychological Pricing Techniques: Using psychological pricing techniques such as setting prices with .99 or .95 can help to make the cost appear lower. 

Also, use anchor pricing by showing a higher original price next to your offer to highlight the deal the customer is getting. 

4. Regularly monitor and maintain Amazon’s Fair Pricing Policies. The policy highlights some important points like: 

• Accurate Reference Pricing: Ensure the reference price reflects the true market value to prevent misleading customers about the quality or usual cost of the product.
• Avoiding Excessive Pricing: Your product and shipping prices should not be significantly higher than those offered on or off Amazon. This includes adhering to reasonable shipping fees, assessed against standard carrier rates and handling charges.

Following these guidelines helps prevent potential penalties such as the removal of the Buy Box, listing suspension, or more severe consequences like the termination of selling privileges on Amazon.

5. Understanding and Complying with MAP Agreements: Minimum Advertised Price (MAP) agreements are established by manufacturers to set the lowest price at which a product can be advertised for sale. 

Adhering to these agreements is crucial for maintaining healthy relationships with suppliers and ensuring compliance with their pricing policies.

6. Consider Additional Costs: Factor in Taxes, Amazon Referral fees, etc., so that when you price the product on Amazon, you can maintain healthy margins.

Risk Management in Amazon Retail Arbitrage

When you engage in Amazon retail arbitrage, you need to be careful about the risks as well that can impact your business’s success.

Which risks?

Below, we have provided a breakdown of common risks and how to mitigate them:

1. Account Suspension

• Risk: The first risk is that Amazon can suspend your account if you are found violating any of its policies. These include selling items in improper conditions or without proper authorization.
• Mitigation: To help prevent this, it’s advised that you always adhere to Amazon’s guidelines and ensure you can provide valid purchase receipts or invoices upon request to prove authenticity.

2. Brand Restrictions

• Risk: There are some brands that don’t allow selling or reselling their products without their approval. And if you are found violating this condition, your Amazon seller account can be penalized or banned.
• Mitigation: Go through the list of restricted brands and make sure that in case you decide to sell products for any one of those brands, you get their approval.

To help you out, we have compiled a list of 700+ restricted brands. We sourced it from Helium 10 and you can download the whole list here.

3. Low Profit Margins

• Risk: The competitive nature of retail arbitrage can drive down profit margins. And this happens majorly in saturated markets.
• Mitigation: Use pricing tools like Keepa to monitor market conditions and adjust prices to stay competitive while maintaining profitability.

4. Counterfeit Claims

• Risk: Selling products from popular brands can sometimes result in counterfeit claims. And this further can damage your reputation and legal standing.
• Mitigation: Source products from reputable vendors and avoid categories heavily targeted by counterfeiters.

Also, always keep the documentation that helps you prove the legitimacy of your products.

5. Market Fluctuations

• Risk: Prices and demand in retail can change rapidly, which may affect inventory value and sales potential.
• Mitigation: Regularly update your market research to adapt pricing and inventory to current market conditions. Amazon marketing tools like Helium 10 can analyze competition and sales trends effectively.

Tips for Success in Amazon Retail Arbitrage

With that, let’s now also look at some tips that will help you succeed with the retail arbitrage model on Amazon:

1. Buy Products For Reselling During Seasonal Sales

Buy products during retail sales seasons like Black Friday or after Christmas when items are often heavily discounted. This strategy can increase your margins as you acquire inventory at lower costs.

2. Focus on Niche Categories

While electronics and toys are popular, they are also highly competitive. Look for niche categories where competition might be lower, such as pet supplies or specialty kitchen gadgets.

3. Leverage Local Market Discrepancies

Different regions can have different pricing for the same product. If you travel, look for arbitrage opportunities in various geographic locations to find unique products or better deals.

4. Monitor Store Return Policies

Some stores offer extended return periods or overstock returns, which can be an opportunity to purchase returned, yet still new, items at a discount. Always ensure they meet Amazon’s quality standards before listing.

5. Stay Informed on Trending Products

Keep an eye on trending products by following market blogs, using social listening tools, or tracking Amazon’s bestseller lists. Quick action on these trends can yield high returns.

6. Build Relationships with Store Managers

Sometimes, building a friendly relationship with store managers can lead to tips on upcoming discounts or bulk deals before they become widely available.

7. Optimize Your Shipping Costs

If you’re handling fulfillment yourself, consolidate your shipments to Amazon to reduce shipping costs. If using FBA, understand the weight and size thresholds that impact shipping fees and adjust your inventory choices accordingly.

