Tag: tips

How to Make a Decision of Buying a Lead?

Tons of websites and companies claim to offer profitable online arbitrage leads. Now, let’s say you buy their leads list but should you really buy every item? You need to develop an individual decision-making process which you can refer to at times like this. This process must consist of strategies and indicators that are important to you, and determine whether you should buy a lead or not.

Some sellers choose to copy YouTube videos by setting unrealistic goals and indicators, which leads to them ignoring many potentially profitable leads and losing lots of money. Don’t be like that! Check out the tips below to find out how you can make a decision about buying profitable online arbitrage leads:

1. Use a Reliable Lead Generation Tool

The first step in buying the best online arbitrage leads is to use a reliable lead generation tool. There are many tools available in the market that can help you find profitable leads, but not all of them are created equal. To ensure that you get the best results, choose a lead generation tool that has a proven track record of delivering accurate and up-to-date information. 

2. Check Product History and Profitability

Before making any purchase decisions, it’s important to check the product history of each item you’re interested in buying. This will help you determine whether it’s worth investing in or not. Use your lead generation tool to check the product’s sales history over time. Look for trends such as seasonal fluctuations or sudden spikes in sales volume that could affect your profitability.

3. Calculate Fees

When buying online arbitrage leads, it’s important to calculate all fees associated with each transaction before making any purchase decisions. This will help you determine whether or not each item is worth investing in based on its potential profit margin. Use your lead generation tool to calculate all fees including shipping costs, taxes, and marketplace fees such as Amazon FBA fees.

4. Monitor Prices

Finally, once you’ve purchased your online arbitrage leads, it’s important to monitor prices regularly to ensure that you’re still getting a good deal. Use your lead generation tool to track prices over time and look for any sudden changes that could affect your profitability. You can also set up price alerts so that you’re notified when prices drop below a certain threshold.

Different Sellers Have Different Criteria for Analyzing OA Leads

Overall, the most important criteria for choosing profitable leads – regardless of the seller – are profit margin, ROI (return on investment), and monthly sales. However, all three can’t be your first priority at the same time. Here’s where you should consider the overall state of your business, your individual goals, and how much risk you’re willing to take.
This way, you can customize and determine criteria that are tailored to your individual situation. For example, a seller that has a long-term vision can prioritize the return on investment over time. Another seller with a limited budget might care more about monthly sales and try to find fast-selling products. On the other hand, another seller who is financially struggling probably prioritizes profit margin over everything else. Since their goals and needs might evolve and change over time, these sellers have the option to be flexible and switch between their criteria.

As you can see, the individual concerns and goals of each seller affect their criteria for choosing leads greatly. So, try to determine which of these three important criteria matches you more, and prioritize the rest of them according to how much risk you’re willing to take. Don’t forget to learn from other sellers and educational YouTube videos, but do not try to copy their strategies.

Think about your overall strategy and establish a threshold for every criterion. For example, you may want to make a profit of >$5 on every product you sell. After that, start testing the waters to see what works best for you. Be flexible with your strategy, because after a while you might find out something else works better for you. Keep in mind that trying to find the “perfect” lead won’t get you very far, so try to find a balance between the criteria. For example, if you find a product that has a big profit margin, don’t ignore it just because it’s not Buy Box eligible.

What Are the Criteria to Choose a Profitable Lead

Finding the best Amazon FBA leads can be challenging, especially if you don’t know what criteria to consider. Here are some of the essential factors to look for when choosing the best online arbitrage leads:

1) ROI

ROI (Return on Investment) is a key metric that measures the profitability of an investment. In simpler words, it means the profit you’ll earn (minus Amazon fees, packaging, and other expenses) in return for the investment you made. 

(Net profit) / (COGS) * 100 = ROI

When choosing online arbitrage leads according to ROI, you should try to establish a balance between risk and reward. If the lead is very risky, the ROI should be higher. But if it’s a stable lead, it makes sense even if the ROI is not that high. After deducting all the costs, you should be left with at least a 10% ROI.

However, it’s hard to estimate the ROI when you have to consider unpredictable issues such as the product being returned. So, it makes more sense to establish a 20% ROI as your criteria after calculating specified costs such as Amazon fees and shipment expenses. However, this is not set in stone and can be less or more than 20% according to your individual situation and the state of your business.

2) Profit

The profit margin is the difference between the cost of acquiring a product and its selling price. When calculating the profit, you should deduct these costs from the selling price on Amazon:

• Buying cost
• Referral fee (15%)
• Amazon FBA fee
• Shipment to Amazon cost
• Other possible expenses

You should choose products with high-profit margins to maximize your earnings. Beware of the hidden costs of selling on Amazon (such as the examples above) when calculating profits. In the end, you should be left with a profit of $5-$10 – again, this can be determined according to your individual situation.

3) BSR

BSR (Amazon Best Sellers Rank) is an Amazon metric that shows the selling rank of individual listings/ASINs in their relevant categories. It shows how fast the product sells and how much demand there is for it. Overall, it’s not a good indication if the lead is not ranked in the 1% best-sellers in the main categories. However, there are exceptions because not every category is the same.

Keep in mind that BSR can mean different things for an online arbitrage seller and a wholesale or private label seller. As an online arbitrage seller, you don’t have a high stock of one product, and you need to make sure your products are sold quickly in a short amount of time. So, you should care more about this rather than improving your BSR. It’s best to use other methods to estimate demand because it’s hard to just work with BSR.

4) Estimated Monthly Sales

This metric estimates how many units of a product are sold each month on Amazon. There are many tools and software that make these estimations, and each of them has its own formula, so the estimations might be different from one tool to another. You can use tools such as Seller App or AZ Insight and set a threshold for yourself. For example, you might consider a product not profitable enough if it has an estimated monthly sale of <20. Again, this depends on your individual strategy.

5) Price History

Some products may be profitable “now”, but their status may change in a few days or weeks. For example, you may find a profitable lead and buy it, but during the time it takes to send the lead to a fulfillment center and upload the listing, suddenly you find out that its price has fallen drastically. Beware of sudden spikes in the product’s price history by using tools such as Keepa.

Here’s an example of what a risky lead looks like:

This product was sold for about $50 during the past 90 days, but suddenly it spiked and now the current price is $143. In this case, most experienced sellers would skip this lead. However, some leads have a stable and reliable price history. Take the example below:

6) Number of Competitor Sellers

The number of competitors selling the same product is important, but not as important as their in-stock number. Considering the competitors’ in-stock number and the product’s monthly sales can help you estimate how fierce the competition is. In addition to that, you should check if Buy Box is controlled by a specific number of sellers or giving other sellers a chance as well.

So, determining the number of competitors selling the same product as you is not enough. You must know how much of the product they have in stock, but you don’t have to check every competitor. For example, imagine you sell a $40 product. In this case, you must check the in-stock of competitors in the same price range as yourself, not those who are selling the same product for over $50.

