{"id":11021939,"date":"2021-05-20T01:07:29","date_gmt":"2021-05-20T05:07:29","guid":{"rendered":"https:\/\/www.ecommerceceo.com\/?page_id=11021939"},"modified":"2023-08-23T15:51:50","modified_gmt":"2023-08-23T19:51:50","slug":"retail-arbitrage","status":"publish","type":"page","link":"https:\/\/www.ecommerceceo.com\/learn\/retail-arbitrage\/","title":{"rendered":"Retail Arbitrage For Beginners"},"content":{"rendered":"<h2 class=\"wp-block-heading\">What is Retail Arbitrage? A Simple Definition<\/h2>\n\n\n\n<p>Retail arbitrage is an <a href=\"https:\/\/www.ecommerceceo.com\/types-of-ecommerce-business-models\/\" data-lasso-id=\"319\">ecommerce business model<\/a>. You purchase products from retail stores, then list them for sale on Amazon and other online marketplaces at a higher price.<\/p>\n\n\n<style>.kb-table-of-content-nav.kb-table-of-content-id11021939_37e38a-91 .kb-table-of-content-wrap{padding-top:var(--global-kb-spacing-sm, 1.5rem);padding-right:var(--global-kb-spacing-sm, 1.5rem);padding-bottom:var(--global-kb-spacing-sm, 1.5rem);padding-left:var(--global-kb-spacing-sm, 1.5rem);background-color:var(--mission-blue);}.kb-table-of-content-nav.kb-table-of-content-id11021939_37e38a-91 .kb-table-of-contents-title-wrap{padding-top:0px;padding-right:0px;padding-bottom:0px;padding-left:0px;}.kb-table-of-content-nav.kb-table-of-content-id11021939_37e38a-91 .kb-table-of-contents-title-wrap{color:var(--base-3);}.kb-table-of-content-nav.kb-table-of-content-id11021939_37e38a-91 .kb-table-of-contents-title{color:var(--base-3);font-weight:regular;font-style:normal;}.kb-table-of-content-nav.kb-table-of-content-id11021939_37e38a-91 .kb-table-of-content-wrap .kb-table-of-content-list{color:var(--base-3);font-size:var(--global-kb-font-size-sm, 0.9rem);font-weight:regular;font-style:normal;margin-top:var(--global-kb-spacing-sm, 1.5rem);margin-right:0px;margin-bottom:0px;margin-left:0px;}.kb-table-of-content-nav.kb-table-of-content-id11021939_37e38a-91 .kb-toggle-icon-style-basiccircle .kb-table-of-contents-icon-trigger:after, .kb-table-of-content-nav.kb-table-of-content-id11021939_37e38a-91 .kb-toggle-icon-style-basiccircle .kb-table-of-contents-icon-trigger:before, .kb-table-of-content-nav.kb-table-of-content-id11021939_37e38a-91 .kb-toggle-icon-style-arrowcircle .kb-table-of-contents-icon-trigger:after, .kb-table-of-content-nav.kb-table-of-content-id11021939_37e38a-91 .kb-toggle-icon-style-arrowcircle .kb-table-of-contents-icon-trigger:before, .kb-table-of-content-nav.kb-table-of-content-id11021939_37e38a-91 .kb-toggle-icon-style-xclosecircle .kb-table-of-contents-icon-trigger:after, .kb-table-of-content-nav.kb-table-of-content-id11021939_37e38a-91 .kb-toggle-icon-style-xclosecircle .kb-table-of-contents-icon-trigger:before{background-color:var(--mission-blue);}<\/style>\n\n\n<section class=\"wp-block-uagb-section uagb-section__wrap uagb-section__background-color uagb-block-a427fdc9\"><div class=\"uagb-section__overlay\"><\/div><div class=\"uagb-section__inner-wrap\">\n<\/div><\/section>\n\n\n\n\n\n<h2 class=\"wp-block-heading\">Is Retail Arbitrage Illegal?<\/h2>\n\n\n\n<p>The short answer is No. Though it may seem silly to some to buy a product from Walmart and sell it on Amazon or eBay, people have been doing it for years. <strong>Once you legally buy something, it\u2019s yours to resell<\/strong>. There are caveats because only authorized resellers can sell branded products.<\/p>\n\n\n\n<p>Here\u2019s a perfect example:<\/p>\n\n\n\n<p>The Walmart private label Equate brand is listed for sale on Amazon. You\u2019d think the seller would be Walmart, right? Wrong.&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"585\" height=\"848\" src=\"https:\/\/www.ecommerceceo.com\/wp-content\/uploads\/2021\/06\/image-5.jpg\" alt=\"Example of Retail Arbitrage \" class=\"wp-image-11022429\" title=\"\" srcset=\"https:\/\/www.ecommerceceo.com\/wp-content\/uploads\/2021\/06\/image-5.jpg 585w, https:\/\/www.ecommerceceo.com\/wp-content\/uploads\/2021\/06\/image-5-260x377.jpg 260w, https:\/\/www.ecommerceceo.com\/wp-content\/uploads\/2021\/06\/image-5-434x629.jpg 434w, https:\/\/www.ecommerceceo.com\/wp-content\/uploads\/2021\/06\/image-5-497x720.png 497w\" sizes=\"(max-width: 585px) 100vw, 585px\" \/><\/figure>\n\n\n\n<p>For comparison, here\u2019s the same product on Walmart.com. You\u2019ll see the Amazon listings all have a slightly higher price and significantly higher shipping fees.