What is Retail Arbitrage on Amazon? [2025 Guide]

What is Retail Arbitrage?

The process of buying products at a low price from any local retail store and reselling them in another marketplace at a higher price is called retail arbitrage. In this way, you will be getting lots of profit from your business. There are many places where you can provide your products, such as Walmart, Home Depot, Target, and Lowe’s.

However, you can find many platforms to sell your products, such as Amazon, Facebook and eBay. Because of the provided features by Amazon, it is the most popular marketplace.

How Does Retail Arbitrage Work?

There is a misunderstanding about retail arbitrage, as people think it is the same as regular retailing when it is not. In traditional retailing, you directly buy your products from the manufacturer, while in retail arbitrage, you purchase your products from other retailers. The major contributor to this business is the difference in the prices. The people who look to make easy money are shifting to Amazon FBA retail arbitrage. In this business model, you purchase products and send them to an Amazon warehouse, then a customer puts an order, and Amazon ships the item to the customer. Here, you can save time and have less stress, which helps you gain profit and save money.

If you have a big or small business, you can use retail arbitrage for your work, as its process is simple and easy to apply. When you come across a sale at any retailer or seller platform while looking to purchase the products, you will buy them without any doubt. Sometimes the retailers put some items on sale because they want to get rid of the old pieces which are called clearance sales. Both forms of sales are helpful to make a profit. You buy the products with a good discount from retailers and resell them at a higher price with a reasonable profit. So you, like many other businesses, can save more and be more lucrative. That’s why people prefer retail arbitrage. This process is the easiest way to reach your goal if you want to become an online retailer.

Is Retail Arbitrage Still Profitable in 2025?

One of Amazon’s business strategies is retail arbitrage which has been successful for years. You might hear that a seller earns a ridiculous return in a short time on his investment. But recently, this business model has been facing various challenges like inability to scale, high competition, and proving the supply chain; Amazon increased pressure rapidly. Many sellers don’t have permission to sell all brands, as Amazon aggressively gates them. This action is convenient for manufacturers because they will face a smaller number of counterfeit products listed. Besides, their profits will significantly increase because of Amazon’s Brand Registry program that gate resellers. This program makes online arbitrage difficult for resellers.

They think arbitration could still be profitable for them in the coming years, or how can they prepare their sourcing list to make money on Amazon?

Many articles guide you on how lucrative this business model can be, but you should consider several different aspects. If you are interested in knowing more about this topic, refer to Is Retail Arbitrage Dead article on OABeans website.

Pros and Cons of Retail Arbitrage

Retail arbitration on Amazon has many benefits. Compared to an unproven private label product, the arbitration method generally offers a more straightforward, faster, and lower-risk option for setting up your trading.

1. It is simple: you don’t need to put as much time and effort into convincing your customers to trust you and buy from you because you sell products from established and known brands.
2. It is quicker: you can start selling and running your business as soon as you purchase the inventory. On the contrary, you need to spend a much longer time selling private label products. Even with the best scenario, you can’t make money nearly as quickly as you could in retail or online arbitrage.
3. It is low-risk: this profitable business model has another perk, which is the possibility to establish your business almost with any budget. You should buy products with a significant profit margin potential. This is what makes your business go well, even with the minimum investment.

On the other hand, you should be aware of the challenges and risks of retail or online arbitrage. The main risk is acquiring inventory to sell, which is the main issue for succeeding in your business. For initial purchasing, you always have some limitations by whatever deals and inventory are available. 

Another problem that can occur in arbitration method is that, especially on Amazon, certain products need permission for reselling, and they are “brand gated.”

The following negative point of arbitration on amazon is that the Return of Investment (ROI) is relatively low because of smaller margins.

How to Get Started with Amazon FBA Retail Arbitrage?

The first step is creating an Amazon seller account. After that, you need to find products to start selling retail arbitrage on Amazon. Be aware of considering the trends and seasonal products. However, you can find various software and tools in the market to help you find products for selling. “Keepa” and “Jungle Scout” are two Chrome extensions that make finding profitable products easier for you. “Amazon seller app” is also another available tool that is free to use with your Amazon seller account.

You can easily download this app on your phone from the app store or google play store, search “Amazon Seller” after downloading, log in to the app with your Amazon seller account, and you are ready to continue. Go for selling. Amazon seller app has various features that it may take some time to get familiar with.