7) Buy Box Eligibility

The Buy Box is where most Amazon sales occur, so it’s better (but not necessary) to choose products that are eligible for it. Products must meet specific criteria such as price, availability, shipping speed, and seller rating to be eligible for the Buy Box.
Keep in mind that this metric is not that important and most sellers don’t even consider it. You should only include this criterion if everything else is at a stalemate and you can’t make a decision based on other factors.

8) Number of Reviews and Its Trend

The number of reviews and trends can give you an idea about how well a product is performing in terms of customer satisfaction and popularity over time. The more reviews a product has, the more it’s selling. Checking the review graph can help you with this – if the graph is ascending, the lead has a high sale history and is in demand. However, if the graph is flat, that means the product is not being sold and you shouldn’t count it as a profitable lead.

9) IP Complaint 

The number of IP complaints on Amazon is increasing every day, and different tools may have different reports on this. Intellectual Property or IP complaints can lead to account suspension or legal issues, so it’s essential to avoid products with IP complaints or verify their authenticity before purchasing them. Make sure you check this criterion because it can lead to difficulties down the line.

10) Sellers’ In-Stock Number 

This criterion allows you to know how long you should wait for the product to be sold. To get the answer, you need to know the competitors’ in-stock numbers. Some extensions can help you with this, such as Seller App and BuyBotPro. Find out how much of the product is in stock for sellers in your price range, then add them up and compare them to the monthly sales to make a decision.

For example, if the product has a monthly sale of 100 and your competitors have 1000 of it in stock, you’ll have to wait a long time before your product can get sold. Therefore, it’s best to avoid such a lead.

Final Thoughts

In conclusion, profitable online arbitrage leads are essential for any successful online arbitrage business. They offer higher profit margins, reduced risk, increased sales volume, diversification of product offerings, and a competitive advantage over other sellers in the market. But keep in mind that you have to develop quantitative criteria – such as monthly sales / in-stock numbers – according to your individual goals and needs.

By investing time in developing a personal process and criteria for choosing a proper lead, you can take your online arbitrage business to the next level and achieve long-term success. Lastly, keep yourself up to date with the latest Amazon news and guidelines, keep in touch with other sellers, and try to learn from them as to avoid the same mistakes.

What Counts as an Online Arbitrage Deal?

Online arbitrage deals, also known as online arbitrage leads, are ready-to-sell, profitable products you can purchase from online retailers and resell on Amazon. An OA deal must not include items that will be challenging to sell, unprofitable, or problematic in the eyes of Amazon. Here are some of the good qualities that OA deals should have:

• Eligible to Sell: Before investing in a product, ensure you can sell it on Amazon. Some categories and brands are restricted (gated) on the Amazon marketplace, which means sellers must get Amazon’s approval to offer them. 
• Not Hazardous (FBA-Compatible): If you use the Amazon FBA fulfillment method, ensure your products don’t count as hazardous. For example, some items containing certain chemicals may have shipping restrictions. 
• Fits Your Profit and ROI Goals: Just because an item is available at a lower price doesn’t mean it will be profitable. Factor in your individual goals and costs – including shipping expenses, Amazon fees, etc. – and potential returns. 
• Reasonable Competition: If an item has many sellers with hundreds of units in stock, it may be too hard to compete. 
• Sales History: This is a good indicator of the product’s popularity and helps predict its future sales. An item with a consistent or upward sales record can be counted as an OA deal.

How to Optimize OA Deals to Get the Most Profit?

Online arbitrage is all about optimizing the acquisition cost to maximize profit margins. There are various tools and strategies to optimize OA deals, including:

• Coupons: vouchers that provide a fixed discount on the purchase price, either as a percentage or a set dollar amount.
• Discounts: Direct reductions in the listed price of a product – can be seasonal, clearance, or promotional.
• Gift Cards: Preloaded cards that can be used as an alternative to cash when purchasing products from a specific retailer.
• Cash Back and Rebate Offers: Post-purchase incentives that return a portion of the purchase price to the buyer.

Best Methods for Optimizing OA Deals

Now, we know the best methods for optimizing OA deals, but tons of websites offer coupons and cashbacks, and they can’t all be trusted. Below, we will introduce some reliable websites and extensions for OA sellers:

1. Use Discount Gift Card Websites

Gift card websites allow you to buy gift cards for less than their face value, giving you free money to spend. Here are some of the best discount gift card websites:

• Card Cash: They buy gift cards for less than their value from people who don’t want them, so they resell them at a discount. Card Cash offers a 45-day guarantee period to ensure safe savings. 
• Raise: This is an excellent marketplace for gift cards. The amount you can get for a gift card on Raise.com depends on the brand, its popularity, and the size of the discount. You can also get coupons and discount codes on Raise. 

2. Use Coupon Websites

Coupon websites collect coupons and offer them to OA sellers to help reduce sourcing costs. CouponFollow is of the best coupon websites you can use. This platform aims to provide the best and most recent coupon codes and offers a browser extension (Cently). You can locate coupons on CouponFollow by searching for a specific store or browsing the latest posted deals. It uses a real-time algorithm to curate a list of active coupons.

3. Use Cashback Websites

These websites offer a percentage of your purchase back, which can be a good strategy combined with coupons and gift cards. Some reliable Cashback websites include:

• TopCashBack: This is one of the most popular cashback websites that allows you to save money on online purchases from partnered retailers. Plus, the website is free to join, and there is no minimum payout. 
• Quidco: Another cashback website that lets users earn free money when purchasing. Quidco is entirely free to use, and even its premium plan takes the fee out of your cashback, so you don’t have to use your bank card or deposit money on Quidco. 
• Mr Rebates: This legit cashback website rewards you for taking advantage of their cashback offers. You can become a member on Mr Rebates’ website to gain access to many cashback offers or install its Chrome extension to get notified about cashback offers on online stores you visit. 
• BeFrugal: This website offers cashback and coupons at over 5000 online stores. It also has a Chrome extension and mobile app and offers various payment methods such as PayPal, Venmo, gift cards, etc. 
• Complete Savings: Besides cashback, this website offers discounted gift cards and other rewards. It charges a monthly fee but does offer a 30-day free trial. 

For more info about this topic, follow best cashback websites article.

4. Getting Chrome Extensions

If you use the Chrome browser, there are tons of extensions you can use. These extensions alert you to savings opportunities automatically:

• Rakuten: This extension alerts you to cashback opportunities while shopping online and automatically applies the best coupon code at checkout.  
• CapitalOne Shopping: This free extension will let you know if you can earn rewards while shopping and try out coupon codes. It works with thousands of online stores and offers additional features such as price comparison, shopping credits, watchlist, automated price protection, featured offers, etc. 
• TopCashBack: Besides their website, TopCashBack offers a browser extension that alerts users to cashback opportunities when they visit online retailers. 
• RetailMeNot: This extension automatically finds and applies coupon codes at checkout, eliminating the need to copy and paste codes on the checkout manually. 
• Honey: This is one of the best and most popular extensions for OA sellers that automatically finds and applies the best coupon codes at checkout. It also tracks price drops and offers a rewards program. 

