What is Online Arbitrage?
Online arbitrage, or OA for short, is the act of buying something online (from online retailers like Walmart) and selling it on an online marketplace (like Amazon) for a profit. All you need is a computer, yes and no. This type isn’t a “get rich quick” scheme. Suppose you want to avoid ending up out of pocket and holding plenty of inventory that you can’t sell. In that case, you need tools, data, and a systematic approach to identifying profitable deals.
This article breaks down the essential tools for online arbitrage and all
you need to get started. Then we will answer some of your most frequently asked questions, and finally, we will give you a few expert tips to have a more successful business.
Online arbitrage is like retail arbitrage but with a few key differences.
You buy different items at a lower price to sell them for a profit. Unlike retail arbitrage, online arbitrage is based on the internet, so it’s not limited to your geographical location. You can do it everywhere and spend as much time as you want. That’s why every year, more and more arbitrageurs are attracted to this method.
Amazon is the biggest online marketplace in the world. Thereby many online arbitrageurs sell their items on Amazon. This is called Amazon online arbitrage.
Is online arbitrage legal?
One of the frequent questions that arbitragers ask is: Is online arbitrage legal? It is generally legal, but there are some problems that you should stay away from.
First things first, if you are not allowed to sell a product (and need to be an authorized seller), don’t try to bypass it. It might lead to being suspended by Amazon. Also, avoid sourcing any counterfeit. Amazon takes such infringements seriously. Also, before listing any of your products on Amazon, ensure you have read and understood all the rules and regulations. Amazon has proven to be strict about the rules sellers need to follow.
Generally, if you are doing something you are not sure about, don’t risk it. Search about it and ask other sellers.
Does Online Arbitrage Still Work in 2023?
Although the field might get more competitive, online arbitrage is here to stay. In 2023, as remote work becomes more popular, it can be a good idea for you to start doing retail arbitrage. It will be profitable, but there is one thing you need to consider: Amazon changes its rules and regulations often, and in the new year things might change. Products that you can sell now can get restricted, and more items can get ungated. Long story short, more than anything you need to stay updated in order to stay in the game.
Different Types of Online Arbitrage
When we talk about online arbitrage, the first thing that comes to mind is Amazon online arbitrage. It is not the only but the most famous marketplace to do eCommerce business. Here is a brief introduction to some of the known marketplaces.
1. Amazon Online Arbitrage
Amazon is the most famous platform to do online retail arbitrage. The marketplace includes more than 2 million sellers and attracts hundreds of millions of buyers worldwide every month.
2. eBay-to-Amazon Arbitrage
This one isn’t much different from other sourcing methods. You find a product on eBay with a lower price and list it on Amazon for a profit. But the point here is that many of the products on eBay are used. You can’t use second-hand items if you are working on a “new product” condition on Amazon. You need to check eBay products more carefully for possible damages and errors.
3. Amazon to eBay Arbitrage
In Amazon to eBay arbitrage, you won’t have to buy goods from online
retailers and can sell the items “without possessing them.” First,
you find an item on Amazon, then list this item on eBay for a higher price. You order it from Amazon and send it to the eBay buyer whenever it is sold.
The downside is that this method can make both eBay buyers and Amazon sellers unhappy. If the eBay buyer receives the product inside the Amazon box, they can find out that they have paid more for it. Also, don’t forget that Amazon sellers will only be happy if they know that the products are resold with permission.
eBay has banned direct shipping products from Amazon to eBay buyers in some countries like the Us and UK. But repacking the items by the eBay seller and sending them to the eBay buyer doesn’t have a problem. It is explicitly written in eBay rules:
“Dropshipping, where you fulfill orders directly from a wholesale
supplier, is allowed. However, listing an item on eBay and then purchasing the item from another retailer or marketplace that ships directly to your
customer are not permitted.”
If you want to know more about this topic, follow the Amazon to eBay Arbitrage article
4. Google Shopping
You can upload your product data on Google Merchant Center (GMC) and use the power of google to present your goods to the customers.
Walmart is another massive marketplace with lots of opportunities to buy and sell. Walmart is one of the most common sources to buy products at a reasonable price. However, you can also use Walmart as a selling platform too.
Bonanza is recommended highly by customers and gives unique features to know the potential buyers.
7. Facebook marketplace
Facebook is known for the connection that it has made between people. But recently it has been offering a buying & selling service. Facebook Marketplace is designed to sell & buy used items in the same community. A seller can post the items for sale, then anyone looking in his area can find it and message the seller if they want to purchase.
