You can run your Amazon OA business with nothing more than a laptop computer from anywhere you can get a WiFi signal, while utilizing one or more Third-Party Prep Services to process and ship your items to Amazon.
There are many Online Arbitrage Tips that can help you scale this business model, whether you are brand new to E-commerce, or an experienced business owner who has been selling on Amazon since 1997.
Below I’ve selected 10 Online Arbitrage Tips and Strategies that you can implement right now to optimize your OA business. Even if you are using software like Tactical Arbitrage or OAXray, these strategies can help you to realize higher profits, fewer returns, and a better overall OA experience.
Feel free to post questions and comments below the article.
1) Use an OA Leads List
Most OA sellers find that it is impossible to research enough products on their own to run a successful full-time Online Arbitrage business. Arbitrage opportunities are usually tied to the fact that the item is on sale, and replenish able inventory items are few and far between. This forces the OA seller to always be searching for new inventory opportunities.
The best way to overcome this obstacle and accomplish this is by taking advantage of other people’s time and expertise. You could hire and train a Virtual Assistant (VA), but that can be time-consuming on a whole new level. A better alternative may be to subscribe to an Online Arbitrage deals service.
2) Check the Clearance Section
ESPECIALLY the Health and Beauty Categories
At some point, manufacturers may decide to “Improve” an item that they sell, or they may decide to discontinue it if it isn’t selling well (or when they are no longer in business). Here’s the reality: Some people like the original version better than the “New and Improved” product. In fact, they will often pay a premium to get the original version, or the item that is no longer being manufactured.
Just because something didn’t sell well for the manufacturer or one of their retailers doesn’t mean it won’t sell well on Amazon. When the consumer can no longer buy it from their source, they are left with limited choices. If the only place they can get the item that they are looking for is Amazon (or eBay), they are going to have to pay the price, or they will have to go without.
Always check expiration dates and manufacturer’s date codes. Amazon has very tight rules concerning this, so be sure not to sell expired products. Products near their expiration date will not be allowed to sell through Amazon FBA. Contact the manufacturer directly or check online to understand manufacturer date codes.
3) Purchase Enough to Qualify for FREE SHIPPING
Online Arbitrage orders are often shipped for free, when you reach the threshold that the retailers require for free shipping. For some retailers, like Target, it is as low as $35. For other online retailers, it may be $49, or $75, or $99. Make sure, when you are placing OA orders that you know the minimum amount you need to spend to receive the Free shipping discount.
4) Be Careful Using Cash-Back Websites
Cash-back sites exist for one purpose – to direct traffic to websites that pay affiliate commissions. This is almost always tied to a purchase, meaning the referring website (i.e. the cash-back site) gets paid when the person being referred makes a purchase. In turn, they give some of that money back to the purchaser, hence the term “cash-back”.
The problem lies in the fact that some of the “cash-back” sites don’t give back any cash to the purchaser, keeping it all for themselves. When you click their link, they drop a “cookie” (a piece of computer code) into your computer which lets the retailer know which website you were on prior to visiting the retail website. The referring website, assuming they have an affiliate relationship with the retailer, would then be credited a percentage of the amount you spend. But some “referrers” will claim that there is no cash-back available after you click through their link. In some cases, this may be true, but in other cases, they are just keeping all of the commissions for themselves.
Here are a few tips:
Look for cash-back sites that have affiliate relationships with the most retailers. We use Ebates (Rakuten) and Be Frugal, since they consistently have some of the highest rebate percentages.
Avoid the temptation to click around. Once you have clicked through to a retailer from a cash-back link, don’t click another link until you have made your purchase. If you have clicked Ebates and then you check Honey, your Ebates cookie will be overwritten by Honey’s cookie, and then you run the risk of getting nothing back, assuming Honey isn’t offering cash-back from that retailer.