For more info about this topic, follow Chrome extensions for Amazon sellers article.

5. Searching on Google

This is a simple yet effective method for optimizing OA deals. All you have to do is type “[product name] + discount” or “[retailer] + coupon,” and Google will provide you with hundreds of results. However, before using any of these websites, ensure they are legit by reading user reviews.

Top Tips to Optimize Online Arbitrage Deals

When using cashback and coupon websites, it’s always good to make sure you are using a legit and reliable platform – if possible, one that offers guarantees or free trials. Some additional tips to optimize OA deals include:

• Use more than one coupon website. Different coupon websites might have exclusive deals or discounts.  
• Use cashback rewards. Cashback rewards lower the cost of your purchase. Even if it’s just a little bit saved each time, it can add up to a lot afterwards. This can help increase your profits.
• Don’t use every coupon. Some deals might sound good on paper, but they come with strings attached, like limitations on what you can buy. Always ensure a coupon truly offers value for your specific needs. 

• Use coupon extensions to save time. Extensions like Honey, Rakuten, or RetailMeNot automatically apply the best available coupon codes at checkout, eliminating the need to search manually and test codes. 
• Remember that a good deal can turn bad due to increased competition. If you’ve found an excellent deal, chances are, others have too. Always assess the competition level and potential demand before making a purchase. 

Final Thoughts

The line between a successful online arbitrage deal and a missed opportunity is often determined by sellers’ sourcing strategies. By mastering the art of optimizing OA deals using coupon websites, cashback rewards, and extensions, sellers can save both time and money. These tools offer various benefits, such as eliminating the need to manually search and input coupon codes at checkout, comparing different codes to pick the best one, and much more. Using the tips and websites introduced in this article, you can make the best of your OA deals. 

What Are Amazon Online Arbitrage Leads?

Online arbitrage leads are specific product suggestions that can be bought at a low price and sold at a higher price on Amazon. The leads are checked against various criteria, such as sales rank, profitability, ROI, competition, number of reviews/ratings, etc. Amazon OA leads are usually compiled in a sourcing list, which can be bought from certain companies and service providers. Sellers can also compile the leads themselves by manual sourcing or using sourcing tools and software. They can also hire virtual assistants to source the leads.

The Importance of Proper Lead Assessment in Online Arbitrage

Sellers can use various sourcing methods like purchasing leads lists, using sourcing software, manual sourcing, or hiring a VA to get a daily flow of fresh online arbitrage leads. However, after compiling a list of leads, sellers must carefully assess each lead and decide whether it’s worth purchasing. The way you go about assessing leads can make or break your business, so it’s an important part of your journey as an Amazon seller.

Why Thoroughly Assessing Leads is Crucial

When deciding whether a lead is worth purchasing, proper assessment of the lead is crucial because the results of this repetitive decision-making process have a significant impact on your business in the midterm. So, you must get a good grip on the decision-making and lead assessment processes, and prioritize the metrics that are most important for the success of your business.

While pre-prepared OA leads are usually compiled using various tools and thorough research, assessing leads and making sure they match your goals is a necessary step that you should take before purchasing them.

The Role of Data in Evaluating Leads

We’ve all heard about “data-driven decision-making” before. Using data for decision-making is especially important for online arbitrage sellers because personal intuition-based decision-making does not work on Amazon. As an online arbitrage seller, you may find yourself dealing with decision-making dilemmas every day, but using data can minimize the risk of your decisions and put your business in the right direction.

By using data for evaluating OA leads, you can make informed decisions about the product you are considering selling, plan your inventory to avoid unsold items and assess your risk. To gather enough data about a lead, you must have software tools for analyzing essential metrics such as monthly sales, competition, and sales rank. Some of the best OA tools for evaluating leads include Keepa, InventoryLab, RevSeller, CamelCamelCamel, and other similar tools.

Understanding Key Metrics and Indicators

Evaluating the leads by knowing the key metrics and indicators can be easy. The essential factors you should keep in mind when assessing leads include the following:

• ROI (return on investment)
• Profit margin
• BSR (best sellers rank)
• Estimated monthly sales
• Price history
• Number of competitors and their in-stock levels
• Buy Box eligibility
• Number of reviews and trend
• IP complaint

What OA Leads Are Risky?

Risky OA leads carry a higher degree of risk for the seller. These leads can lead to losses, unsold inventory, or other issues. Here are some of the characteristics of risky OA leads:

Insufficient Profit Margin

Leads with insufficient profit margins are considered risky because even a tiny change in costs or selling price can lead to losses. It’s best to always consider the safety factor for profit margins to minimize loss.

Unstable Low BSR

BSR, or Best Sellers Rank, is an Amazon metric that measures the selling rank of ASINs in their relevant categories. You can use this metric to analyze the demand and ensure the product sells quickly. To assess the Amazon BSR for a lead, you can use tools like Keepa to analyze the historical sales rank. Just make sure you know how to use Keepa before analyzing leads with it.

By analyzing the historical sales rank, you’ll find out if a good BSR is just a temporary spike and unreliable, or if the lead has always been in demand (a stable BSR). If the lead is experiencing a sudden spike in sales rank, you have to analyze its monthly sales to make sure it’s going to sell quickly. Otherwise, you’ll be left with unsold inventory and tied-up capital.

Review Count Trend

The review count trend on a product can show you how well it has been selling. The general idea is that a product that sells well gets reviews, while a product that’s not getting reviews is probably not getting any sales either. Therefore, this is a good metric to assess how well or how stable a product is selling.

High Competition

When analyzing competition, you must consider the number of competitors in your price range and their in-stock level. Combining the competitors’ in-stock level and the lead’s monthly sales can help you estimate the product’s risk. A high number of competitors and a high in-stock number increases the lead’s risk. Usually, leads that have >15 sellers and >1 number of in-stock items/sales (in the same price range) are considered risky.

Inconsistent Price History

Imagine you find a profitable lead and purchase it, but when it takes the product to reach a fulfillment center, its price suddenly drops, and your profit turns into a loss. To avoid such cases, you should analyze the price history graph for OA leads using tools like Keepa. Beware of sudden spikes or drops in the leads’ price history.

IP Compliant

Intellectual Property (IP) complaints happen when sellers who are not authorized distributors offer a certain brand’s product. If a seller receives too many IP complaints Amazon, their account may get suspended, so it’s important to know how to decide about leads that have a high chance of receiving IP complaints. Using tools like IP Alert, you can find out which leads have had previous IP complaints. These leads are usually considered risky, especially if the complaints were recent.

Low Customer Ratings

A low customer rating usually means higher return rates. Customers who gave a low rating to the product were not satisfied with it, which means your potential buyers will not be satisfied either. This can lead to high return rates, affecting profits and causing logistical challenges.    

