Amazon Private Label vs Online Arbitrage – What is the difference?

Thinking about selling on Amazon but unsure which path to take? Private label and online arbitrage are two of the most popular business models, but they work in very different ways. 

Private label is about building your own brand, controlling your product line, and scaling for long-term growth. Online arbitrage, on the other hand, focuses on reselling existing branded products for quick profits.

So, which one is right for you? In this guide, we’ll break down the key differences, pros and cons, and help you decide which strategy aligns best with your goals as an Amazon seller.

What Is Amazon Online Arbitrage?

Amazon Online Arbitrage is a retail reselling strategy where sellers buy discounted or underpriced products from online retailers and resell them at a higher price on Amazon for a profit. The key advantage is that sellers don’t need to create their own brand or manufacture products – they simply leverage price differences across online offers.

Online arbitrage is a great beginner-friendly model because it doesn’t require product development, bulk orders from manufacturers, or marketing investments – just smart sourcing and listing.

How it works

A seller sources products from websites like Walmart, Target, or Best Buy, does product research to check how well the product sells, its profitability, and risks using tools like Seller Assistant, purchases inventory, and then lists the products on Amazon’s marketplace. Once sold, Amazon handles storage, shipping, and customer service through FBA (Fulfillment by Amazon) if the seller opts in.

How it differs from private label

Unlike private label, where sellers create their own branded products and invest in long-term brand building, online arbitrage allows sellers to resell existing branded products for fast returns with minimal upfront costs and risk. 

What you need to start

• Minimal capital

As little as $500 for initial inventory purchases

• Seller account on Amazon

Professional plan recommended for scaling

• Product sourcing tools

Seller Assistant, Keepa

• Shipping and prep strategy

Decide between self-fulfilling orders or using Amazon FBA

• Basic understanding of costs and profits

Cost of Goods, Amazon fees and profit margins to ensure profitability.

Example

Imagine you find a LEGO set on sale at an online retailer for $30.

• You buy 10 units for $30 each, spending $300.
• You list the LEGO set on Amazon for $55.
• If all 10 units sell, you make $550.

Profit calculation

$550 − $300 = $250 (before Amazon fees and other costs).

Note. Seller Assistant is a comprehensive product-sourcing software that helps Amazon sellers quickly find high-profit deals. It combines three extensions: Seller Assistant Browser Extension, and IP-Alert Chrome Extension by Seller Assistant, and VPN by Seller Assistant, Amazon seller tools: Price List Analyzer, Brand Analyzer, Seller Spy, Bulk Restrictions Checker, and API integrations, and features: Side Panel View,  FBM&FBA Profit Calculator, Quick View, ASIN Grabber, UPC/EAN to ASIN converter, Stock Checker, IP Alert, and Restrictions Checker.

Seller Assistant shows all essential product data on Amazon search, product, and inventory pages, and on any website to help you find high-margin deals. By using this FBA and FBM product sourcing software, you can easily identify products that have the potential to be sold well on Amazon.

What Is Private Label?

Private label is a business model where sellers create and sell their own branded products on Amazon. Instead of reselling existing products, they work with manufacturers (often overseas) to produce items under their own brand name, giving them full control over pricing, marketing, and branding.

How it works

A seller identifies a profitable product niche, works with a supplier (typically from Alibaba or similar platforms) to customize the product and packaging, registers their brand through Amazon Brand Registry, and launches it on Amazon with unique branding and marketing efforts. Successful private label sellers often use Amazon FBA for storage and fulfillment.

How it differs from online arbitrage

Unlike online arbitrage, which focuses on flipping existing branded products for quick profits, private label is about building a long-term brand with sustainable growth potential. It requires more upfront investment but offers higher profit margins and full control over the business.

What you need to start

• Initial capital 

$2,000–$5,000+ for product sourcing, branding, and marketing

• Market research

To find the right product with demand and low competition

• Brand registration

Recommended for protection and access to brand benefits

• Product customization

Working with manufacturers to create a unique product

• Marketing and launch strategy

Including Amazon PPC ads and SEO-optimized listings.

Example

Imagine you create a custom bamboo cutting board with engraved measurement markings and sell it under your own brand on Amazon.