With this app, you can scan all products in different retail stores. When you scan the products with the Amazon seller app, if you are allowed to sell the specific product, it will show you various listings and sales ranks.

Below are some features of the Amazon seller app:

• You can directly list your products
• You can monitor your sales
• It is possible to answer the customer messages
• You can scan barcodes of your products
• You can enter your buying cost to determine your profitability
• You can easily manage orders and returns
• And much more

Besides, it would be best to choose Fulfillment by Amazon (FBA) among possible fulfilling methods. In FBM, you fulfill your products by yourself, and Amazon doesn’t have anything to do with the whole process, while in FBA, Amazon will handle picking, packing, shipping, return, and refunding.

How to Do Retail Arbitrage?

You can follow these steps to start your business with retail arbitrage.

1^st: Going into a retail store and start scanning products or search online on retailors’ websites

2^nd: Going through the search results and choose the correct listing

3^rd: Analyzing the data

4^th: Deciding how many units to buy

5^th: Determine your target (return of investment)ROI/profit margin

In the first step, you can walk into a retail store like Walmart and start scanning the barcodes with your tools like the Amazon seller app. Or you can stay at home and look for the products on the internet conveniently. Secondly, after scanning the products in the store or searching them on the internet, you will have multiple results. It is time to go through them and select the proper listing. Be careful some products have duplicate listings, or you may have restrictions on selling them. Now, you should analyze the data in this step. Sales rank, sellers on the listing, price and gross proceeds, feature, and details sections need to be overviewed. In this step, based on your risk tolerance, you decide how many product units to buy. If you are a newbie to this business model, starting with a few items would be great. The last step is determining your return on investment (ROI). You want the highest ROI. Some sellers prefer making a small ROI, as they sell their product within a month with about 20% ROI, while others expect to make at least 50% ROI.

How to Source Retail Arbitrage Products to Sell on Amazon?

Finding products to sell at a much higher price on Amazon is crucial to success in the Amazon FBA Business. You can source your products in two ways:

• From brick and mortar retail stores
• From online websites

However, by buying random items from different stores, you can’t hope to provide a lower price than Amazon’s price. You may probably know that compared to most retailers, Amazon mostly offers the lowest price. So, get started looking for some products once you are armed with the Amazon seller app or other tools and software.

Some of the best stores for retail or online arbitrage that you can choose from are:

• Walmart
• Target
• Ross
• TJ Maxx

Some of these retailers also have an online website that you can source from them. Also, retailing websites like Alibaba and Aliexpress are well-known for sourcing products.

If you are interested in finding more stores, read the following article Best retail Arbitrage Store.

Best Categories to Do Retail Arbitrage

Besides, some products are well-suited for reselling. You should know that Amazon has gated and ungated categories. If you want to resell the products in gated categories, you need Amazon approval, such as jewelry, music, watches, collectible coins, and so on. In contrast, you can resell the products in ungated categories instantly. The below categories are ungated, and even newbies can start to sell them as they want:

• Health & Beauty Items
• Clearance Items
• Sporting Goods
• Clothing & Shoes
• Home and Kitchan Items
• Toys and Games
• Electronics and Accessories
• Baby Products

Health& Beauty: Sub-$20 items are the best arbitrage contenders. That’s why the available products in the Health&Beauty category are the best choice for profit, discounts, and bulk purchasing.

Clearance Items: The best category for retail arbitration are any items on the clearance rack regardless of store. As part of your retail or online arbitrage sourcing strategy, checking the clearance rack should be one of the first places in the physical store. Having tools and software such as the Amazon Seller app is handy for scanning the products and understanding the potential ROI.

Sporting Goods: It is one of the few categories of products that are non-essential, but they are in high demand.  Sporting equipment is necessary for children, men, women, casual athletes, and weekend warriors. Some equipment is not used literally for physical sport, but it can be for outdoor hobbies such as fishing, hiking, or camping. If you have access to big sales in a large-scale retailer like REI or Bass Pro Shop because of the high variance in the price of sporting goods, you have the potential to turn a very high profit.