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"560\" src=\"https:\/\/www.ecommerceceo.com\/wp-content\/uploads\/2021\/06\/image-6-1024x560.png\" alt=\"Online Arbitrage \" class=\"wp-image-11022430\" title=\"\" srcset=\"https:\/\/www.ecommerceceo.com\/wp-content\/uploads\/2021\/06\/image-6-1024x560.png 1024w, https:\/\/www.ecommerceceo.com\/wp-content\/uploads\/2021\/06\/image-6-689x377.jpg 689w, https:\/\/www.ecommerceceo.com\/wp-content\/uploads\/2021\/06\/image-6-768x420.jpg 768w, https:\/\/www.ecommerceceo.com\/wp-content\/uploads\/2021\/06\/image-6-720x394.png 720w, https:\/\/www.ecommerceceo.com\/wp-content\/uploads\/2021\/06\/image-6.jpg 1036w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>This is also a great example of how risky retail arbitrage can be. If you&#8217;re selling a brand-restricted product (the Walmart page says, &#8220;Only at Walmart&#8221;) without approval, Amazon can flag the listing. If you&#8217;re not authorized to sell it, Amazon could freeze your account.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">How Retail Arbitrage Works<\/h2>\n\n\n\n<p><strong>Find products to buy. Buy them. List them online to resell<\/strong>. Pretty simple, right? On the surface, yes. In practice? Not so much.<\/p>\n\n\n\n<p>Ideally, you don&#8217;t want to list your products at higher than retail prices since people can usually purchase the same product directly from brick-and-mortar stores. Instead, you want to capitalize on finding clearance sales and discounted products at a low price that you can turn around and sell at the normal retail price.<\/p>\n\n\n\n<p>There are some situations where you can buy a lot of profitable products at retail prices and sell them for more. A common option is video game consoles &#8211; which tend to go out of stock at all retailers during the holiday shopping season. This is especially true the year the console launches.&nbsp;<\/p>\n\n\n\n<p>You&#8217;ll find that some people are willing to pay over retail just to have the item. However, this approach doesn&#8217;t generally work in multiple niche markets. And is often frowned upon since it hurts the brands. You may encounter what is called a &#8220;<a href=\"https:\/\/www.extension.iastate.edu\/agdm\/wholefarm\/html\/c5-200.html\" data-type=\"URL\" data-id=\"https:\/\/www.extension.iastate.edu\/agdm\/wholefarm\/html\/c5-200.html\" data-lasso-id=\"7297\" target=\"_blank\" rel=\"noopener\">barrier to entry<\/a>&#8220;, and in some situations, you may find a <strong>brand-restricted product that you cannot sell via Amazon retail arbitrage<\/strong>.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"536\" src=\"https:\/\/www.ecommerceceo.com\/wp-content\/uploads\/2021\/06\/How-Retail-Works-1024x536.png\" alt=\"How Retail Works\" class=\"wp-image-11022413\" title=\"\" srcset=\"https:\/\/www.ecommerceceo.com\/wp-content\/uploads\/2021\/06\/How-Retail-Works-1024x536.png 1024w, https:\/\/www.ecommerceceo.com\/wp-content\/uploads\/2021\/06\/How-Retail-Works-720x377.png 720w, https:\/\/www.ecommerceceo.com\/wp-content\/uploads\/2021\/06\/How-Retail-Works-300x157.png 300w, https:\/\/www.ecommerceceo.com\/wp-content\/uploads\/2021\/06\/How-Retail-Works-768x402.png 768w, https:\/\/www.ecommerceceo.com\/wp-content\/uploads\/2021\/06\/How-Retail-Works.png 1200w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">Why Does Retail Arbitrage Work?<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\">Convenience<\/h3>\n\n\n\n<p><strong>People are willing to pay for convenience<\/strong>. That\u2019s why a 20-ounce soft drink out of the cooler at the checkout line is priced more than a two-liter of the same. You\u2019re not paying for the product itself so much as the serving size and the fact that it is already cold. When you\u2019re thirsty, it\u2019s worth it.<\/p>\n\n\n\n<p>Customers will order things online to avoid having to go to the store and stand in line. They want to save time. Some may not be able to drive to go pick up items. Some may not live in an area where services like Walmart delivery are available.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Products aren\u2019t Priced the Same Everywhere<\/h3>\n\n\n\n<p>The product you\u2019re buying for $2 in one city may cost $5 in another. Products that are slow to move in one area may be in high demand elsewhere. Some products, like Cheerwine and Big Red sodas, are only available regionally. Sellers can use this to their advantage and turn a profit.