8. Prepare for Seasonal Sales

Plan and stock up for seasonal peaks such as back-to-school, Halloween, or holidays. Seasonal items can offer excellent short-term profits if timed correctly.

Also Read: Understanding Amazon Warehousing and Distribution (AWD) Amazon Global Logistics Explained: Shipping Across Borders Amazon 1P vs 3P: Which Selling Model Is Best for Your Business? How to Sell on Amazon Handmade: A Simple Guide For Sellers

Helpful Tools For Amazon Retail Arbitrage

Below, we have shared some tools that will help you smoothen your Amazon retail arbitrage journey.

Jungle Scout

Jungle Scout’s browser extension provides real-time data on Amazon product pages. It offers insights such as sales estimates, competition levels, profit projections, and historical pricing and sales rank data.

Pricing: Starts at $39 per month with various tiered options available.

Keepa

Keepa tracks price history, offers deal alerts, and sends notifications about price drops. It’s invaluable for making informed purchase decisions based on pricing trends and sales rank data.

Pricing: Approximately $20.5 per month (€19/month).

Helium 10

Helium 10 offers a suite of tools that assist with everything from product research and keyword identification to inventory management and optimization of listings. It’s comprehensive for serious sellers looking to scale their business.

Pricing: Plans start at $39 per month, with more advanced features available in higher-tier plans.

Sellozo

Sellozo offers a platform that helps sellers with Amazon ad optimization and product sourcing. It uses AI-driven tools for price tracking and profit calculation, helping sellers manage their campaigns and pricing strategies efficiently.

Pricing: Custom Pricing

RestockPro

RestockPro maximizes profits by providing accurate forecasting and restock suggestions, automating many aspects of Amazon inventory management.

It analyzes over 70 data points to offer intelligent FBA restock suggestions, helping sellers avoid excess inventory fees and streamline their inventory systems.

Pricing:

A free 21-day trial is available.

Starting at $49 per month for 1000 FBA orders.

Conclusion

In conclusion, Amazon retail arbitrage can be a good way to make money by taking advantage of price differences between stores and Amazon. By choosing the right products and understanding important details like sales rank and profit calculations, you can succeed in this business.

While some users believe that this market is shrinking and becoming more challenging due to strict Amazon rules and increased competition, with careful planning and the right tools, you can still achieve success.

Stay up-to-date with market trends and adapt your strategies to keep ahead in Amazon retail arbitrage.

FAQs

1. Is Amazon retail arbitrage worth it? 

Amazon retail arbitrage can be profitable but it’s becoming more challenging. Increased competition and stricter Amazon policies make it harder to succeed compared to the past.

2. How to get ungated on Amazon? 

To get ungated on Amazon, start by signing up for a Professional Seller account, which costs $39.99 per month. Next, in your Seller Central account, go to the ‘Inventory’ tab and choose ‘Add a product’. Search for your product by ASIN, UPC, or name. If there are restrictions, click ‘Listing Limitations Apply’ to see details. 

Then, click ‘Apply to Sell’ to start the ungating process. If not auto-approved, purchase products from an authorized wholesaler and submit invoices with your application. You’ll generally need invoices for at least 10 units​. 

3. How to do retail arbitrage on Amazon? 

Start by setting up an Amazon Seller account, then use tools like the Amazon Seller App to scan and list products found at lower prices in retail stores. Price items competitively and manage your listings actively for success.

4. How to use Amazon Seller App for retail arbitrage? 

Use the Amazon Seller App to scan products in stores, check competitive pricing, sales rank, and calculate potential profits. It helps you make informed decisions on what products to buy and resell.

5. How to find retail arbitrage products? 

Look for products in retail stores, especially in clearance sections, or use online platforms to find items priced lower than their Amazon listings. Use tools like Keepa to analyze price history and demand.

6. How much money do I need to start retail arbitrage on Amazon? 

You can start with a small investment, often less than $500, to purchase initial inventory. The exact amount will depend on the type of products you plan to sell and their retail prices.

7. Can I do Amazon retail arbitrage part-time? 

Yes, many people do Amazon retail arbitrage as a part-time activity. It can be a flexible way to earn extra income, fitting around other commitments.

8. Are there any restrictions on what I can sell through retail arbitrage on Amazon? 

Yes, some categories and brands are restricted or gated on Amazon, requiring approval before you can sell them. Always check Amazon’s policies and ensure you are authorized to sell particular products.