Pros and Cons
Here is a list of pros and cons of online arbitrage against retail arbitrage:
- Low physical work
You don’t need to look for profitable deals from one store to another. Your computer is enough to purchase and resell the product to potential buyers.
You can run your business from anywhere and have access to online stores all over the world. In addition, you can attract customers from everywhere. So the chance of selling is high.
- Time Independent
Whether it’s off today or late at night, you can check the products and find the best prices. You can run your business in your free time as a part-time gig.
- Low essential capital
You don’t need to invest so much money at the beginning. Small investments work too. After making a profit, you can reinvest it in your business to scale it up.
- Missing discounts
You might miss local store promotions, garage sales, and other physical promotions.
- Using different software
In online arbitrage, you need more analyzing software and searching tools. It can potentially lead to more costs.
- Restriction and copyright
Reselling copyrighted products is a challenge, and you must receive permission from the copyright owner.
How to Make Money from Online Arbitrage?
The main reason for online arbitrage’s popularity is that it gives unexperienced people the chance to make money and have a side hustle. Imagine you buy a pair of shoes from an online marketplace for 20$ in a discount. Listing it on Amazon for 27$ gives you a 7$ profit for a single product. Now if you sell 10 of them in a month, you will be left with a 70$ profit margin. The more you sell, the more money you make. Money you can spend for expanding your business and buying new products.
Here are a few tips that can help you get better in online arbitrage:
- Select popular niches
- Use tools and software that make the work easier for you
- set your prices using data and studying history
How to Get Started with Online Arbitrage?
Creating an Amazon seller account is the first thing you need to get started with online arbitrage on Amazon. Amazon has two plans: individual and professional. If you are a newbie in this business, it would be great to choose an individual seller’s account, which is free. After a while, you could sell more than 40 items per month, and it would be better to upgrade your account to a professional one to save on sales fees, and get access to more advanced tools.
The first step of your Amazon online arbitrage journey should be understanding the Amazon’s selling fees. The costs you need to consider are:
- Product’ cost
- Selling fee of Amazon
- Shipping cost
For calculating Amazon FBA costs and profit, you can use our Amazon FBA costs calculator. Find more information here: https://oabeans.com/amazon-fba-profit-calculator/
How to Do Amazon Online Arbitrage?
If you still need clarification about how Amazon FBA business works, continue reading. Here is the process of online arbitrage broken down into a few simple steps:
- Before buying, identify the products you want to purchase. You need to analyze the data to find the best ones. You also need to set a criterion for yourself to make your decisions.
- The next step is sourcing your items. You can head to a retail website like Target or Walmart, buy sourcing lists and even hire a team to do it for you.
- Place your order. You can send your items to preparation centers. They can check the items for possible damages and pack them again to ship them off to the Amazon warehouse.
- List the items on Amazon.
- Wait to sell your inventory.
- Remember to respond to customer issues to avoid negative feedback!
Now, after getting familiar with the general process of Amazon’s online arbitrage business, it’s time to talk about getting started.
As a beginner, there is no shortage of options to source for your online arbitrage inventory. There are a lot of online retailers you can choose from. To get started, follow the steps involved in this method:
- Look for good products with less price than Amazon on other platforms. Using of online arbitrage sourcing list, such as OABeans Leads, to find profitable OA deals could be very helpful for newbie sellers. The Fayot list provides 5-7 daily leads with 100% ungated products and 75% average ROI.
- Since you can find your product online, buy it and use the FBA service to ship it to Amazon’s warehouse or ship it to your facility.
- When the product comes to your inventory, add it to your listing for sale. Choose a competitive price that can win the Buy Box and give you a good profit margin.
OA for Advanced Sellers
As an advanced and experienced seller, you would know all tricks of online arbitrage on Amazon. It is time to improve your product research with advanced software and tools like Tactical Arbitrage. It has a free trial but upgrading the service and paying the cost is well worth it if you are serious about increasing your Amazon sales. A tool like Tactical Arbitrage has the benefit of doing all the searching for you. It will exactly find what you are looking for when you give your criteria to this software. Besides, it will:
- Ensure a higher sales rank of the product.
- Cross-reference the Amazon database to ensure the profitability of the product.
- Help you understand your competitors who sell the same items.