<\/p>\n\n\n\n<p>Let&#8217;s take a closer look at what it takes to run your own <strong>retail arbitrage business<\/strong>. By the time you get to the end of this article, you should have a good idea about whether you want to use this approach to start your store.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What You Need for a Successful Retail Arbitrage Business<\/h2>\n\n\n\n<p>To get started with retail arbitrage on Amazon, and create a sustainable business model, <strong>you need products with a profit margin<\/strong>, <strong>a seller account<\/strong>, and <strong>apps to help you with pricing<\/strong>.<\/p>\n\n\n\n<p>Some use this business model to list products they know they can purchase at a discount, then buy the product only after the order has come in. For instance, if Target has a sale on card and board games, you list various card and board games for sale in your online store. Then, when the customer purchases something from you, you go to all the local Target brick-and-mortar stores in your area and buy as many of the items as you can. You may even visit the Target website and buy more, shipping them all to yourself.<\/p>\n\n\n\n<p>With this method, you don&#8217;t spend your own money to buy the product, so your initial investment won&#8217;t include anything out of your pocket to start your Amazon business. There&#8217;s always the potential that you won&#8217;t be able to find exactly what someone ordered, though. That translates to wasted time and effort (and gas in your car) to track down the item, a canceled order, and an upset customer.<\/p>\n\n\n\n<p>That&#8217;s why many conducting retail arbitrage catch the clearance and sale products first, then list and sell them.<\/p>\n\n\n\n<p><strong>Generally, if you don&#8217;t get a discount on the retail price, you should skip it<\/strong>. Profit margins are a big part of making money online. If you don&#8217;t make anything from the sale, then what&#8217;s the point?<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Amazon Seller Account<\/h3>\n\n\n\n<p>To sell anything on Amazon, you must first sign up for an <strong>Amazon Seller account<\/strong>. You have two options: an individual seller account or a professional seller account.<\/p>\n\n\n\n<p>For a step-by-step guide to creating your account, check out<a href=\"https:\/\/www.ecommerceceo.com\/how-to-become-an-amazon-seller\/\" data-lasso-id=\"321\"> How to Sell on Amazon<\/a>.<\/p>\n\n\n\n<p>The individual seller account is ideal for a retail arbitrage seller just getting started and testing the waters. Instead of a flat monthly fee, you&#8217;ll pay $0.99 per item plus sales commissions. The commission is based on the product category.<\/p>\n\n\n\n<p>The default option is the professional account. You&#8217;ll pay a flat rate of $39.99\/month. In exchange for this monthly fee, you will not have to pay any per-item fees. You will still have to pay sales commissions to Amazon, along with any other costs specific to that category.<\/p>\n\n\n\n<p>If you think you&#8217;ll sell more than 40 items in your first month, save yourself time and money and opt for a professional account. It will also make it possible for you to take advantage of Amazon Prime promotions, so your customers get fast fulfillment.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">The Amazon Seller App<\/h3>\n\n\n\n<p>After you sign up for your account, you can start listing products right away. Before you do anything else, though, you should download the <strong>Amazon Seller App<\/strong>. Use this app while shopping in a local store. <strong>Use your camera to scan product barcodes<\/strong> of the items you see on the sales rack and any other clearance items you may find.<\/p>\n\n\n\n<p>This app is free and gives you all the information you need to decide whether or not a product is worth selling. It will tell you:<\/p>\n\n\n\n<ul>\n<li>The item&#8217;s selling price on Amazon<\/li>\n\n\n\n<li>The fees for selling the product on Amazon<\/li>\n\n\n\n<li>The sales rank<\/li>\n\n\n\n<li>Whether your account has permission to sell the item<\/li>\n<\/ul>\n\n\n\n<p>When you first start selling products, it&#8217;s best to stick with items with a <strong>best-seller ranking below 250,000<\/strong> in their respective product categories.<\/p>\n\n\n\n<p>If you find an item within that sales rank and you&#8217;re eligible to sell, move to the next step.