What is Retail Arbitrage?
This eCommerce model has a simple concept. Basically, the act of buying the products from brick and mortar stores at a low price and reselling them in a marketplace such as Amazon at a higher price is known as Retail Arbitrage. You can get advantages from these price differences between various markets. Besides, some people believe that you can even find products from online retailers. An excellent example is purchasing a discounted teddy bear for $4 from Walmart and then reselling it on Amazon for $16.
You should find profitable products. So, doing research and comparing the prices is wise before buying. Here are the most famous retailers stores to look for the best-discounted products:
- Home Depot
- Best Buy
- Office Depot
In addition, you have a very comfortable option to find lucrative products, which is retail arbitrage apps. These apps are very useful to identify the best items for selling on Amazon. By scanning the barcodes with your phone camera, they get all relevant product data, like if the product is already saturated on Amazon or estimate the profits. Retail Arbitrage apps are beneficial and avoid losing money on listing for your inventory. Here are some apps that you can use:
- Amazon Seller
- Profit Bandit
- Scan Power
Pros and Cons of Retail Arbitrage
Retail Arbitrage comes with a set of downsides and perks for sellers. Whoever needs an additional source of revenue mention the Pros and Cons as below:
Pros of Retail Arbitrage
- The sellers who want to get familiarized with the Amazon marketplace use Retail Arbitrage. This business model helps them know the functionality of Amazon to run their new business better. It is a significant first step to learning the trick of the trade.
- For starting selling online, Retail Arbitrage is a low-risk way. Unlike wholesale, there is no need to buy bulk inventory. It is even possible to sell a single product and get to the retail business. So, the physical location is not required.
- Starting a business with Retail Arbitrage is very quick. You set up your business by buying an item and listing it in your inventory. It is no need for marketing and branding.
- The investment cost is low for Retail Arbitrage, by using Amazon fulfillment, no need to pay for the product store.
Cons of Retail Arbitrage
- Gated products are the main problem in selling Retail Arbitrage on Amazon. Amazon needs the approval to start selling specific products
- Your ability to acquire inventory to resell can affect the success of your business. The available deals in the market are always limited for the initial purchase.
- Hunting great deals is time-consuming. The time investment is significant for searching products in either local stores or the internet.
Read More: Is Retail Arbitrage Legal?
Is Retail Arbitrage Dead for New Sellers?
If you google this question, you will see it go far back as 2013. So, more than a decade has passed since people have discussed the topic. So, the short answer is “No,” and Retail Arbitrage definitely is not dead. It is not late for new sellers to start and become successful with this business model. The process seems simple, but it is not easy. It is indeed too much competition in this business model. But if you know how and where to source products for your inventory, Retail Arbitrage on Amazon is still a feasible way to earn thousands of dollars monthly
Read More: Is Online Arbitrage Dead in 2023?
Retail Arbitrage Challenges for Beginners in 2023
One of the biggest challenges for newbies is sourcing products. It is highly recommended to beginners to look for clearance sales actively. Almost all retailers in the market have a sales period, which is the best time to find suitable items for your business.
While buying your product from clearance, it is essential to check the condition of the products. Sometimes, the discounted products have poor quality or are dents. Bad products’ state can affect customers’ reviews and consequently harm your reputation. Amazon backlists these kinds of sellers. Besides, buyers stop purchasing from you.
The other challenge sellers are up against with Retail Arbitrage is winning the “Buy Box.” Many other sellers are selling products the same as you. Amazon algorithm is complicated for this purpose. The competitable price and good reviews are factors that can help you win the “Buy Box.”
The next issue is challenging with trademarks that sell the same product as you. It is somehow challenging for beginners to prove authenticity if they provide all of their products from retailers.
Read More: Is Retail Arbitrage Still Profitable?
How Can You Make Money from This Business?
You can make a healthy income with Retail Arbitrage on Amazon if you choose the right strategies. The profit you will make is based on the time and money you initially invested in the business. The bigger your inventory, the more you sell. So, you will need to put more money into sourcing products for your big inventory. Besides, it would be best to choose among many available Amazon categories. Some of them have considerable scope for selling for current and coming years, as:
- Bath and Kitchen
- Sports and Outdoors
- Toys and Games
- Clothing and Shoes
- Pet Supplies
- Beauty & Personal Care
Read More: How to Make Money with Retail Arbitrage?
Amazon Retail Arbitrage is a great business model for beginners. It is known as the most accessible and cheapest way to launch an online business on Amazon and make a side income in the quickest time. You can buy products at reduced prices and then resell them with markup for a reasonable profit. Retail Arbitrage has its own challenges as any other business. A lot of time and effort is required to become successful in RA.