Amazon Retail Arbitrage 2024 Guide

If you like shopping in brick-and-mortar stores and consider selling on Amazon, retail arbitrage is an excellent choice. With this time-tested business model, you can buy products at a low price from retail stores, resell them on Amazon for a higher price, and make money.

In this guide, we'll explore the ins and outs of retail arbitrage on Amazon, show its pros and cons and how it works, and help select profitable retail arbitrage products. 

What Is Amazon Retail Arbitrage?

Amazon retail arbitrage is a business model where sellers source products from various offline retailers and then resell them on Amazon for a profit. 

The profit comes from the difference between the price of the products retail arbitrage seller finds in clearance, liquidation stores, and promotional or discounted offers, and the higher selling price on Amazon. If successful, the seller pockets the difference between the purchase price and the selling price on Amazon, minus any associated costs like shipping and Amazon fees.

Retail arbitrage is an excellent option to start selling and make money on Amazon. However, it is a very time-intensive business because you must travel to the stores physically to find the products to sell.

Despite high competition and moderate profit margins, retail arbitrage is a popular business for sellers. 25% of Amazon sellers do retail arbitrage. This model is popular because it’s easy to start, doesn’t require special skills and the initial investment can be low.  

Pros and Cons of Amazon Retail Arbitrage

Retail arbitrage is the traditional reselling model. It’s easy and inexpensive to start; however, you have to go around brick-and-mortar stores to find a product to resell, which takes a lot of time.

Pros

Quick and easy to set up

Retail arbitrage can be set up quickly and easily. It involves registering an Amazon account, finding discounted products, and listing them for sale.

Low startup cost

Retail arbitrage has a low startup cost. You can start it with $500 or more.

No need for advanced skills

There is no need for specialized knowledge or advanced computer skills, making it an accessible entry-level option.

Low risk with small investment

Retail arbitrage carries a small risk since there is no need to invest much money upfront. Also, you can focus on reselling popular products on Amazon, which have a proven sales history and are less likely to remain unsold.

Cons

Time-intensive business

Retail arbitrage can be a time-consuming business model as you need to visit physical stores to find products to resell. That doubles the time required for product sourcing. Retail arbitrage is hardly a part-time occupation because it requires effort and time to find profitable products, making it difficult to combine with other jobs.

Inventory needs to be restocked physically

You need to restock your inventory by going to physical stores more or less each week. Additionally, there is a risk that you won’t find the product at the same price because the discount is gone.

Finding deals is challenging

Finding profitable retail arbitrage products can be challenging since it relies on luck and takes a considerable amount of time. You must check many products in the retail store to find deals.

Difficult to scale 

Scaling retail arbitrage can be difficult because the quantity of discounted items available in the store is limited hence limited growth opportunities.

How Does Retail Arbitrage Compare to Other Amazon Business Models?

Retail arbitrage is a good option for beginners due to the low barrier to entry. However, it can be time-consuming and has lower profit margins compared to wholesale or private label. Here's a breakdown of how retail arbitrage compares to other popular Amazon business models.

Retail arbitrage vs. online arbitrage

Similarities

Both involve finding lower-priced products and reselling them on Amazon for a profit.

Differences

• Retail arbitrage sources from physical stores, while online arbitrage sources from other online retailers;
• Retail arbitrage requires physical deal hunting, while online arbitrage can be done entirely from home.

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Retail arbitrage vs. dropshipping

Similarities

Both require minimal upfront inventory investment.

Differences

• With retail arbitrage you purchase the inventory upfront and manage fulfillment, while with dropshipping the supplier stores and ships the product directly to the customer;
• Retail arbitrage offers more control over product quality and fulfillment because you physically purchase the product, while with dropshipping there’s low control over product quality shipping.

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Retail arbitrage vs. wholesale

Similarities

Both involve reselling lower-priced products on Amazon.

Differences

• Retail arbitrage typically deals with smaller quantities and relies on finding clearance deals, while wholesale involves buying in bulk due to high Minimum Order Quantities from brands;
• With retail arbitrage, you need small money to start, while wholesale requires a larger upfront investment, and often involves negotiating with distributors or manufacturers.

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Retail arbitrage vs. private label

Similarities

Both involve selling on Amazon.

Differences

• With retail arbitrage, you resell existing brands, while with private label you must develop your own branded products;
• Retail arbitrage requires a small upfront investment and is less risky because you sell existing products, while private label requires significant upfront investment in product development, branding, and marketing, and involves more risk because you sell a new brand.

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How to Do Retail Arbitrage on Amazon?

The key task of Amazon retail arbitrage seller is finding the products in brick-and-mortar stores currently priced lower than their selling price on Amazon. That creates an opportunity for profit.

This task involves two parts. 

First, you must look for cheaper-priced items. You can find them in clearance, and liquidation stores, and look for promotional or discounted offers at local retailers. 

When you find such products, you must ensure these products will be in demand on Amazon, will give you enough profit (Amazon selling price, minus all associated fees and costs), and will not pose any risks (restricted products, generic brands, meltable products, etc.). 