<\/p>\n\n\n\n<p><strong>Buy anything you notice has at least a $3 profit and 50% return on investment (ROI)<a href=\"https:\/\/www.ecommerceceo.com\/amazon-sales-tax\/\" data-type=\"post\" data-id=\"11025669\" data-lasso-id=\"322\"> after sales tax<\/a>, seller fees, and shipping costs<\/strong>. Be careful about purchasing large quantities of any particular item until you see how customers respond.<\/p>\n\n\n\n<p>You, of course, are free to adjust the minimum profit threshold to anything you want, but $3 is a good starting point for even the most successful resellers.<\/p>\n\n\n\n<p>It&#8217;s also worth mentioning the Amazon seller app isn&#8217;t the only scanning app available. Because it&#8217;s free and connected directly to the platform, it&#8217;s often the best choice for beginners.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Other Product Research<\/h4>\n\n\n\n<p>Of course, these are optional steps, but the more <a href=\"https:\/\/www.ecommerceceo.com\/product-research\/\" class=\"rank-math-link\" data-lasso-id=\"323\">product research <\/a>you do, the better off you&#8217;ll be.&nbsp;<\/p>\n\n\n\n<ul>\n<li><strong>Keepa: <\/strong>Look at the item&#8217;s graph. This tool tracks prices and sales ranking for millions of Amazon items. Though it&#8217;s far from perfect, it does an excellent job at giving you a big picture look at your products.<\/li>\n\n\n\n<li><strong>Read customer reviews: <\/strong>Look at the customer reviews overall, and pay attention to recent reviews. <strong>&nbsp;<\/strong>If a product hasn&#8217;t been reviewed in a while &#8211; it&#8217;s a sign the majority of the content is old. You need frequent <em>and <\/em>recent reviews to validate your product. Don&#8217;t let negative reviews scare you, but let that influence your decision if you notice a trend.<\/li>\n\n\n\n<li><strong>Are you competing with Amazon? <\/strong>Some products may put you in direct competition with Amazon. Do you match their price or go lower? If you match, you&#8217;ll have to wait for Amazon&#8217;s stock to sell out before you start t get the sales.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Products from a Retail Store<\/h3>\n\n\n\n<p>You can&#8217;t run any store without an inventory of some kind. <strong>Retail arbitrage sourcing is easy<\/strong> if you know what product you&#8217;re looking for and the mortar retail stores you&#8217;ll buy it from. Common stores to scout product options include:<\/p>\n\n\n\n<ul>\n<li>Barnes &amp; Noble<\/li>\n\n\n\n<li>Bed Bath &amp; Beyond<\/li>\n\n\n\n<li>Best Buy<\/li>\n\n\n\n<li>Big Lots<\/li>\n\n\n\n<li>CVS<\/li>\n\n\n\n<li>Hobby Lobby<\/li>\n\n\n\n<li>Home Depot<\/li>\n\n\n\n<li>Lowes<\/li>\n\n\n\n<li>Marshall&#8217;s<\/li>\n\n\n\n<li>Meijer<\/li>\n\n\n\n<li>Menards<\/li>\n\n\n\n<li>Michael\u2019s<\/li>\n\n\n\n<li>Office Depot<\/li>\n\n\n\n<li>Rite Aid<\/li>\n\n\n\n<li>Ross<\/li>\n\n\n\n<li>Shopko<\/li>\n\n\n\n<li>Staples<\/li>\n\n\n\n<li>Target<\/li>\n\n\n\n<li>TJ Maxx Home Goods<\/li>\n\n\n\n<li>Tuesday Morning<\/li>\n\n\n\n<li>Walgreens<\/li>\n\n\n\n<li><a href=\"https:\/\/www.ecommerceceo.com\/how-to-sell-on-walmart-marketplace\/\" data-type=\"post\" data-id=\"11030353\" data-lasso-id=\"324\">Walmart<\/a><\/li>\n\n\n\n<li>Any other local retail outlet store<\/li>\n<\/ul>\n\n\n\n<p>Of course, <strong>Amazon isn&#8217;t the only online marketplace<\/strong> where you can list products for sale. Other options include <a href=\"https:\/\/www.ecommerceceo.com\/how-to-sell-on-ebay\/\" data-type=\"post\" data-id=\"11028468\" data-lasso-id=\"325\">eBay<\/a>, Walmart.com, Jet, Craigslist, Facebook Marketplace, Let Go, OfferUp, etc.<\/p>\n\n\n\n<p>And if you don&#8217;t live in an area where there are many local retail stores available, you can use <strong>online arbitrage<\/strong> to source your products. Instead of visiting local stores to source your retail arbitrage products, you order the products from online retailers.<\/p>\n\n\n\n<p>However, keep in mind that unless you have warehouse space to stock inventory, you&#8217;ll have to start small. If your tiny bedroom closet is the only storage you have available, then you obviously can&#8217;t buy a huge quantity of bulky items.