Clothing & Shoes: It is recognizable that the most profitable categories are the ones with year-round and consistent demand. One of the fundamental human needs is, of course, clothing. People always buy clothes, even during a recession. What makes shoes & apparel one of the best retail arbitrage is a lower price tag and a constant demand with frequent sales in every large retailer’s clothing section.

Home Items: Among the top candidates for reselling, you can find accessories, home décor, and home maintenance items. They are almost in demand in the market constantly and have a mid to low-range price tag.

Toys: The toys have a constant demand during the year but skyrockets during the holiday season. Arbitrage sellers should have an eye on typical discount patterns, as they can make a good profit from this seasonality, specifically on toys in high demand.

Best Retail Arbitrage Apps

You source your products from physical stores in retail arbitrage, and it needs lots of time and effort. So some apps help you to find discounted products faster.  For getting proper knowledge about identifying your profit, people refer to these scanning apps to track their progress. You can scan the barcode of your product with these apps. The exact amount of selling a product and your profit on it will show you with this scan.

Here we introduce to you the five best apps:

• Amazon Seller App

You can use this app right away as you have already registered as a seller on Amazon with an individual or professional plan. You will access the following information:

• Official Amazon category
• Bestsellers rank
• Product price
• FBA fees
• Total number of sellers
• Approximate profits

• FBA Scan

This app can switch between live search and local database modes when you are ever in a reception/wifi black hole. What makes it standalone is this data/wifi-independent feature. Besides, you have access to general information that other apps offer you, such as:

• Sales ranking
• Type
• Image
• FBA price
• weight

• Profit Bandit

As you have the most current information at your fingertips, you can make the best possible decisions. There is a subscription fee for this app, but it is affordable. Actually, this reasonable cost makes it the best choice for lower volume sellers who have just entered the business.

• Scoutify

In terms of features and quality, it is probably the best scanner app. Also, we want to mention that you should sign up for the whole package. So, because of its cost, it is suitable for sellers with a high monthly sales volume. Besides, for using this app, you will need an Amazon Pro Merchant account. Additionally, it has below benefits:

• It is possible to scan with Bluetooth.
• You can sync the information with third-party apps such as Keepa.
• As you have access to InventoryLab, some tools are available to you, such as reporting, bookkeeping and sourcing tools.
• You can get closer to the final price number because they work in taxes.

• ScanPower

This app provides you with the most accurate live data from Amazon. It has two attractive features:

• It creates 2D barcodes, so even after shipping your products, they are already there.
• If you want to send back the information to your desktop to think about it later, you can do it with this app.

How Much Can You Make Doing Retail Arbitrage?

Generally, retail arbitrage has been highly competitive recently. That’s why it is hard to scale. The amount of money that you as a seller can make depends on many factors. The time and effort that you spend on it have the main rule. Besides, the amount of money you can invest will allow you to buy more inventory.

Consequently, you can sell more. Be aware that there is always the possibility of failure on Amazon FBA retail or online arbitrage. If we only consider the successful sellers, you can have a monthly profit between $100 and $50,000. It would be nice to review this article, as it mentioned some valuable tips on making money with retail arbitrage.

Differences Between Retail Arbitrage and Online Arbitrage

These days, arbitration on Amazon has become very popular and has grown incredibly. In an eCommerce business, the practice of purchasing products from one marketplace that could be online or a store in brick and mortar at a lower price and reselling them on different marketplaces with markup is known as retail arbitrage.

On the other hand, the process of online arbitrage is sellers buying products from an online retailer and reselling them for a reasonable profit in another marketplace.

Here, there is a comparison table to notice the differences and similarities.

 For more info about this topic, follow the online arbitrage vs retail arbitrage article on OABeans website.

Final Thought

Here, the process of retail arbitrage and how it works is explained to you. You learn the difference between retail and online arbitrage. Besides, a guideline is provided to newbies and professionals who want to use this business model. You also can find the pros and cons of this method and understand if it is legal and how it will still be profitable in 2025. Additionally, you will learn how to begin retail arbitration using Amazon FBA and source your inventory. You recognize the categories on Amazon which are profitable and notice how much profit you can gain.

Are there any questions in your mind that we didn’t answer? Comment it for us to give you the answer & if you wanna know more about retail and online arbitrage, follow the OABeans website’s blog.

Retail Arbitrage FAQ