Leads Involving Seasonal or Trending Products

The success and profitability of seasonal or trending products often depend on timing. You must list these products at the right time to avoid missing the peak selling period, resulting in slow sales and unsold inventory. Check the product’s monthly sales during last year’s related event or holiday to see how it performs.

Unreliable Source

Reliability of the supplier – or the source – of the lead is critical in online arbitrage. If the source provides counterfeit/fake products, does not deliver on time, or delivers a damaged product, there will be a higher return rate and customer dissatisfaction.

Products with Short Shelf Life or Expiration Dates

Before purchasing, you must check the lead’s shelf life or expiration date. You will be left with unsold inventory if the product doesn’t sell before expiration. In addition, Amazon has strict rules about selling items close to their expiration dates and failing to comply with these rules can lead to account suspension.

Products Requiring Special Storage or Handling

Special storage or handling often means higher costs. This could include refrigeration for perishable goods, special packaging for fragile items, or secure storage for valuable items. This could lead to shipping challenges and an increased risk of returns or damages.

Should You Ignore a Lead If It Is Flagged as Risky?

So, what should you do if you encounter a risky lead? Usually, sellers avoid these leads, but you should consider the risk and reward balance. A lead may be risky, but it might be worth considering if the potential reward is high enough. Here’s how you should deal with risky leads:

Consider All Factors

Sellers usually consider various factors when making a decision about purchasing OA leads. For example, one lead may seem risky because it has high competition, but it’s so in demand that you can join the competitors and sell your inventory fast. So, if you’re doubtful about purchasing a lead because you consider it risky, it’s important to consider other factors as well, such as profit margin, monthly sales, sales rank, review trend, etc.       

Risk vs. Reward

Risk vs. reward means that if the product is risky but has a high-profit margin or ROI, you can consider purchasing it. Sometimes, higher-risk OA leads can lead to greater profits. Finding the balance between risk and reward can be achieved through experience and trying different strategies, so keep adjusting your strategy and metrics to find a perfect balance.

Consider Your Risk Tolerance

Risk tolerance refers to the degree of risk you are willing to accept regarding your products. To measure your risk tolerance, you must reflect on your comfort level. How do you feel about losing money? Evaluate your financial situation, business goals, and experience. Additionally, consider how long you’re willing to wait for a return on your investment. As you gain more experience in online arbitrage, you’ll better assess leads and determine if the risk is worth it.

Monitor and Learn

After making a decision about risky leads – whether you choose to purchase them or not – you must continuously monitor their performance to learn from previous decisions and use this knowledge in the future.

Strategies for Minimizing Risks When Buying Arbitrage Leads

If you evaluate yourself and find out you have a low-risk tolerance, don’t worry! There are some strategies you can use to minimize risks when buying OA leads, such as:

Diversifying Your Portfolio of Leads

By diversifying your lead portfolio, you will spread your investments across various products or categories, reducing the impact if one of your products fails to perform as expected. Remember that while diversification can help manage risks, you must perform due diligence on each lead to ensure viability. 

Regular Monitoring of Lead Performance

By regularly monitoring lead performance, you can keep yourself informed and make data-driven decisions. To do this, you must keep a close eye on sales velocity and analyze the lead’s performance to see how much profit it yields in the end.

Final Thoughts

Online arbitrage leads can offer attractive opportunities for profit on platforms like Amazon. Still, they inherently come with various forms of risk, such as fluctuations in the selling price. Higher-risk OA leads can sometimes offer higher potential rewards but pose a greater chance of loss. When approaching risky leads, sellers should evaluate their business strategy and risk tolerance and balance risk and reward.

While risky leads are a part of any online arbitrage business, they can be managed and mitigated through careful research, data-driven decision-making, and practical strategies.

Unlocking the Potential of Sourcing Lists: Key Advantages for Your Business

Before we get into the details, let’s find out the advantages of using online arbitrage sourcing lists for your Amazon business:

Time Efficiency: Streamlining the Product Research Process

This is one of the most significant advantages of using OA sourcing lists. Instead of spending countless hours searching across different websites to find profitable products, you can refer to a list of opportunities pre-compiled by experts. Sourcing list providers usually have a team of OA experts who use various tools and software to source products or a virtual assistant who does the sourcing. This can free up time to focus on other aspects of your business.

Increased Profit Margins: Identifying High-Potential Products

Sourcing lists are typically compiled based on data-driven product sales and profitability analysis. Providers use various tools and software to check price history, monthly sales, etc., to identify products with a track record of solid sales and low risk. This information also helps sellers make informed purchasing decisions.

Competitive Edge: Staying Ahead in the Online Arbitrage Market

Sourcing lists help online arbitrage sellers identify products in high demand and sell fast. By focusing on products with a proven track record of sales – among other critical criteria – sellers can increase their chances of success and avoid products that might not sell. By providing them with a steady stream of profitable products, sourcing lists allow them to stay ahead of the competition.

Curated Products: Handpicked and Checked by Experts

This is one of the most significant benefits of online arbitrage sourcing lists. As mentioned, these lists are compiled by teams of experts or VAs with years of experience in this business. They use various tools and software to conduct extensive research and analyze the products using factors such as monthly sales volume, competition, etc., to handpick leads with the highest quality.

Lower Learning Curve: Fastest Way to Find Deals

Online arbitrage sourcing lists are designed to be user-friendly and easy to navigate, even for beginners. This allows sellers to quickly and easily find profitable products without extensive knowledge or experience. Instead of spending weeks or months learning to find leads, sellers can refer to a sourcing list and start sourcing products immediately.

Non-Problematic Products: Lower Risk of Account Suspension

Amazon has strict policies regarding product quality, authenticity, and other factors. Violating these policies may result in account suspension or even permanent banning from the marketplace. OA sourcing lists help sellers avoid these risks by providing a curated list free of problematic products like hazmat, fragile, or oversize.

Ability to Test the Waters: Trial Periods and Money-Back Guarantees

Sourcing lists usually include trial periods, money-back guarantees, and personal support, which provides sellers with additional peace of mind. Trial periods allow sellers to try out the sourcing lists for a specified period, and money-back guarantees offer a refund if the seller is unsatisfied with the list.

Discovering Quality: How to Find and Evaluate the Best Sourcing List Providers

Finding and evaluating the best OA sourcing list provider can be challenging. Still, there are several factors you can consider to ensure you choose a reputable and reliable provider:

Reputation and Reviews: Assessing Provider Credibility

The reputation of the provider is an essential factor for determining their reliability. Sellers can read customer reviews and feedback to evaluate the provider’s services. These reviews can be found on review websites, forums, and social media platforms where OA sellers discuss their experiences with different providers.