<\/p>\n\n\n\n<p>When it comes to fulfillment, you can handle it yourself &#8211; packing and shipping the items as you receive orders. Or, you can enroll (for an extra fee) in the <a class=\"rank-math-link\" href=\"https:\/\/www.ecommerceceo.com\/reviews\/amazon-fba\/\" data-lasso-id=\"326\">Fulfillment By Amazon (FBA)<\/a> program. This makes you an FBA seller and allows you to send the items you sell to the Amazon warehouse. Then, their fulfillment centers take care of packing and shipping the items on your behalf. Plus, they\u2019ll even handle customer service and returns. I&#8217;ll talk about this more in a bit. Or, you can dropship.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Retail Arbitrage vs Dropshipping<\/h2>\n\n\n\n<p>With <strong>retail arbitrage<\/strong>, you buy the products yourself and send them to your customers.<\/p>\n\n\n\n<p>With <strong>dropshipping<\/strong>, you place orders on a website but don\u2019t carry inventory. Instead of taking care of your own fulfillment, you send the orders to your seller, who then sends the orders to your customers.&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"536\" src=\"https:\/\/www.ecommerceceo.com\/wp-content\/uploads\/2021\/01\/How-Does-Dropshipping-Work-1024x536.png\" alt=\"How Dropshipping Works\" class=\"wp-image-11019580\" title=\"\" srcset=\"https:\/\/www.ecommerceceo.com\/wp-content\/uploads\/2021\/01\/How-Does-Dropshipping-Work-1024x536.png 1024w, https:\/\/www.ecommerceceo.com\/wp-content\/uploads\/2021\/01\/How-Does-Dropshipping-Work-720x377.png 720w, https:\/\/www.ecommerceceo.com\/wp-content\/uploads\/2021\/01\/How-Does-Dropshipping-Work-300x157.png 300w, https:\/\/www.ecommerceceo.com\/wp-content\/uploads\/2021\/01\/How-Does-Dropshipping-Work-768x402.png 768w, https:\/\/www.ecommerceceo.com\/wp-content\/uploads\/2021\/01\/How-Does-Dropshipping-Work.png 1200w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>To take advantage of dropshipping, you have to establish yourself with wholesalers, so you can sell products. You\u2019re in control of the products you sell.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Retail Arbitrage Pros<\/h2>\n\n\n\n<p>With the basics of what retail arbitrage is and how to get started with it, now let&#8217;s talk pros and cons.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">No Marketing Investment Required<\/h3>\n\n\n\n<p>When you start your own online store with your own products, you have to spend more money on marketing and advertising than with this approach. Since people are already searching Amazon for the types of products you&#8217;re buying and reselling, there&#8217;s not much marketing to be done.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Easy to Get Started<\/h3>\n\n\n\n<p>There&#8217;s nothing more to do than sign up for a selling account, find the products that will turn a profit, list them, and sell them. And because there are likely already other sellers with the same items, you won&#8217;t even have to put much effort into your product listings. It\u2019s a quick way to get started with online retail.<\/p>\n\n\n\n<p>If you\u2019re interested in running a business with products you create later, it is a great way to familiarize yourself with the Amazon Marketplace. You can get used to the tools and functionality that are available before you launch your own store.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Fast Profit<\/h3>\n\n\n\n<p>If you buy and sell one item, you&#8217;ll already have profit in your pocket. Compared to building a brand with <a href=\"https:\/\/www.ecommerceceo.com\/learn\/private-labeling\/\" data-type=\"page\" data-id=\"11022675\" data-lasso-id=\"327\">private labels<\/a> on another <strong>ecommerce platform<\/strong>, you&#8217;ll earn money faster.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Dropshipping Pros<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\">Low Startup Costs<\/h3>\n\n\n\n<p>Since there\u2019s no inventory to store, you don\u2019t have to spend capital on the inventory itself. And you don\u2019t have to spend money on the warehouse you\u2019d use to store said inventory.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Low Inventory Costs<\/h3>\n\n\n\n<p>Inventory is one of the most expensive parts of starting a business if you\u2019re dealing with your own product. You may end up with inventory you can\u2019t use, which costs you money. Dropshipping allows you to avoid this because there\u2019s no need to keep any kind of inventory on hand. You can change products around as needed.