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What is Online Arbitrage and How it Works? [Updated 2021]

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If you are looking for online arbitrage strategies that actually work in 2020, you’re in the right place. Online Arbitrage refers to the act of buying products from websites and then selling those same products through other online marketplaces for a profit. The most reliable sources of products are from the websites of large retailers that you are likely already making purchases from: Walmart, Home Depot, Target, among others.
what is online arbitrage and how it works

Table of Contents

What is Online Arbitrage?

Online arbitrage is something you can do from just about anywhere, so long as you have internet access.

Online arbitrage is the act of buying items from online retailers (like Walmart or Target) and then selling them via a different marketplace like (Amazon or eBay) for a profit.

Items purchased in this manner are generally acquired on sale, offering a significant discount compared to the retail price.

Items that are purchased via online arbitrage can be sold on a variety of marketplaces. These marketplaces include Amazon, eBay, Jet, Walmart.com, Etsy, Craigslist, Facebook Marketplace, OfferUp, Let Go, and many others.

In my experience, Amazon is the best marketplace to sell on when first getting started, so this post will focus on selling the items on Amazon.

So, in a nutshell, online arbitrage means buying low from an online retailer and selling high online.

How Does Online Arbitrage Earn You a Profit?

Online Arbitrage makes you money when you buy items at a significantly lower price compared to what you will sell them for on a different marketplace. But don’t forget — you need to account for marketplace fees and shipping costs.

For example, let’s say you can buy an item for $19 from Walmart’s website, and it’s selling for $44.99 on Amazon. After all of the fees and shipping costs, Amazon will pay you $34 after a customer buys your item. In this example, you would make a profit of $15 on your initial $19 investment.

Essentially, this is how online arbitrage can earn you money on Amazon. Below, you’ll learn more about how to get started with online arbitrage. Most importantly, you’ll learn how to source products and be profitable.

How to Get Started with Online Arbitrage Sourcing?

The first step in getting started with online arbitrage is setting up an Amazon seller account. This is the account you’ll need to sell items on the platform.

When you are signing up for your account, I recommend using an “individual” seller account.

This account type has no monthly fees and is perfect for new sellers on Amazon. You can sign up here. Be sure to scroll part way down the page and click the link about becoming an “individual seller”

Next, you will be required to fill out some forms to get your account setup. It should take less than 10 minutes to complete the application. For most people, you will be approved right away, but it’s possible Amazon will have to review your application. Once your account is approved you will be able to get started selling on Amazon.

Your new seller account will provide you details on your eligibility to sell a variety of different products, and will be an important part of deciding what to buy, which we’ll cover later in this post.

Read More: 10 Tips for Getting Started Online Arbitrage

What Tools Do I Need for Online Arbitrage?

The only things that you must have to do online arbitrage are an Amazon seller account, a computer, access to the internet, and some money to spend on inventory. There are a lot of other tools and things that are helpful, but to get started you don’t need much.

With many business opportunities, you need a huge amount of upfront capital, but online arbitrage is not one of them. Ideally, I recommend starting with at least $200, but you can get started with whatever you have available. You just need to be able to buy a few items to sell to get started.

Most of these are not required to get started but will make the process easier, and I’d recommend considering them as soon as you have the money. We’ll discuss how to actually use the tools later in other articles.

If you buy Online Arbitrage leads from a company like OABeans, you don’t need much to do with different software because we already took care of many things that you should check before purchasing a product. However, its appropriate to install some extensions like Revseller on your browser.

Online Arbitrage Sourcing List (Pinto): Subscribe Now!

Online arbitrage leads by OABeans

What is Revseller?

It is a Google Chrome extension that will show you some very helpful information about any product you are looking at on Amazon. It displays the information directly on the page when you are looking at items on Amazon. For categories with a lot of variations, it’s especially helpful.

How to Determine Which Items to Buy Via Online Arbitrage to Sell on Amazon

There are 3 main factors that you will want to evaluate for any item you are considering selling on Amazon. The 3 factors are:

  • Your eligibility to sell the item on Amazon,
  • How long it will take to sell the item,
  • How much profit you will make from selling the item

At OABeans we take care of the second and third one so you don’t have to be worry about them. But you need to check your eligibility to sell the item on Amazon by yourself.

Read More: How to Get Ungated On Amazon

 How to Determine if you are eligible to sell an item on Amazon?

Especially as a new seller, I recommend that you check to make sure you are eligible to sell the item you are looking at on Amazon. Certain categories such as clothing, shoes, grocery, and beauty are typically unavailable without approval. While categories like toys, books, home improvement, home, and electronics are available to brand new sellers.

You will also be restricted on certain brand names. Some examples that you are likely to be restricted on right away include Nike, Bose, and Lego. There will be others, but some big-name brands, and brands that have a higher than normal risk of counterfeiting, you will not be eligible to sell.

There will still be many more items that you are able to sell, and I recommend that you focus on them when getting started. To make sure you are eligible to sell an item, you will need to login to your Amazon Seller Account. Then hover over the inventory tab, then click “add a product.” Then you will be brought to this screen:

list a new product on Amazon screenshot

Enter in a search term in the above box. Then click search. In this example, I’m searching for “Bose”:

listing limitations on Amazon screenshot

You can see that it says “listing limitations apply” and that I am not eligible to sell this particular product in any condition. In this case I would not purchase this product to sell on Amazon, as I’m not eligible to sell it.

If you are eligible to sell the product, it will look like this:

eligible status on Amazon seller central panel screenshot

In this example you can see that there is the yellow “sell yours” button. This means that you are eligible to sell this item on Amazon.

On the items you are not eligible to sell, you have 3 main options:

  • Do not buy the item.
  • Go through the approval process so you can buy the item.
  • Buy the item to sell somewhere besides Amazon.

In order to be efficient when first getting started, I typically recommend option #1 or #3. As you gain more experience and know that selling online is something you want to take seriously, then it’s worth going through the approval process (option #2) on a good portion of the items you come across that you aren’t eligible to sell.

Source: https://onlinesellingexperiment.com/online-arbitrage/

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