• You source 500 units from a manufacturer at $8 per unit, spending $4,000.
• You register your brand and design custom packaging for $500.
• You list the cutting board on Amazon for $30 per unit.
• If you sell all 500 units, your total revenue is $15,000.

Profit calculation

$15,000 − ($4,000 product cost + $500 branding) = $10,500 (before Amazon fees, ads, and other costs).

Amazon Online Arbitrage vs. Private Label: Key Differences

Both online arbitrage and private label are popular Amazon selling models, but they work in very different ways. Online arbitrage is a fast, low-risk way to resell existing products, while private label is about building a long-term brand. Below, we’ll compare the key differences between these two strategies to help you decide which one fits your business goals.

Investment and startup costs

Online arbitrage

Online arbitrage requires low startup capital, often between $500–$1,000, making it accessible for beginners. Sellers buy discounted or cheaper-priced products in small quantities and resell them for quick profits.

Private label

Private label requires a larger investment, usually $2,000–$5,000+, to manufacture and brand a unique product. Costs include product sourcing, custom packaging, brand registration, and marketing.

Product sourcing and control

Online arbitrage

Online arbitrage sellers buy products from online retailers like KaTom or Target and resell them on Amazon. They have no control over branding, packaging, or product quality.

Private label

Private label sellers work with manufacturers (often from Alibaba) to produce unique products under their own brand. They have full control over design, packaging, pricing, and marketing.

Profit margins and scalability

Online arbitrage

Online arbitrage offers quick but lower profit margins, typically around 10–30% per product, as sellers compete with others listing the same items. Growth is limited because sellers rely on finding discounted products.

Private label

Private label offers higher profit margins, often 30–50%, since sellers set their own prices, but you need to invest essential money upfront. It has greater scalability because successful brands can expand their product lines and build customer loyalty.

Time and effort required

Online arbitrage

Online arbitrage is easier to start and requires less time, as sellers focus on finding deals and listing existing products. There’s no need for product development or branding.

Private label

Private label takes more time and effort, as sellers must research products, negotiate with manufacturers, create branding, and market their listings. However, once established, it requires less daily work.

Risk level

Online arbitrage

Online arbitrage is low-risk since sellers can start small and test different products with minimal upfront investment. If one product doesn’t sell well, they can quickly pivot.

Private label

Private label is higher risk, as sellers must invest in bulk inventory and branding before knowing if the product will succeed. If a product fails, it can result in significant financial loss.

Long-term potential

Online arbitrage

Online arbitrage is best for short-term income, offering a simple way to make profits without long-term brand building. However, competition and supply fluctuations can limit growth.

Private label

Private label is ideal for long-term success, as sellers create their own brand that can grow over time. A strong brand can lead to repeat customers, higher margins, and even an exit strategy to sell the business.

Example of private label vs. online arbitrage

Online arbitrage example

Imagine you find a Nike backpack on sale at an online retailer for $25.

• You buy 10 units for $25 each, spending $250.
• You list the backpack on Amazon for $50.
• If all 10 units sell, you make $500.

Profit calculation

$500 − $250 = $250 (before Amazon fees and other costs).

Private label example

Imagine you design and sell your own custom travel backpack under your own brand.

• You source 500 units from a manufacturer at $15 per unit, spending $7,500.
• You register your brand and create custom packaging for $500.
• You list the backpack on Amazon for $60 per unit.
• If all 500 units sell, your total revenue is $30,000.

Profit calculation

$30,000 − ($7,500 product cost + $500 branding) = $22,000 (before Amazon fees, ads, and other costs).

Pros and Cons of Private Label and Online Arbitrage

Both private label and online arbitrage have their advantages and challenges. Below, we break down the pros and cons of each business model to help you choose the best fit for your goals.

Pros and cons of online arbitrage

Pros and cons of private label

What Is More Risky - Private Label or Online Arbitrage?

Private label is riskier than online arbitrage due to its higher upfront investment, longer launch process, and dependence on branding and marketing success. Online arbitrage carries lower risks since sellers can start small, pivot quickly, and avoid major financial losses.

If you’re looking for a low-risk, flexible way to start selling on Amazon, online arbitrage is the better option. However, if you’re willing to take on more risk for long-term brand growth and higher profit potential, private label might be the right choice. 