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Low Fulfillment Costs<\/h3>\n\n\n\n<p>Traditionally, order fulfillment requires that you have a warehouse to organize and track your inventory. Then, you have to label it, pick it, and pack it up before you can ship it to your customer. With dropshipping, a third party handles all of that for you. The only thing you have to do is send the orders.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Sell and Test Products with Less Work<\/h3>\n\n\n\n<p>Since you don\u2019t have to invest in inventory and the physical space to store it, you can test a variety of product options without as much risk. You don\u2019t have to worry about carrying an obsolete inventory because you only pay for the items you sell.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Retail Arbitrage Cons<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\">Certain Amazon Product Categories are Gated<\/h3>\n\n\n\n<p>Although there are no current policies that technically forbid <strong>retail arbitrage on Amazon<\/strong>, resellers cannot sell certain items. This is due to a <strong>brand gating policy<\/strong>. Amazon requires resellers to provide manufacturer invoices or invoices from approved distributors. If your products aren&#8217;t backed by the manufacturer&#8217;s invoices will be authorized to sell on Amazon.<\/p>\n\n\n\n<p>The gated categories include:<\/p>\n\n\n\n<ul>\n<li>Automotive &amp; Powersports<\/li>\n\n\n\n<li>Collectible Coins<\/li>\n\n\n\n<li>Entertainment Collectibles<\/li>\n\n\n\n<li>Fine Art<\/li>\n\n\n\n<li>Gift Cards<\/li>\n\n\n\n<li>Jewelry<\/li>\n\n\n\n<li>Music &amp; DVD<\/li>\n\n\n\n<li>Major Appliances<\/li>\n\n\n\n<li>Sports Collectibles<\/li>\n\n\n\n<li>Streaming Media Players<\/li>\n\n\n\n<li>Video, DVD, &amp; Blu-ray<\/li>\n\n\n\n<li>Watches<\/li>\n<\/ul>\n\n\n\n<p>Seasonally, you may find that other categories become gated &#8211; notably Toys &amp; Games &#8211; around the holidays.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">The Brand Registry<\/h4>\n\n\n\n<p>Amazon has a <strong>Brand Registry program<\/strong>. This program protects enrolled brands from bad listings and <strong>trademark infringements<\/strong>. It also gives them access to additional tools that sellers outside of the program don&#8217;t have.<\/p>\n\n\n\n<p>What does this mean for you?<\/p>\n\n\n\n<p>Brands that are part of the registry (like New Balance, Braun, Garmin, GoPro, etc.) have control over listings for their products. As a reseller, Amazon doesn&#8217;t allow third-party sales of products in the brand registry without proof that you&#8217;re an authorized retailer. That means you can&#8217;t buy a bunch of New Balance shoes on clearance and list them on Amazon.<\/p>\n\n\n\n<p>That&#8217;s another reason why using the seller app to check your account&#8217;s eligibility to sell items is important.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">No Control Over Product Supply<\/h3>\n\n\n\n<p>Since you\u2019re buying items from other retailers, you have no control over the <strong>product supply<\/strong>. When a sale is over, it\u2019s over. When the stock is gone, it\u2019s gone. If you find that a particular item was popular with your customers, you can only ride the wave so long.&nbsp;<\/p>\n\n\n\n<p>By the time the product deal comes around again, if it ever does, your customers may have moved on. In normal retailing, you are in complete control of your product supply. Lack of control here makes it hard to compete sometimes.<\/p>\n\n\n\n<p>And if for some reason, you get lucky enough to land in the buy box, you\u2019ll run out of product faster. Sure, it will be great for your bottom line, but you\u2019ll have a hard time holding onto the momentum.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">No Control Over Profit Margin<\/h3>\n\n\n\n<p>While you can set the margin on what you\u2019re willing to invest in and resell, you don\u2019t have much control. Amazon charges variable closing fees for each sale. You\u2019ll have the commission based on the kind of item it is, plus shipping fees.<\/p>\n\n\n\n<p>It\u2019s all going to depend on the deals you can find. Some items you may get a $3 profit margin on. Others you may get $6. And others could be much lower. Success in retail arbitrage comes in a wide range of products, lots of research, and patience.