When you identify such items and ensure they bring the profit you want, you can list and sell them on Amazon.

Steps to Amazon retail arbitrage

• Step 1. Set up your Amazon Seller Account

That involves registering and completing the necessary steps to become a seller on Amazon's platform.

• Step 2. Install the barcode scanner app on your mobile

Download any scanner app to scan product barcodes when you go out to the stores. By scanning a barcode you can find the product match on Amazon and compare prices. You can use the free Amazon Seller App tool provided by Amazon for retail arbitrage sellers.

• Step 3. Visit a retail store and scan products

Use a mobile app or dedicated barcode scanner to quickly scan product codes at brick-and-mortar stores. 

• Step 4. Find the matching listing on Amazon

Once you scan a product, Amazon Seller App will offer a list of several listings on Amazon.  Go through the search results and choose the correct listing that corresponds to your product. Make sure the products you find in the store and the products on Amazon are exactly the same.  

• Step 3. Research the product

Analyze the product information, and make sure the products will sell on Amazon, will be profitable, and don’t have any risks. 

To do so, use one of the product sourcing tools like Seller Assistant App. These tools help check the current selling price on Amazon, sales rank and historical sales data assess the product's demand on Amazon, seller competition, product profitability, your eligibility to sell the product, restrictions, product flags and alerts, and estimated sales.

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• Step 5. Purchase the products

If your product research confirms the product is profitable and OK to buy, check the estimated product sales and purchase as many units as you need. Ensure you have enough money to cover the purchase cost.

• Step 6. List your product on Amazon

Add your offer to the existing listing on Amazon. In your Seller Central, go to Inventory > Add a product, enter your product ASIN, specify the product condition, and click “Sell this product.”

• Step 7. Select fulfillment method

To fulfill orders to the customers, you have two options. You can use Fulfillment by Amazon (FBA) where Amazon stores, picks, packs, ships, and provides customer service for your products, or Fulfillment by Merchant (FBM), where you do that yourself.

Consider factors like product size, weight, and profit margins when choosing the best fulfillment option. Use tools like Seller Assistant App’s FBA&FBM Calculator to quickly calculate all fulfillment fees.

• Step 8. Sell the product

Wait until the customer orders from you. When your inventory is low, go out and find more products.

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How to Research Amazon Retail Arbitrage Products?

When you find a product that you think may be viable to sell on Amazon, must do product research using Amazon seller tools. The best option is Seller Assistant App. This product sourcing platform helps you identify products that will be in demand on Amazon and avoid any potential issues when selling them. 

Steps to research Amazon retail arbitrage products

• Step 1. Check your product for private label

Avoid potential legal issues by identifying private label brands (trademarked products). Look for products with more than one FBA seller and no reported intellectual property (IP) complaints.

Seller Assistant App's IP Alert feature displays a red triangle next to products with IP issues and shows the FBA seller count.

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• Step 2. Analyze competition level

Aim for a balanced level of competition by targeting products with 3 to 15 sellers.

Seller Assistant App shows two seller counts: the total number of FBA or FBM sellers (blue background) and the number offering a price within 5% of the Buy Box price (white background).

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• Step 3. Identify and avoid products sold by Amazon

Skip products where Amazon dominates the Buy Box, as it’s difficult to compete.

Seller Assistant App indicates such a product by a red «A» icon on product pages and an orange Amazon icon on search pages.

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• Step 4. Check how old is the listing

Ensure the product has a decent sales history (at least 6 months) and analyze price, sales consistency, and seasonality trends.

A Keepa chart displayed by Seller Assistant App reveals the listing age (when sales began).

• Step 5. Analyze BSR trends

Look for products with consistent sales (low rank) and a positive upward trend in their Best Seller Rank (BSR).

Seller Assistant App provides the average BSR, its trend, and drops over various periods (30, 90, and 180 days). Additionally, it displays estimated monthly product sales based on BSR and category.

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• Step 6. Research Buy Box offers

Look for stable pricing trends and avoid intense competition. Analyze the Buy Box price to determine your potential pricing strategy.

Seller Assistant App displays the Buy Box trend, average price, and minimum FBA and FBM prices. The Buy Box percentage per seller helps identify dominant sellers (who might be difficult to compete with).

• Step 7. Verify product variations

Ensure variations comply with Amazon's rules (e.g., size, color) and identify the best-selling variation.

Seller Assistant App's Variation Viewer reveals all product variation details, including rating share, total ratings, and rating percentage per variation. The one with the highest rating share typically sells the best.

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• Step 8. Look at customer reviews

Aim for products with an average rating of 4-5 stars and minimal negative reviews.

Reviews are available on the separate Keepa chart within Seller Assistant App.

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• Step 9. Check eligibility and restrictions

Ensure you can sell the product on your account, considering product restrictions.

Seller Assistant App uses icons to indicate eligibility: a green open lock means you can sell, while a red closed lock shows you can’t do it.

• Step 10. Identify product alerts

Be mindful of potential issues like oversized, meltable, fragile items or hazardous materials.