Identifying Your Needs: Matching Your Requirements with Providers’ Plans

Before deciding on a specific provider, you must identify your business needs and goals. This can include budget, growth plans, product niche, etc. From there, you can develop an individual strategy with various metrics that you have set for yourself. Then, you should evaluate the different plans offered by the provider and compare them to your needs and goals to see if they match.

Customer Support and Resources: Ensuring Provider Reliability

To ensure provider reliability regarding customer support and resources, sellers should research and consider the provider’s response time and availability, check the available resources (such as training materials and educational articles), and look for trial periods and money-back guarantees. 

If you find a provider that seems reliable, you can contact them before purchasing any plans to ensure high-quality support and ask any questions you may have regarding their services. Some companies also offer money-back guarantees, which is the best way to test the quality of their plans. The money-back-guarantee allows you to purchase a plan, test it, and cancel your trial or get your money back if you are not satisfied with its quality.       

Analyzing Key Features: Comparing Profit, Seats, ROI, and Other Essential Attributes

Last but not least, sellers should compare different providers to see which one fits their business. To do this, they can compare the profitability of listed products using trial periods, evaluate the number of seats included in the plan to see whether it’s suitable for their business needs and assess the ROI of the leads to see if the lists are worth investing in. They can also analyze other essential attributes such as sales rank, customer support, pricing, diversity of plans, etc.

Is It Worth It? Conducting a Cost-Effectiveness Analysis of Sourcing List Services

Online arbitrage sourcing lists can be a cost-effective way of sourcing products for sellers, but this depends on several factors, such as the quality of the sourcing list, the seller’s business needs and goals, and the plan’s pricing. Let’s see how you can conduct a thorough cost-effectiveness analysis of the sourcing lists:

Weighing Service Costs Against Potential Profits

First, sellers must weigh service costs against potential profits to determine whether sourcing lists are cost-effective for their business. To do this, sellers should look for trial periods or money-back guarantees. This way, they can evaluate the potential profit of the leads by considering market demand, competition, etc.

They can also calculate the ROI by comparing the potential profits with the cost of purchasing sourcing lists and other hidden costs (such as Amazon fees, shipment expenses, etc.). Other important metrics to remember when weighing service costs against potential profits include the possible time and effort savings, along with the scalability of the sourcing lists to evaluate whether the provider’s plans can accommodate future growth.

If you want to conduct a thorough cost-benefit analysis of each provider you work with, you can make an Excel or Google sheet containing every profit you have made with their leads. This way, you’ll know if the return on investment was enough. Since you use various providers’ lists and different sourcing methods, you won’t have a good understanding of which method is more efficient unless you have an organized sheet. 

Evaluating Time Savings and Efficiency Gains

One of the most significant benefits of online arbitrage sourcing lists that makes them highly cost-effective is saving time and gaining efficiency in product research and sourcing. As mentioned previously, these lists save a significant amount of time because they are pre-compiled by experts, and all sellers have to do is check if the leads match their specific criteria. 

Usually, sellers only consider their monetary costs as an investment, but time is as important – if not more – as the money they invest in tools, sourcing lists, and other things. However, using a time-consuming but cheap method can lead to losses instead of profits because the seller could save time by investing more money in an efficient method – ultimately gaining more profit. 

For example, using sourcing lists, sellers can quickly and easily identify profitable products, which increases productivity and decreases the required time and effort for finding products.

Creating Your Own Rules: Customizing Criteria for Selecting Profitable Leads

Since every online arbitrage seller has specific goals and needs, you must develop rules and criteria for selecting profitable leads. To do this, you must consider the overall state of your business, your individual goals, and how much risk you’re willing to take. After that, you can identify the essential criteria to choose an online arbitrage profitable lead, establish a threshold for each metric, and develop a unique strategy.

Most experienced OA sellers customize the following criteria to develop their individual strategy to use when selecting suitable leads:

Analyzing BSR, Number of Competitors, and Their In-Stock Levels

BSR (Best Sellers Rank) is an Amazon product rank that measures the selling rank of ASINs in their relevant categories. This metric shows how fast the product sells and the demand for it. Generally, a low BSR indicates high demand, but this differs from category to category. Since most online arbitrage sellers deal with numerous categories, it’s not easy to gain enough experience in one of them to use BSR effectively. Therefore, it’s recommended to focus on other metrics, such as monthly sales.

The number of competitors offering the same ASIN as you is crucial, but the competitors’ in-stock level is even more important. The number of competitors can impact the market competition level, profitability, and how fast the product gets sold. You must consider competitors within your price range because these are the sellers you will compete with. In addition, you should assess their in-stock level to ensure you won’t stay behind and be forced to deal with unsold inventory.

Assessing Profit Margins and ROI

ROI (Return on Investment) is a critical metric that can be used to measure the profitability of an investment. ROI is calculated by measuring the potential profit minus hidden costs such as Amazon fees, etc. Its formula is as follows:

(Net profit) / (COGS) * 100 = ROI

Choosing a lead according to ROI requires a balance between risk and reward, meaning that if the lead is very risky, the ROI should be higher. On the other hand, if the lead is stable, it makes sense to choose it, even if the ROI is not that high.

Profit margin is another key metric that measures the difference between the cost of acquiring a product and its selling price. When calculating the profit margin for a lead, you should deduct hidden costs such as Amazon FBA fee, referral fee, shipment, buying cost, and other possible expenses using an Amazon FBA calculator.

Considering Seasonal and Market Trends

During specific holidays and events such as Christmas, Halloween, etc., some products experience high demand. For example, Christmas light decorations are only bought and used during this particular holiday. So, it’s good to consider seasonality and market trends during specific times of the year when evaluating leads on an online arbitrage sourcing list.

Analyzing Estimated Monthly Sales and Price History

Estimated monthly sales estimates how many units of a product get sold each month. This is one of the easiest and most effective criteria to work with. Therefore, most OA sellers use this metric. You can use various tools such as Viral Launch, AMZScout, and Unicorn Smasher to estimate the monthly sales for a lead. However, note that each tool uses a unique formula so the results might differ.

Price history is a more concrete metric that shows the price of a lead during the past months. You can use price history to measure the stability of a lead and find out about sudden spikes or setbacks. A good lead must have a stable and reliable price history. You can check the leads’ price history using tools such as Keepa.

Studying the Number of Reviews and Its Trend

The number of reviews and trends for a lead shows how well a product performs in terms of customer satisfaction and popularity. The more reviews a product has, the more it’s selling. Additionally, you must look at the review graph for the past few months: if the chart is ascending, the product is in-demand and selling well. On the other hand, if the graph is flat, the product is not popular, and it’s best to avoid it.

Checking the Lead Against IP Complaints

IP (Intellectual Property) complaints are when a brand sends a complaint to Amazon to stop a seller from using their intellectual property. IP complaints can lead to account suspension or legal issues, so avoiding such products or verifying their authenticity is essential before purchasing them. Include this metric in your overall strategy to prevent potential problems in the future.