<\/p>\n\n\n\n<p>In traditional retail, there\u2019s wholesale pricing that gives you control &#8211; and the fact that you own the product. With retail arbitrage, you\u2019re already paying that retail markup &#8211; even if you\u2019re buying the product on sale. You\u2019re at a distinct disadvantage compared to those who purchase wholesale and add a small markup.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Finding Inventory Takes Time<\/h3>\n\n\n\n<p>Even if you do your research before you head to the store, you\u2019ll still spend time driving from store to store and doing the shopping. Many retailers now offer buy-online pick-up-in-store options that make it easier for you to get the things you need. That, however, comes with drawbacks.&nbsp;<\/p>\n\n\n\n<p>One &#8211; you have to place the order, wait for it to be picked, then arrive within a specific window of time for pickup. You may end up waiting a while to get your order, depending on how busy the store is at your chosen pick-up time.<\/p>\n\n\n\n<p>Two &#8211; just because something says it\u2019s available in the store doesn\u2019t mean it will be. Sometimes stock gets messed up. If you\u2019ve already got an order for the product and can\u2019t find it anywhere locally, that spells trouble for your customer.<\/p>\n\n\n\n<p>You can save time by visiting shopping centers with multiple retailers and making lists, but you may still end up having to visit numerous store locations of the same chain to find what you need.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Difficult to Impossible to Foster Customer Loyalty<\/h3>\n\n\n\n<p>Since your retail arbitrage efforts aren\u2019t specialized and focused on a product you make that customers love, you\u2019ll struggle to build customer loyalty. Since you\u2019re basically trying to sell anything you can find at a low price so you can earn a profit &#8211; you\u2019re mainly dealing with commodity items. You can find those in various other places, so there\u2019s nothing to draw customers away from your competition.<\/p>\n\n\n\n<p>On the off chance you manage to build some kind of following, the second you fail to find more products at lower prices, you\u2019ll start to see customer loyalty decline. If people who\u2019ve come to rely on your store find that your supply is inconsistent, they\u2019ll begin to look elsewhere.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Bad Inventory is Always Possible<\/h3>\n\n\n\n<p>Getting a great price on a product isn\u2019t always a good thing for business. When a big box store has inventory that\u2019s not selling and cannot be returned to the supplier, that\u2019s a reason to discount it. Those discounted items are the prime source of your inventory.&nbsp;<\/p>\n\n\n\n<p>If you end up with bad inventory, you\u2019ll suffer a larger loss with retail arbitrage. You\u2019ve already bought it for more than a business getting it directly from a supplier. If you spend a lot of money on items that aren\u2019t selling, you\u2019ll have to lower your price point more to offload them. At that point, you risk only breaking even, or worse, losing money.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Switching Gears isn\u2019t Always Practical<\/h3>\n\n\n\n<p>When customers want something new, traditional retailers have the upper hand. You\u2019ll have to find a deal, buy it, then mark it up even more so you can make a profit. When something is popular and brand new, chances are slim to none that you\u2019ll be able to secure the product at a price that allows for profit.&nbsp;<\/p>\n\n\n\n<p>That means you\u2019ll be unable to reach certain customer bases. You won\u2019t always be able to follow what your customers or market wants when you\u2019re stuck with only what the retailers have for sale.&nbsp;<\/p>\n\n\n\n<p>If a product is ever discontinued, you\u2019re out of luck because you don\u2019t own the product or have a supplier relationship.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Dropshipping Cons<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\">Relying on Other People\u2019s Stock<\/h3>\n\n\n\n<p>Though you have the option to offer new items quickly and to stop selling products that don\u2019t do well, you still don\u2019t control the overall stock. If the wholesaler runs out of stock, so do you. This translates to longer lead times, which may translate to lost customers.