Arbi-what? Arbi-trage! More specifically, arbitrage on Amazon and whether you should be choosing online or retail, if that sort of thing appeals to you. Confused? Let RepricerExpress lead you down the yellow brick road to understanding.

Demystifying What Arbitrage on Amazon is All About

So maybe you just decided to sell random stuff around your home on Amazon — a lot of sellers start off this way, but arbitrage can be a gateway to even greater sales and buzzworthiness. If you want a pretty detailed explanation, click here. But in essence, arbitrage is the practice of really knowing an item’s price inside and out and capitalising on its differences in different markets.

Make sense? No? Okay, let’s look at a real-world example. Right now, the currencies in Canada and the U.S. aren’t the same. If you were to buy a paperback novel in the U.S., you’d pay, oh, let’s say about $5. But if you went north of the border and bought the same one, you could very well pay about $10 for it. Even with the currency disparity, you’d still end up paying more for the Canadian one than the American.

From an arbitrage point of view, you the seller would buy that book in the States (or wherever else it was cheaply sold) for the lower price and turn around and sell it in Canada (or wherever else it sells for higher) for a tidy little profit. And when it comes to arbitrage on Amazon, there are two ways you can go about it: online and retail.

Retail Arbitrage

We’re not going to go into too much detail here because it just doesn’t comprise the bulk of Amazon buying and selling. Retail arbitrage concerns itself with brick-and-mortar shops, whether it’s hawking wares in your yard or running a professional franchise. There are businesses that do sell on Amazon, but as we said, it’s just not the bulk of what goes on on Amazon.

Online Arbitrage

The neat thing about arbitrage is that it can go both ways. If you deal with retail arbitrage, there’s no reason why you can’t source your items online, and vice versa. But when it really comes down to it, we probably like online arbitrage better just because of its sheer reach.

Instead of having to rely on shoppers walking into your store, you can market to people all over the world instantaneously and use so many more tools at your disposal. You can pick up items either in person or online, and then sell them to buyers in different countries at varying prices. The downside with buying items at brick-and-mortar stores is you have to deal with higher overhead costs (which, in turn, jack up prices), but you can also score some pretty awesome deals (i.e. yard sales, clearance sales) and examine items in person instead of going at it blind online.

But if you deal solely with online goods, then hey, you can really make some good money! Looking at sources like Alibaba where you can buy in bulk for super low prices is an awesome idea, especially when you can turn around and re-sell those items at a good profit. Plus, you can hook up with as many retailers as you want, buy as much or as little as you want, buy exactly when you want, and sell when and where you want.

Tips for Using Arbitrage on Amazon

So, Amazon is a very unique animal in that specific conditions apply. We already outlined some of the rules that apply to arbitrage in general, but what about when it happens on Amazon? Here are some things to remember.

  • You’re not reselling because that involves using sources like wholesalers, distributors and manufacturers. Rather, you’re acting like a customer at regular stores and then a business on Amazon so keep in mind Amazon’s selling rules (like their fees) and how to factor in a profit for yourself.
  • You’ll want to be using browser extensions like Keepa and CamelCamelCamel to keep close tabs on an item’s price and rank history so you can capitalise as sharply as possible. Quick tip? Try and avoid items with abnormal or quick spikes in prices because that’ll usually translate to fewer or thinner profit margins on Amazon.
  • Start with arbitrage on Amazon the way you would with lending money: don’t invest anything — at the start, anyway, until you build up familiarity and trust — that you’re not prepared to lose.
  • Focus first on amassing many positive reviews instead of many sales. When you go after great feedback first, the sales will follow (especially when you first start out).
  • Really practice the saying of ‘measure twice, cut once’ principle when it comes to research. The more studying you do, the likelier your chances of success will be.

Final Thoughts

When you’re ready for an extra challenge, selling via arbitrage on Amazon can be a fantastic next step. And whether you want that challenge or not, using RepricerExpress to take a huge chunk of the monotony out of the business of selling is a no-brainer. To make your life easier, hop on the easy train by starting your 15-day trial completely free.

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Related: How to Choose The Right Amazon Business Model