Don’t Miss Out: Keeping an Eye on Old Leads for Hidden Opportunities

So, imagine you’ve bought sourcing lists and analyzed the leads, and some didn’t pass the evaluation process. In such cases, keeping the sourcing lists for later is best. This has a few benefits: by revisiting old leads, you can identify missed opportunities that may have happened due to reasons such as changes in customer demand. It also allows you to analyze customer demand and preferences trends, develop new product ideas, and discover new niches.

Now, let’s find out how you can analyze the old leads to find hidden opportunities:

Monitoring Price Fluctuations and Availability

Monitoring price fluctuations and availability can be an effective way for online arbitrage sellers to identify products with changing demand and find products currently underpriced due to changes in the market, product availability, etc. Sellers can use price tracking tools like Keepa to monitor price fluctuations, set up alerts for products they’re interested in buying, and check the availability of products listed in old sourcing lists. Suppose a product is no longer available from the original supplier. In that case, sellers may need to find a new supplier, which can lead to the discovery of other products that are currently not on the seller’s radar. 

Revisiting Unsold Inventory for Potential Gains

Sellers can also identify hidden opportunities by revisiting unsold inventory. For example, a product that was not popular in the past may have increased in demand due to changes in the market. Additionally, revisiting unsold inventory can help sellers optimize their pricing strategy, free up storage space by removing unsellable products, and find opportunities to bundle products on Amazon. Bundling products together can increase the product’s perceived value, enabling you to sell it for a higher price.

Leveraging Historical Data for Future Decisions

Analyzing historical data can help sellers make informed decisions about their future buying and selling strategies. Analyzing sales trends and review charts can also help sellers optimize their pricing strategy and forecast future demand for particular products.

Digging Deeper: Analyzing Other Products of Profitable Leads for Additional Gains

Sometimes, the leads in a sourcing list can direct you to other profitable leads and opportunities. For example, you may find a good lead from a specific brand on one of the lists you have purchased. In this case, you can check out similar products from the same brand and find new and potentially profitable leads. In simpler words, sellers must dig deeper into the sourcing lists they purchase to find additional opportunities.

Exploring Alternative Suppliers and Platforms

One of the ways to dig deeper into the sourcing lists is by checking out other suppliers and websites that sell a specific lead. For example, imagine a profitable lead with Walmart as its supplier. Sellers can check out the same or similar products on other websites to find other suppliers and potentially buy the product at a lower price.

Conducting In-Depth Product Analysis

Conducting an in-depth analysis of the leads can help sellers better grasp the market and adjust their sourcing strategies accordingly. To do this, sellers can check out other products from the same brand as the lead and analyze their price history and other essential metrics.

Building a Database of Potential Opportunities

After conducting thorough research and analyzing the leads, sellers can build a database of potential opportunities they can refer to occasionally. This database can help sellers identify new leads and opportunities in the future.

Final Thoughts

Online arbitrage sourcing lists can be a powerful tool for sellers who want to boost their business and maximize profits. Sourcing lists allow sellers to identify new deals and opportunities without investing too much time and effort. Analyzing old leads on previously purchased sourcing lists can help sellers find hidden opportunities and forecast future demand. Utilizing OA sourcing lists is a valuable strategy for any seller looking to succeed in the online marketplace.

Understanding Online Arbitrage Competition

In private label, sellers offer similar products from the same niche or category, and their goal is to reach the top of the search results on Amazon. Additionally, private label sellers need to consider metrics such as the number of similar products, their sales history and reviews, overall demand trend for the product and how they can differentiate from competitors. 

On the other hand, none of this is important for OA sellers. Competition in online arbitrage refers to the number of OA sellers offering the same ASINs as you on the Amazon platform, along with their in-stock number. Lastly, the competition analysis covers the long term in private label, whereas in online arbitrage, sellers analyze the competition for the short term.

Why is Competition Important in Online Arbitrage? 

Competition can affect online arbitrage in several ways, which is why it’s crucial to analyze the competition for an online arbitrage lead:

• Price wars – as more sellers compete to sell the same or similar products, some may lower their prices to attract more buyers, leading to a price war and reduced or negative profit margin for all the sellers. 

Slower sales – when competition for a specific ASIN is too high, you will be forced to wait while your products sell over weeks or even months instead of being sold quickly and offering you a reasonable ROI. This results in idle capital and many other issues associated with it.  

Key Competitive Factors in Online Arbitrage

So, which factors should we consider when we analyze the competition for an online arbitrage lead? The most important factors are: 

• Number of sellers of an item on Amazon 
• Competitors’ stock levels 
• Evaluating Buy Box competition 

Keep reading to find out how these factors affect competition between online arbitrage sellers on Amazon.   

Number of Sellers of an Item on Amazon

The number of sellers is the first factor to consider when analyzing an OA lead. This factor can impact the market competition level, affecting profitability and how fast the product gets sold. With the increased competition over a particular product, prices may drop, and it may be harder to win the Buy Box. 

So, how can we determine the number of sellers of a specific ASIN on Amazon? There are two methods to do this – first, you can open the product page on Amazon, check out the list of sellers offering the product, and count how many sellers there are. Take the picture below as an example:

The other method is to use tools such as RevSeller or AZInsight. When you open the product page, these tools will show you how many other sellers are offering it, as shown in the picture: 

FBA Sellers vs FBM Sellers

You may wonder why determining whether your competitors use FBA or FBM is important when analyzing the competition. Since it’s easier for FBA sellers to win the Buy Box than FBM sellers, if you are using the FBA method, you can consider the FBA sellers as your competitors. On the other hand, if you use FBM, you have to consider all sellers as your competitors. 

Consider Competition Within Your Price Range 

Competition within your price range is another factor to consider when you analyze the competition for an online arbitrage lead. When many sellers offer the same product as you, but their prices are considerably higher, you don’t have to consider them as competitors. This is because you will be competing with sellers with a similar price range. 

You can check the product listing on Amazon to see if the competitor is selling the product within your price range. You can also use price tracking tools such as Keepa and CamelCamelCamel for historical pricing data. 

Assessing Competitor Stock Levels 

Another essential factor to remember when you analyze the competition for an online arbitrage lead is the competitors’ in-stock levels. Imagine this – you’re analyzing a lead that 15 other sellers offer, but their in-stock level combined is 20. The product has a monthly sale of 100, so you can consider it a good lead with low competitor stock levels. 

Now, imagine another lead offered by 5 sellers, but they combined have 1000 units of it in stock, and its monthly sale is 100. In this case, the competition is higher, and you may want to avoid this lead. So, you can see how competitor stock levels can be an even better and more reliable metric than the number of competitors. It’s best to consider both metrics to get the best results. Combining this metric with another one, like monthly sales, can be even more beneficial; for example, the number of estimated monthly sales divided by the in-stock level of competitors. 