If you are looking for online arbitrage deals with high profits, don’t miss OABeans’ Pinto or Navy OA list. The most important features of these lists are:
- 7-10 daily leads
- 75% average ROI
- 1% top best sellers rank products
Online Arbitrage Sourcing
Sourcing the items is one of the essential parts of the OA business. Identifying profitable deals is an important step to increasing the benefits. Following, we briefly introduce 4 different methods for sourcing products in online arbitrage.
Manual Sourcing With OA Websites
There are hundreds of online retailer websites, from very famous ones like Walmart.com to fewer famous websites. This method fits newbies who have low demands.
Websites like Rakuten can show you the companies that offer deals and
Looking for a profitable deal manually between millions of products can be tricky. The search needs to be clarified, especially if you consider this
business serious because it can not meet your demand. So, it’s good to warm up for a few days, but if you want to improve your inventory, choose from other
Using Online Arbitrage Software
Checking websites one by one to find a reasonable deal is time-consuming. You can use scraper software to check the websites and list the items based on your criteria. You can also identify the best deals, the actual demand for the product, and product price history in online arbitrage.
Still, there are possible errors, and you have to check them and also pay a membership to use the software. If your business is scaling, we suggest you buy sourcing lists instead of making them on your own and focus on your business, not finding the products.
Online Arbitrage Sourcing List Service
If you want to do online arbitrage without software headaches and consume time checking every single website, you can buy a list of products from valid companies. From Mon to Fri, you are given a list of products. These lists include 5-10 items, usually with necessary data like net profit and ROI.
Why We Need Software to Do OA?
When you buy sourcing lists, you don’t need to struggle with different software, pay for them, and spend time learning how to work with that software. Sometimes, the software you have chosen doesn’t have good customer service, and you have to deal with a new hassle too! If you want to know more about this article, follow the best free online arbitrage software article.
The Importance of Using OA Sourcing Lists
It is the most headache-free way of sourcing! In any other type –
from manual sourcing to hiring an assistant for it – you have to be a part of this procedure. But when you buy sourcing lists, you receive various profitable
lists in your email and check the items as you drink your morning coffee.
Also, if you buy lists from companies that offer a money-back
guarantee, you can ensure that the items have satisfying quality. So, if you want to avoid spending your time finding profitable deals, paying for a different software, and struggling with them, buying a high-quality online arbitrage sourcing list is our suggestion.
Online Arbitrage Virtual Assistant
When you scale your business, buying sourcing lists and using the
software doesn’t work for you. You need more items every day. Sometimes your brand has grown up very fast, so you even need to hire someone to respond to the customers and follow up on their issues. If you want to do everything in a scaled business on your own, you can’t focus on the more important stuff and keep a steady flow of growth.
So, it is time to hire a virtual assistant and teach them. If you
have a professional team, you can make your sourcing lists based on your
criteria and find as many products as you need. By having your own team, you have complete control over the items.
Online Arbitrage Apps and Extensions
Tools and apps are used to give you enough data to make the process as profitable as possible.
Some of them are Chrome extensions like Revseller. This type of
extension can show you the crucial data you need about an item, like net
profit, ROI, sale rank, etc. For example, such extensions calculate the buying price, shipping expenses, and other features to give you the actual net profit.
Another group of apps is used to check if the categories, brands, and
products are open. They can protect you from costly mistakes and let you know if you are not allowed to sell a product. Also, there are several mobile apps for an online arbitrage business.
Online Arbitrage Tools: Free vs Paid
We discussed the disadvantages of not using tools in online arbitrage. Tools can mine data from hundreds of stores, store and filter it, collect the product price history to estimate its future efficiency, and help us be realistic and make the right decisions.
These OA tools are divided into two groups: Free & Paid tools. This is
important because there are dozens of tools and extensions that you can pay for in the online arbitrage business. You must choose them wisely to avoid spending lots of subscriptions every month. The paid ones are usually customizable and won’t require you to alter the results at the end. That’s why many people chose them over the free ones. Free tools can give you results, but the results aren’t always final.
These extensions are beneficial and can put critical info at your fingertips on any web page. They are free but can be very useful. There are dozens of such tools, but here we introduce the following extensions:
1- Keepa – Amazon Price & Sales Rank Tracker
For limited data, Keepa is free, but the premium version is highly recommended if you are a pro. You can see sale rank history, price history, and much more at a glance (the extra futures are open in paid version).
2- Amazon assistant
When you check a product on an online retailer (usually Target.com), Amazon assistant brings up potential matches on Amazon. Notice that the matches aren’t always correct!
As you look at a product on a website (whether it’s Amazon or a retailer), it tries to find a lower-priced product for you. Remember that check two items carefully to avoid a mismatch deal.
