- Thomas
- March 9, 2023
In this article, we’ll be discussing the different opportunities that one can find in online arbitrage on Amazon.
Some may be familiar with what online arbitrage is, for those who are out of the loop, Amazon provides multiple avenues for creating income for existing Amazon sellers, but also for the hopefuls that wish the take the opportunity given by this marketplace. If you have the same question; can you make money with arbitrage? Read on.
Topic Rundown:
- What is online arbitrage?
- Where should you begin to look for arbitrage deals online?
- Advantages and disadvantages of online arbitrage
- What Amazon features and tools can help you with your business?
- What specific categories can you enter on Amazon?
- Guide to sourcing for online arbitrage beginners
- Top Tips
What is online arbitrage?
Online arbitrage (OA) is the process by which arbitrageurs search for market inefficiencies and take advantage of them to create a profit by buying products at a lower price and then reselling said products to a different market for a higher price. You can view it as buying from a certain online retailer and then re-selling them on a different e-commerce platform, such as Amazon.
If you’re looking to start a business in online arbitrage, you’ll have to know how to start. Every process starts somewhere and arbitration starts with sourcing. Sourcing is the process of finding products that are sold for cheap prices, which you can re-sell and turn a profit from. When you find products that you want to sell, those are called arbitrage deals or arbitrage leads. You have to familiarize yourself with these terms. If you want to sell on Amazon, you’ll encounter these terms several times.
Where should you begin to look for arbitrage deals online?
There are multiple websites and platforms that you can choose from, you don’t have to limit yourself to one source. You just need to make sure that the business model is legal on the specific platforms that you wish to conduct your business.
There are two specific types of sources that you’ll encounter when sourcing, those are retail sources and brand sources. There is a distinction between the two, which you’ll have to be aware of when conducting business with each. Brand sources sell products that are made specifically by their brand for their specific niche or niches. Retail websites may sell a far larger selection of products sourced from multiple brands, it feels like an online grocery store. Realizing your specific goals and needs will help you select the type of source that your company needs to flourish.
Advantages and Disadvantages of online arbitrage
Advantages
You are your own boss
One of the primary advantages of creating your own online arbitration business is that you are your boss, and you’ll lead and pave your path. You create and control your own business and time, and conduct deals and sales on terms that you agree upon.
Less direct costs
You will find that if you buy products online, they already come with their own packaging. Buying from a brand that creates their own products and services, which more often than not, have their own packaging which you can use when you re-sell the product for a profit.
The limit on work and efficacy only relies on you
You are the owner of the business. You control the inventory and the products that you wish to sell. For one, you can keep buying the stock that you find is profitable for your business, with the only limit being the amount of money you’re willing to spend for your business.
Because you create your own time and schedule, you can work for as long as you want on your business. If you wish to put in the time and hard work into your business, then you will feel the effects throughout. Unlike in any other job where you have to serve under an employer or a manager, you can put in your efforts and also reap the benefits.
Knowledge and skill are rewarded
If you’re already knowledgeable about the market and also have experience with this type of business model, you will find that it will be easier for you to start an online arbitrage business compared to online sellers with little to no experience or background knowledge.
Disadvantages
You are your own boss
If you are lazy and don’t have discipline in running your business, there isn’t anyone to blame for your business’ demise but yourself and your actions. Unlike in a different profession where you have someone that will lead you down the right path.
You are the limit for how the business grows
As you will be the first employee and also the boss, you’ll run almost everything by yourself, pay for it using your own money, and if a business decision fails, you will lose your money. Which can prove to be detrimental to any business and can deter people from entrepreneurship.
You have to be knowledgeable about the market
You have to be aware of trends in the market; you have to know about niches and which would be profitable for your business to enter. This knowledge can be learned, but some may think that the time it would take them to learn the market could be used for other endeavors.
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What Amazon features and tools can help you with your business?
Amazon FBA Calculator
Using the FBA calculator can help an Amazon seller understand the profit a product can make. You can use the tool to help analyze the maximum profit potential of a product by adjusting the pricing points, costs of products, and shipping costs, which can help you calculate the optimal price range for your product.
FBAmultitool
This tool is used in Fast Track FBA, a chrome extension that has the amazing ability to analyze all your Amazon deals. Though you do have to pay to be able to use the benefits brought by this tool, it will surely be worth the amount and more.
What specific categories can you enter on Amazon?
Beauty and Personal Care
There is no better time to dive into reselling beauty and personal care products than now. The effects of the pandemic on people and their skin have urged people to start developing skin and personal care routines.
Clothes
There is no lack of customers found who don’t need clothes inside the market. There will always be customers and consumers who will buy the clothes that you resell, though there is a multitude of competitors, it is a wide market with a lot of variety and sub-niches you can explore.
Shoes
Choosing to buy and resell shoes has lower risks compared to other niches such as electronics. You can buy a few sets of shoes using the money to buy a single piece of electronics which you can then resell for higher. Though you will have to obtain permission to sell from the brand owner.
Sports
Depending on the country you wish to be your main demographic, you can choose to sell sports attire and paraphernalia based on which sports are most popular.
Books
Choosing to buy books at a cheaper price from a store and reselling them in a different market is a quick and easy way to create an income because it is easier to browse through a store to find books to sell rather than searching the market for a specific niche of items that you want to explore
Electronics
These are the cornerstone of today’s society. There is almost always an electronic in any household. It is the most popular category in e-commerce in general. Though it may seem that selling electronics is highly competitive, there is still a great demand for them.
Guide to sourcing for online arbitrage beginners
Not everyone will have the ample knowledge needed to start an online arbitrage business from the get-go but don’t worry aspiring Amazon sellers, we can help with that. Arbitrage with the proper mastery and skills is a great way to create profit.
For the complete guide on how to source your products to resell and find them on Amazon FBA, you can watch this video we create.
Top Tips
Take advantage of Cash Back sites
What are cashback sites? Cash back refers to a credit card benefit that refunds the cardholder’s account a small percentage that depends on the sum of the products that they’ve bought.
You can read our previous article about How to get Cash Back Amazon for your Online Arbitrage Business to learn more.
Hire a Virtual Assistant
There is nothing wrong with hiring people who know a lot more about a specific task than you to do the job for you. Having a virtual assistant that can do the sourcing for you will eventually pay for themselves and be more cost-effective in the long run.
Cast a wide net
When you first enter the online arbitrage market, there’s an old saying that goes “Never put all your eggs into one basket”, the same goes for this. Don’t put all your money into one product. That product may fail for a reason unbeknownst to you. It is better to buy more diverse products and lower the quantity.
Hard work pays off
Continuing the same work ethic you had on the launch of your business or slowly improving on that work ethic will greatly benefit you. There is no room for laziness when it comes to running your business. You’re the boss of the business, and you’ll have to take the bull by its horns and lead the business to a prosperous future.
Start your online arbitrage business now and earn money from the comfort of your own home
Online arbitrage is one of the most popular and convenient forms of business. It can help you create your own schedules and time frames, allowing you to spend your time efficiently and effectively. Knowing the proper tools, knowledge, and considerations, you need to thrive in the market.
To know more about online arbitrage, you can check our previous article that talked about how to make money on Amazon with online arbitrage to know more.
There is a large community of Amazon sellers already making money on the platform today. Come and join them.
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