Product flags shown by Seller Assistant App

• Red Closed Lock: Restricted product or unauthorized seller;
• Red Box: Oversized product;
• Red Glass: Fragile product;
• Red Drop: Meltable product;
• Hazmat icon: Hazardous materials;
• 18+: Adult product;
• Red Amazon icon: Amazon is the Buy Box seller;
• GB icon: Generic brand.

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• Step 11. Estimate sales potential

Gain insights into your potential sales volume based on current competition.

Seller Assistant App displays estimated sales ("Est") if you become a seller on the listing, helping you see if you can achieve your desired sales volume.

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Step 12. Calculate product profitability

Ensure profitability by aiming for a minimum ROI of 10%.

Seller Assistant App's FBM&FBA profit calculator shows your ROI directly on Amazon product pages in the "ROI" section. Enter the Cost of Goods (COG) and other costs, and you will get the ROI.

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Where to Source Retail Arbitrage Products to Resell on Amazon

Here are some of the best places to look for retail arbitrage products.

Big box stores

These stores, like Walmart, Target, and Costco, often have a wide variety of products at competitive prices. You can find clearance sections, seasonal sales, and coupon deals to score good deals on products you can resell for a profit. Visit your local stores and look for lower-priced products.

Discount stores

These stores, like Dollar General, Family Dollar, and Ross Dress for Less, offer deep discounts on brand-name and generic products. You can find great deals on everyday items, clothing, and home goods.

Department stores

These stores, like Macy's, JCPenney, and Kohl's, often have clearance sales and coupon deals that can help you find profitable products. You can find deals on clothing, accessories, shoes, and home goods.

Thrift stores and consignment shops

These stores sell donated or used items at low prices. You can find unique and vintage items that you can resell for a profit.

Liquidation stores

These stores sell merchandise that is being discontinued or overstocked at a fraction of the retail price. You can find a wide variety of products at liquidation stores, but the selection can vary greatly.

Online marketplaces

While you can't use Amazon products for retail arbitrage and resell them on Amazon, you can look for deals on other online marketplaces like eBay and Facebook Marketplace.

Clearance sections and sales

Many stores offer clearance sections and sales throughout the year. Be sure to check the clearance sections and circulars of your local stores to find deals on products you can resell for a profit.

Online deal websites and apps

There are a number of websites and apps that track deals and coupons. These can be a great way to find deals on products that you can resell for a profit. Some popular options include Slickdeals, Dealnews, and Brainstormer.

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Popular Retail Arbitrage Product Categories for Amazon 

Some product categories are more popular among retail arbitrage sellers than others. You can choose to sell popular products. 

10 top Amazon product categories for retail arbitrage sellers 

1. Beauty & Personal Care (37% of sellers);
2. Clothing, Shoes & Jewelry: (34% of sellers);
3. Home & Kitchen: (31% of sellers);
4. Arts, Crafts & Sewing: (29% of sellers);
5. Toys & Games: (27% of sellers);
6. Electronics: (25% of sellers);
7. Grocery & Gourmet Food: (25% of sellers);
8. Books: (23% of sellers);
9. Health, Household & Baby Care: (22% of sellers);
10. Office Products: (21% of sellers).

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FAQ

Is Amazon retail arbitrage worth it?

Amazon retail arbitrage can be profitable if done correctly and with the right strategies. However, it requires a lot of time, effort, and knowledge to be successful.

How to start Amazon retail arbitrage?

To start Amazon retail arbitrage, you need to identify profitable products, source them from retail stores, and list them on Amazon. You manage and timely restock inventory, and handle customer returns.

Can you do retail arbitrage on Amazon?

Yes, you can do retail arbitrage on Amazon by sourcing products from retail stores and reselling them on the platform. However, you need to follow certain guidelines and best practices to ensure success and avoid issues with Amazon policies.

Does Amazon allow retail arbitrage?

Yes, Amazon allows retail arbitrage as long as sellers follow its policies and guidelines. Make sure to review Amazon seller agreement and Terms of Service and follow Amazon’s rules.

How to get ungated on Amazon retail arbitrage?

To get ungated on Amazon retail arbitrage, you need to request Amazon’s approval to sell in the gated category. You may be asked to provide specific documents, like proof of authenticity and permission to sell certain brands and categories. This can include invoices, receipts, and authorization letters from suppliers.

Final Thoughts

In conclusion, retail arbitrage is a perfect option for those who are fond of shopping in offline stores and want to start selling on Amazon. You must find products that will potentially sell on Amazon and do product research to ensure they will bring you profit.

To do it in a fast and effective way, use product sourcing tools like Seller Assistant App. This ultimate product sourcing platform helps find profitable products for Amazon. 

With its advanced features such as Side Panel View, FBM&FBA Profit Calculator, Quick View, ASIN Grabber, IP Alert, Restrictions Checker, and other product research functionalities, you can automate product data collection. That lets you get essential insights into product profitability, competition, demand, and other vital product information. By leveraging these data, you can select high-margin items for your store.