4- Rakuten – Get cashback for shopping
With Rakuten, all you need to do is shop like normal, and it will let you know if you can get cashback on your purchase. Also, it can find coupons.
If you are serious about this business, don’t be afraid of paying for using a premium service. Many extensions and software are not free, but they have a free trial. You can pay for them after assuring that they are useful.
You can plug in your data to see the estimated profit and ROI.
- IP Alert
If you want to protect your business against Amazon IP complaints, this extension is what you must have. It can inform you if you’re on an Amazon page for a brand that has been reported to file IP Complaints against third-party sellers.
HowMany shows you the number of units your competitors have in stock of an inventory item. So you can decide if you want to compete with them and how deep you want to go yourself on an inventory purchase.
Online Arbitrage Sourcing Websites
Here are some websites you can rely on for buying products:
Why it’s good
Diversity/ lower prices/ a long history of sales
The ability to buy bulk/ wholesale/ cheap products
Great customer service/ low prices/ in-store pick up
Great deals and discounts/ good quality products/ home and personal accessories
Big inventory of products/ competitive prices
What Is The Difference Between Online and Retail Arbitrage?
In both methods, the final goal is to make a profit. So, there is no basic difference between these methods but sourcing the products. What’s different is the sourcing method. Third-party sellers usually choose Retail Arbitrage and Online Arbitrage, also known as RA and OA.
Retail Arbitrage is more traditional. In Essence, the act of purchasing
discounted products from retail brick-and-mortar stores and reselling them to another marketplace, such as Amazon, at a higher price to make profits. Looking through liquidations, clearance stock, or reduced supply is very beneficial for finding the products physically.
On the other hand, Online Arbitrage is the process of buying your products online at a low price from one marketplace and selling with a markup in another marketplace to have good revenue. The sourcing form of goods in OA on Amazon is usually a Facebook shop or website you don’t need to physically go to. You can buy your products even in significant quantities, days and nights conveniently and minimize your logistic costs.
It would help to consider that some sellers believe that even in Retail
Arbitrage, you can source your items from online stores and resell them in
another Online shop. Besides, there are companies like OABeans that can help you to search for lucrative online arbitrage leads.
Winning Buy Box: How to Win Buy Box
Usually, many sellers sell the same product on Amazon. How can a seller grab more customers and attract their attention? If a seller wins the Buy Box, he/she has a higher chance of selling the items. The Buy Box is where the “Add to Cart” and “Buy Now” buttons are located on a product page.
Using FBA increases the chance of winning BuyBox.
In the same condition, the chance of an FBA seller is always higher than
other sellers to win the Buy Box. If your product’s Buy Box is very
competitive, maybe FBA is a better option.
Extra Tips for Advanced Sellers
There are some extra tips to help you out before getting started with your online arbitrage business:
- Choose the right tools
Some tools make selling on Amazon easier. These are helpful in finding the best keywords. Plus, they monitor your competitors. You can also use them to optimize your ads. You can try the tools at first, as most of them are available for a free trial. Then choose each of them that is the best for you.
For Example, Jungle Scout, RevSeller, and Helium 10 are some of the popular Chrome Extensions that are helpful for Amazon sellers.
This tool is available in both web-app and extension formats. Users can conduct real-time sales data, Amazon keyword research, product rank, revenue, and many more details with their Chrome extension.
This user-friendly interface makes it possible to break down all costs and provide you with the profit margin and ROI for your FBA business. Besides, sales rank, product dimensions, UPCs, and ASIN are shown in this extension.
This tool is the answer to all of your needs, including searching for the best keywords for your products on Amazon, finding suppliers for ASINs, analyzing demand, and calculating profitability
2. Use Amazon ads
One of the best marketing strategies is using paid ads on Amazon. This helps you to boost your sales. They are very affordable as well as super easy to set up. You should just pick your desired product for promotion, choose your keywords, and determine your budget, and it’s time to start.
3. Select the right FBA Service
FBA method of fulfillment offers several advantages. It is a comfort that you don’t need to store the inventory and fulfill orders. Plus, FBA helps you to win the buy box. If an extra fee is not a big deal for you, it is highly recommended to use this program.
In the internet era, many companies tend to be digital, and that’s why
online arbitrage has been so famous. Amazon, as a lead marketplace, is one of the biggest platforms that people do OA on it.
Although this method seems easy and has some straightforward steps, but if you don’t want to fail, you should improve your knowledge about this business.