5) Open and Inspect every Order
Resist the urge to send your OA products to Amazon without first inspecting every item. If you use a prep Service, they should be doing this for you. Make sure, if you are receiving your own shipments that you are inspecting them and not just slapping a label on the box and forwarding it to Amazon. You need to check the condition of the items, make sure the order is correct, and check for things like price labels and store tags.
Condition – Certain stores (like Walmart) often ship orders with no dunnage or packing materials for protection, so your items might get damaged during transport. Others (like Game Stop) ship items that were pulled from retail shelves, so the “new” games you purchase from their website will often be opened when you receive them. Never assume that something is ready to send in to Amazon FBA without first inspecting it.
Accuracy – There will be times in Online Arbitrage when you will receive items that are not what was shown on the website when you made your purchase. Maybe they showed the new version but sent the old version, or vice versa. Maybe they sent the wrong color, or quantity. Always confirm the items shipped match the order that was placed.
Price Labels -Retailers like Kohl’s and Disney will have already added price stickers to their merchandise. If the price is higher than what you will be charging, maybe you won’t have to worry about removing it. But imagine if the Amazon customer receives an item that they just paid $50 for and they discover the $20 price tag the seller didn’t bother to remove. TIP – Disney price tags are often added during the manufacturing process and will sometimes be on the item inside of the retail packaging.
6) Use multiple Prep Services
Getting set up in advance with an additional prep service may prove to be a very smart business decision. Not all Prep Services in existence today will still be in business in 2-5 years. Don’t wait until you need a new prep service to try to find one. If one goes out of business, ALL of their clients will be scrambling to get set up with a new service, so be smart and do it now. Establish a relationship with more than one Prep Service now. Send in some items. Be ready “just in case”. Plus, you may find that you prefer the way one works better than another.
7) Render unto Caesar…
Wholesale purchases and Private Label imports do not incur sales tax, so there is no added benefit to using a Prep Service in a tax free state. Orders placed online, however, are subject to the sales tax of the state where they are shipped. Using a Prep Service in a tax free state for OA purchases could SAVE you money! In fact, the tax savings alone will often more than PAY for the prep charges that you incur. But keep in mind – The money you save can be quickly lost if your inbound shipments are delayed or if it costs more to get your products from the Prep Service to the Amazon Fulfillment Center.
8) Time is Money
As a seller, you have a lot of choices when it comes to analytics tools, both free and paid. Amazon provides a free FBA Revenue calculator. From the list of sellers on an ASIN, you can add 999 units to your cart for each seller, one at a time, and Amazon will show you the actual amount of inventory each seller has. You can click through each variation of an item to see the individual prices, number of reviews, number of sellers, and anything else that is available on the product page.
But as your business begins to grow, you will soon recognize the fact that your time has value. Time is money. And you are wasting a lot of time doing things manually that can be automated quickly and inexpensively. The problem is, some of these tools don’t play nicely with each other.
RevSeller is a popular Amazon FBA Chrome extension used by Amazon merchants. It is a fantastic tool for spotting opportunities that make a healthy profit. You could call it an online arbitrage tool.
9) Set Keepa Tracking Alerts
This one is a no-brainer! When you find something that Amazon is selling at a discount, and you can resell it for a profit (known as an Amazon to Amazon flip), set your Keepa extension to alert you when the item reaches the targeted buy price again. That way, if Amazon puts the item on sale again, you will receive an email or a text alert and can potentially buy the product before it is sold out.
Once or twice a month, Amazon receives an item into their inventory that they sell for $20 a unit. It sells very quickly. The rest of the month they are Out of Stock, and the other sellers are selling it for around $60. It does not sell a huge number of units. but it sells well enough that I have my Keepa alerts set to tell me when Amazon is in stock. Four other sellers also have alerts set for this item (Keepa reveals this information). They all have their alert set for $19.99. Amazon sells it for $20, which means that Keepa NEVER alerts the other sellers, since their target price has not been reached. I buy all of Amazon’s supply at the $20 price point and resell it in the $60 range. Thank you Keepa!