Why private label is more risky

• Higher upfront investment

Requires $2,000–$5,000+ for inventory, branding, and marketing.

• Longer time to see profits

Manufacturing, branding, and launching a product can take months before sales begin.

• Market uncertainty

A private label product might fail if there’s low demand, strong competition, or poor customer reviews.

• Risk of unsold inventory

If a product doesn’t sell, sellers may be left with hundreds or thousands of unsold units.

Why online arbitrage is less risky

• Lower upfront costs

You can start with as little as $500, minimizing financial exposure.

• Quick turnaround

You can test different products quickly and adjust based on what sells.

• No need for branding or marketing

Sellers rely on existing brand demand rather than building a new product from scratch.

• Easier to pivot

If one product doesn’t sell well, you can quickly shift to another without significant losses.

What to Sell with Online Arbitrage?

Finding profitable products is the key to success in online arbitrage. Sellers use different sourcing strategies, each offering unique advantages. Below, we explore the most effective methods for finding products, along with tips on how to research them properly.

Strategy 1. Find deals manually

What it is

This method involves personally searching for products with a significant price gap between a supplier’s lower price and Amazon’s higher selling price. It’s ideal for sellers who prefer a hands-on approach to selecting products but can be time-consuming.

What is achieved

By manually picking products, sellers gain better control over their inventory while learning valuable market trends. This approach allows for low-risk decision-making, ensuring only profitable products are chosen.

How it works

Sellers explore retailer websites, comparing prices with Amazon listings. Tools like Seller Assistant Extension's streamline this process by displaying essential product data directly on Amazon, supplier websites, and competitor storefronts. This helps sellers quickly evaluate a product’s resale potential, profitability, and any associated risks.

How to research effectively

• Instantly access product insights like sales trends, competition levels, and Buy Box probability.
• Compare supplier prices with Amazon selling prices using Side Panel View.
• Identify profitable listings quickly with Quick View
• Detect high-risk products and brands with IP Alert.
• Accurately calculate profit margins with the FBM&FBA Profit Calculator.
• Check VAT and tax obligations with the VAT Calculator (for sellers who sell overseas).
• Verify selling eligibility and check for product restrictions with the Restriction Checker.
• Receive alerts for hazmat items, fragile products, Amazon competition, and other risks.
• Forecast sales and revenue using the Sales Estimator.
• Track inventory levels of competing sellers with the Stock Checker.
• Evaluate product variations and best-selling options with the Variation Viewer, which displays sales distribution and rating shares across different variations.
• Monitor pricing strategies with the Offers feature.
• Export research data directly to Google Sheets.
• Find supplier sources quickly with Lookup Links.
• Review historical pricing and sales trends using Keepa charts.

Who is it good for?

• Beginners who want to develop product research skills.
• Sellers who prefer full control over sourcing and don’t mind spending extra time analyzing products.

Read more

Strategy 2. Use automated supplier list scanning

What it is

This strategy relies on automation tools to scan parsed supplier product lists in bulk. It’s perfect for sellers who manage large inventories and need to analyze thousands of products efficiently.

What is achieved

Sellers can save time by automatically filtering for high-margin, low-risk products. The method also helps reduce sourcing mistakes by flagging restricted items, pricing errors, and high-competition listings.

How it works

Sellers parse supplier websites with all their products. Then upload supplier price lists to the Seller Assistant's Price List Analyzer. The tool automatically matches products to Amazon listings, and shows various product metrics like BSR, competition, calculates profitability, and highlights risks like gated products, low ROI, hazardous materials, etc. Sellers can customize filters to refine results.

How to research effectively

• Check Best Sellers Rank (BSR) to verify product demand.
• Avoid listings with more than 15 competing sellers or those dominated by Amazon.
• Analyze who controls the Buy Box to determine competition strength.
• Ensure return on investment (ROI) and profit margins align with business goals.
• Verify selling restrictions, IP complaints, Amazon policy violations, product alerts and flags.

Who is it good for?

• Online arbitrage sellers managing bulk product sourcing.
• Sellers who want to save time and automate product research.

Read more

Strategy 3. Research competitors to sell what they sell

What it is

This method involves analyzing successful Amazon sellers to discover what products they are offering. By studying competitor inventory, sellers can identify proven, high-demand products without relying on guesswork and sell the same.