To assess the competitors’ stock levels, you can use tools like AMZScout, Unicorn Smasher, or Sellics to receive real-time data on competitors’ inventory levels. 

Evaluating Buy Box Competition

Buy Box is the box on a product detail page where customers can purchase by adding items to their carts. Sellers who win the Buy Box tend to make more sales than those who don’t. Amazon rotates the Buy Box among eligible sellers so multiple sellers can win the Buy Box over time. If various sellers have had the Buy Box for short periods, it means it’s likely that you also win the Buy Box for a reasonable time period. 

However, suppose you notice that a few specific sellers have repetitively won the Buy Box over the past months. In that case, you may want to consider this lead as a higher competition lead because these sellers are hard to compete with – they’re either offering lower prices or having high inventory levels. All in all, it’s good to consider Buy Box competition as a metric when analyzing leads and other competition metrics. 

When you analyze the competition for an online arbitrage lead, you can use Keepa to analyze the Buy Box for specific products. If you want to know how to win Amazon Buy Box, click here. 

Monitoring Price Fluctuations and Trends

Price fluctuations and trends can also impact competition on Amazon. During specific events or holidays – such as Christmas or Mother’s Day – some products experience higher demand. By checking the product’s price history during last year’s event or holiday, you can estimate how trendy it is and for how long. 

For example, one product may have high competition during Christmas, but it’s so in demand that you can also join the market and sell many units. However, be careful not to stock up too much, or you will be left with a lot of unsold inventory that you can’t really sell after the event because it’s not in demand anymore. 

Again, you can use price tracking tools like Keepa and CamelCamelCamel to track pricing trends over time. You can also set up price alerts using these tools to notify you when the price of a product falls within your desired price range. 

Tools to Simplify Online Arbitrage Competition Analysis

Various tools and software can help you analyze the competition for an online arbitrage lead without going through the hassle of manual analysis. The best online arbitrage tools you can use for competition analysis include the following: 

• Keepa – provides historical pricing data for products 
• RevSeller – provides real-time data on competitors’ prices, sales rank, etc. 
• AZInsight – analyzes competitor listings and provides insights into their sales history, pricing strategies, and inventory levels
• BuyBotPro – analyzes competitors’ pricing strategies and provides real-time data on competitors’ sales history, inventory levels, etc. 

Developing a Winning Online Arbitrage Strategy

So, how can we incorporate competition analysis in our decision-making process to choose the best OA leads? The best way to develop a winning OA strategy is to develop an individual and personalized strategy that you will refine as you gain more experience. Here are our suggestions for developing a winning OA strategy regarding competitors: 

Diversifying Product Selection

You can diversify your product portfolio and, for example, offer products with high competition but high profits alongside low-risk products with low competition. This lets you test everything and see what works best for you. It also allows you to find a perfect balance between risk and reward.  

Staying Ahead with Continuous Market Research

By continuously monitoring your products and analyzing the consequence of your decisions and the metrics you have set for yourself, you can refine your strategy and keep learning new things. This will allow you to stay ahead of the competition in the long term and develop metrics and strategies that are unique and tailored to your needs and goals. 

Final Thoughts

It’s crucial to analyze the competition for an online arbitrage lead, but you should also keep in touch with fellow sellers and online arbitrageurs to keep yourself up to date and learn new things every day. More importantly, there’s no one-size-fits-all strategy that works for every seller. So, if you find a competitor with a winning strategy, do not try to copy them – learn from them and keep your business needs and goals in mind to develop an individual OA strategy tailored to your specific situation.

Understanding Product Demand on Amazon in the Context of Online Arbitrage 

Product demand is crucial for online arbitrage on Amazon because it determines the likelihood of a product selling quickly. If there is high demand for a product, many potential buyers are looking for it, which increases the chances of making a sale. On the other hand, if there is a low demand for a product, it may take longer to sell and may not generate as much profit.

But how is product demand in the context of online arbitrage different from other business models, such as private label? Private label sellers need to estimate the long-term demand for a product because they order a large volume of the product that takes months, even years, to sell out ultimately. However, sellers care more about short-term success in online arbitrage and must avoid overstocking. 

So, in private label, sellers must look at global trends and estimate the customers’ long-term demand, while in online arbitrage, sellers need to find a product that sells fast so they can move on to the next in-demand item. 

Defining Online Arbitrage Lead Demand

Lead demand in online arbitrage refers to the level of interest or desire for a particular product among potential buyers. It is crucial for determining whether a product would be profitable for an online seller. The higher the online arbitrage leads demand, the more likely the product will be sold quickly and reasonably priced. 

When buying a lead, OA sellers usually look at specific criteria, such as level of competition, price stability on Amazon, and demand. However, sellers must develop an individual strategy and define certain thresholds to quickly make the buying decision when faced with a new lead. So, if you define your strategy and thresholds, you can make buying decisions quickly and offer more fast-selling products. 

The Role of Demand in Profitability and Risk Management

Product demand can directly affect profitability and risk management in an online arbitrage business. How, you ask?

In terms of profitability, product demand can directly impact the price of the product on Amazon. If you find a fast-selling product, your stock will sell quickly, and you can order the next batch immediately. This way, you can increase your profit margin over time, resulting in higher risk-taking and a higher ROI. 

Regarding risk management, product demand can also decrease the risk of holding onto unsold inventory, which can tie up capital and lead to losses. If the product is in high demand, it will likely sell quickly. This reduces the risk of inventory holding costs, especially if the seller uses the FBA (Fulfillment by Amazon) method. In addition, when the product is not fast-selling, its price might decrease over time, or unforeseen issues might happen with the listing.

By conducting thorough market research to identify products with consistently high demand, you can reduce the risk of holding onto unsold inventory, facing losses, and dealing with unforeseen issues. 

The Importance of Product Demand Estimation for OA Sellers  

It’s crucial to estimate the demand for OA lead because it allows sellers to identify profitable products and avoid investing in products with low demand and low selling opportunities. In general, products in high demand on Amazon are more likely to sell quickly, allowing the seller to make a profit faster. Additionally, products in high demand are less likely to remain unsold, which reduces inventory holding costs. Here’s why demand estimation for Amazon online arbitrage success is essential: 

Better Informed Buying Decisions

When you analyze a lead to determine its demand, you look at essential metrics such as trends and price history, allowing you to make more informed buying decisions. This way, you can be sure the product will sell quickly, enabling you to maximize your profit margins.

Optimal Inventory Management

Inventory management is crucial to the success of your Amazon business. If you don’t keep track of your products, you will have additional inventory fees and heaps of unsold products, resulting in huge losses because they tie up capital and lead to storage costs. However, if your product is in demand, you can plan inventory levels to ensure you have enough stock to meet customer demands, avoid stockouts, and avoid holding onto unsold inventory.

Competitive Advantage in a Crowded Marketplace

There are millions of active sellers on Amazon, so it’s essential to have a competitive advantage to stay ahead of the game. When estimating product demand, you must analyze historical data and identify trends, which allows you to adjust your sourcing strategies accordingly. This way, you can stay ahead of the competition and increase your chances of making more sales.