What is achieved

By tracking competitor top-performing products and brands, sellers can increase their chances of success by offering similar or identical items. This strategy minimizes risk by focusing on what’s already selling well.

How it works

Sellers use Seller Assistant’s Seller Spy to automatically monitor competitor storefronts. The tool reveals which products competitors sell, what they recently added or removed, and their pricing strategies.

How to research effectively

• Monitor new product additions to stay ahead of market trends.
• Track which products competitors stop selling to avoid slow-moving inventory.
• Analyze customer reviews and seller feedback.
• Keep an eye on competitor pricing strategies to optimize your own pricing and profits.

Who is it good for?

• Online arbitrage sellers looking for high-demand, proven products.
• Sellers who want to reduce risk by leveraging competitor research.

Read more

Strategy 4. Hire a virtual assistant

What it is

A virtual assistant (VA) is a person hired to find profitable product deals on behalf of a seller. This strategy helps outsource the time-consuming process of deal searching, allowing sellers to focus on scaling their business.

What is achieved

By hiring a VA, sellers can save hours of manual research while increasing efficiency. This approach is ideal for those who want to scale up their sourcing efforts without personally handling every deal search.

How it works

Sellers can hire a VA from platforms like Fiverr or specialized Amazon VA services. You can use Virtual Assistant Account  feature with built-in VPN access to securely conduct research without accessing the seller’s Amazon account directly.

How to research effectively

• Provide clear sourcing guidelines on pricing, ROI, and product categories.
• Set performance expectations to ensure high-quality leads.
• Use Seller Assistant to verify the VA’s product recommendations.

Who is it good for?

• Sellers looking to outsource product research and free up their time.
• Busy sellers who want to scale their online arbitrage business efficiently.

Read more

FAQ

Which is better for beginners, private label or online arbitrage?

Online arbitrage is better for beginners because it requires less upfront investment and allows sellers to start with as little as $500–$1000. Private label requires more capital, branding, and marketing, making it a better option for long-term sellers who are ready to invest in product development.

How much money do I need to start private label vs. online arbitrage?

Online arbitrage can be started with $500–$1000, as you are only buying and reselling existing products in small quantities. Private label typically requires $2,000–$5,000+ to cover manufacturing, branding, and marketing costs.

Which business model is more profitable, private label or online arbitrage?

Private label has higher profit potential because you control pricing and branding, often achieving 30–50%+ profit margins. Online arbitrage offers quicker but lower profits (10–30% per item) since sellers compete on existing listings with other resellers.

Can I do both private label and online arbitrage at the same time?

Yes, many Amazon sellers start with online arbitrage to gain experience and generate cash flow before transitioning to private label for long-term brand building. Managing both can be beneficial but requires good time management and strategy.

What are the biggest risks of private label vs. online arbitrage?

Private label carries higher risks because of the upfront investment in bulk inventory, branding, and product development, which may not sell as expected. Online arbitrage has lower risks, but sellers must watch for brand restrictions, price fluctuations, and Amazon competition.

Final Thoughts

Both private label and online arbitrage offer great opportunities for Amazon sellers, but they cater to different business goals. Online arbitrage is a low-risk, beginner-friendly model that allows sellers to start with minimal investment and earn quick profits by reselling existing products. In contrast, private label is a long-term strategy focused on brand-building, higher profit margins, and full control over the product line, but it requires a larger upfront investment and more effort.

If you're looking for a fast, low-risk way to start selling on Amazon, online arbitrage is the best option. Product sourcing software like Seller Assistant makes it even easier by helping sellers analyze product profitability, check restrictions, and identify the best deals – all in one place.

Seller Assistant is an all-in-one product sourcing software offering all the features vital for product sourcing. It combines three extensions: Seller Assistant Extension, IP Alert, and VPN by Seller Assistant, tools: Price List Analyzer, Seller Spy, Bulk Restrictions Checker, and API integrations, and features: Side Panel View, FBM&FBA Profit Calculator, Quick View, ASIN Grabber, UPC/EAN to ASIN converter, Stock Checker, and other features that help quickly find high-profit deals. Seller Assistant also offers integration with Zapier allowing to create custom product sourcing workflows.