Key Indicators to Assess Product Demand on Amazon

There are specific criteria you should look at when trying to assess product demand on Amazon. You can’t know the exact number – which is why it’s called an estimation – but these indicators allow you to make your estimation as close as possible:

Best Sellers Rank (BSR)

Best Sellers Rank is an Amazon metric that ranks products within their specific category based on their sales performance. In the example below, the product is ranked as the 136th best-selling product in Health & Household category: 

Amazon BSR shows how fast the product sells and the demand for it. As an online arbitrage seller, you must ensure your products are sold quickly, so BSR is a good indicator to assess, but it’s a tricky metric. Generally, a low BSR indicates high demand, but this differs from category to category. Expert sellers with a lot of experience selling in a specific category can use BSR as a criterion because they know what the BSR means in that category. 

However, online arbitrage sellers deal with numerous categories, and it isn’t easy to gain enough experience in one of them to use BSR effectively. We recommend focusing on the next metric – estimated monthly sales. 

Estimated Monthly Sales 

This metric estimates how many units of a product get sold each month. Estimated monthly sales are the easiest and fastest way to estimate demand, so most OA sellers use this metric. 

Various tools and software, such as Seller App or AZInsights, can estimate a product’s monthly sales, but each uses a unique formula, so the results might differ. Try to set a specific threshold for yourself. For example, one seller might consider that if the estimated monthly sale of a product is <20, it is not in high demand and, therefore, not profitable enough. Here are the best tools you can use for estimating monthly sales: 

• Viral Launch
• AMZScout
• Unicorn Smasher

We have discussed this metric in detail in another article called “How to estimate monthly sales on Amazon.” If you want to know more, click the article link.

Product Reviews and Ratings

The number of product reviews and ratings shows how well the product is performing in terms of customer satisfaction and popularity. Therefore, it’s a good indicator of how fast-selling and in-demand the product is. 

However, it’s important to note that when a product has a low BSR and a good estimated monthly sale but its review graph is flat, the product must be further assessed to make sure it’s viable. In this case, it’s possible that the product has suddenly experienced high sales, but was not in-demand before or after that. Checking the historical BSR trends can help sellers determine whether a product is consistently selling or experiencing sudden high sales. 

So, the more reviews a product has, the more it’s selling. You can check the review graph for products to see how well they’re doing – if the graph is ascending, it means it’s in demand and can be profitable. If a product has a good BSR but a flat review graph, it’s not selling well, and it’s best to avoid it. 

Historical BSR Trends

Historical BSR (Best Seller Rank) trends can help Amazon sellers estimate product demand by providing insights into the popularity of a product over time. By analyzing the BSR history of a product, sellers can determine whether it has consistent sales or experiences fluctuations in demand.

If a product has a stable BSR trend over time, it indicates consistent demand. This means that the seller can expect to sell a certain number of units per month or quarter, which helps them plan their inventory and pricing strategies accordingly. On the other hand, if a product has an erratic BSR trend with sudden spikes and drops, it may indicate that demand for the product is unpredictable.

If you see a product with a low BSR right now, it’s recommended to check the historical BSR trends to see if it’s always been that way. For example, the graph below shows a product with a low BSR on November 1st. However, its rank increases in the following days, which makes it an unpredictable and risky product. 

BSR Drops

When looking at the sales rank history of a product, you may notice many drops in the graph. Sudden drops in the BSR graphs happen each time the product is sold, and they can be used to estimate demand. As shown in the picture below, every time the graph goes down, the product has made at least one sale. Why “at least” one? because we can’t know the maximum number of sales in each drop for sure – maybe the product simultaneously sold two times in one drop. 

However, note that this method does not work with fast-selling products, because it can’t provide an accurate measurement. So, using BSR drops to estimate demand is usually best for products that have a monthly sale of <20.  

Seasonality and Market Trends

Some products are in high demand during a specific time of the year. Take Halloween costumes or Christmas light decorations, for example. These products are only bought and used during particular seasons, so you can consider the seasonality of the product to estimate its demand.

Incorporating Demand Estimation into Your OA Decision-making Process

As an online arbitrage seller, using product demand estimation in decision-making can be a game-changer. By analyzing product demand, you can make more informed decisions about which products to sell, how much inventory to stock, and when to price products. Here’s how you can incorporate demand estimation into your decision-making process:

Setting Demand Thresholds for OA Opportunities

First, you must set specific thresholds for yourself according to your needs and goals. Some products have very high demand, but the competition – and their in-stock levels – may be so high that it’s not worth the trouble because you’ll end up with unsold inventory. So, try to set a specific demand threshold and keep it in mind when estimating demand and choosing profitable leads.

Another critical thing to remember is to consider other metrics, such as competition, product stability, profit, and ROI when setting the demand threshold. So, you can’t, for example, say, “If this product has a monthly sale of <50, it’s not worth it”. One product may be in low demand but have a stable monthly sale and fair competition. It’s best to consider all these metrics alongside each other and develop a unique formula that you can keep in an Excel or Google Sheets file to refer to when needed.  

Balancing Risk and Reward in Product Selection

Balancing risk and reward when incorporating demand estimation into your decision-making process is crucial. For example, you may choose a risky product with high demand, but ensure it offers enough ROI and profits before purchasing it. Ideally, after deducting all the expenses (including Amazon fees, shipping fees, etc.), you should be left with at least a 10% ROI. However, since you can’t predict every expense that might occur during the selling process, it’s best to consider a 20% ROI as your threshold. Of course, this amount can be more or less than 20% according to your individual needs and the state of your business.

So, when selecting products, you must balance how fast-selling the product is and other risk factors such as profitability. This can be achieved through experience and trying out different strategies. 

Achieving Online Arbitrage Success Through Effective Demand Estimation

By estimating demand, online arbitrage sellers can ensure they buy products that sell quickly. However, as mentioned in this article, you should look at demand alongside other criteria such as competition, ROI, profitability, etc. First, you should set a threshold for each criterion according to your individual needs and goals. From there, you can develop a formula or put all the metrics in an Excel file to measure and check each product according to your specific metrics and thresholds. 

It is also crucial for online arbitrage sellers to continually monitor and adjust their demand estimation strategies to keep up with market changes. By staying ahead of the competition and meeting the needs of their customers, online arbitrage sellers can succeed in this highly competitive market.

Final Thoughts

Demand estimation plays a critical role in the success of online arbitrage sellers. Accurately estimating demand helps sellers determine the potential profitability of a product before investing resources. By understanding the level of demand, you can avoid potential losses, make informed buying decisions, and anticipate market trends. This can help save time, reduce costs, and avoid being left with unsold inventory. Understanding demand can also help forecast inventory levels, make better managerial decisions, and improve overall business operations.