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Little Control Over Lead and Fulfillment Times<\/h3>\n\n\n\n<p>Though you don\u2019t carry the cost of holding on to stock, you\u2019ll pay if customers aren\u2019t happy. The wholesalers you work with are the ones liable for managing stock and shipping orders. If they mess up, customers complain to you &#8211; not them.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Smaller Profits<\/h3>\n\n\n\n<p>You don\u2019t have the upfront costs of buying inventory, but you\u2019ll still pay for it. You\u2019ll end up paying more in per-item costs, which ends in less profit overall. If you want to make a lot of profit with dropshipping, you\u2019ll need to sell more products than someone who has a warehouse.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Customer Service Tends to Suffer<\/h3>\n\n\n\n<p>If your supplier causes a delayed delivery, sends damaged goods, or delivers the wrong items, you\u2019ll be the one who has to deal with it. The customer doesn\u2019t <a href=\"https:\/\/www.ecommerceceo.com\/learn\/3pl\/\" title=\"3PL: Fundamentals of Third Party Logistics You Need to Know\" data-lasso-id=\"328\">know you\u2019re using a third party<\/a> to handle everything, so it reflects poorly on you and your brand. Because you don\u2019t <a href=\"https:\/\/www.ecommerceceo.com\/inventory-management-software\/\" title=\"The Best Inventory Management Software in 2022\" data-lasso-id=\"329\">manage your inventory<\/a>, you won\u2019t be able to give a personal touch that many retailers can. You\u2019ll have to deal with the suppliers to make things right for your customers, which may take longer. Because you won\u2019t be able to resolve issues as quickly, customers may get more frustrated.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Retail Arbitrage Strategies<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\">Keep an Eye on Prices and Markdown Schedules<\/h3>\n\n\n\n<p>Visit your selected stores often. <strong>Pay attention to the prices<\/strong>, with emphasis on how the prices change over time. Major retailers run promotions on a regular schedule based on what corporate says. If you can determine the markdown schedules, you&#8217;ll be able to get a head start on what will be on sale. This way, you can go ahead and list products and develop a more detailed strategic approach.<\/p>\n\n\n\n<p>Sounds pretty easy, right? The truth is, these stores don&#8217;t <em>want <\/em>you to find out their <strong>markdown schedules<\/strong>. It&#8217;ll be up to you to research, though much of what&#8217;s out there is old. Watch how the prices change over a month or two, then make a graph. The longer you chart the data, the more accurate you can expect it to be. Remember, nothing is set in stone.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Visit Multiple Locations During Chain Store Sales<\/h3>\n\n\n\n<p>If you find a killer sale that you know you&#8217;ll have no problem turning around &#8211; don&#8217;t limit yourself to the location closest to your home. Give yourself a certain radius &#8211; whatever you&#8217;re comfortable with driving based on the time you have available. Then, visit all the stores within that radius to buy the products, so you have plenty of inventory.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Sign Up for Retailer Email Newsletters<\/h3>\n\n\n\n<p>Subscribe to <strong>email newsletters<\/strong> for the most popular retailers you&#8217;ll be shopping with. You&#8217;ll be able to take advantage of coupons and exclusive deals not available to regular customers. Kohl&#8217;s, in particular, sends advance notice of their sales in postal mailers. Having access to this early information makes it easier for you to plan your listings in advance.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Combine with Dropshipping<\/h3>\n\n\n\n<p>Some retail <strong>arbitrage sellers<\/strong> opt to combine this approach with dropshipping &#8211; ordering products from retailers and shipping them directly to the customer. This approach doesn&#8217;t work with Amazon retail arbitrage, though. Why?<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"998\" height=\"629\" src=\"https:\/\/www.ecommerceceo.com\/wp-content\/uploads\/2023\/08\/Drop-Shipping-Policy-Amazon-Seller-Central-1-998x629.jpg\" alt=\"\" class=\"wp-image-16063436\" title=\"\" srcset=\"https:\/\/www.ecommerceceo.com\/wp-content\/uploads\/2023\/08\/Drop-Shipping-Policy-Amazon-Seller-Central-1-998x629.jpg 998w, https:\/\/www.ecommerceceo.com\/wp-content\/uploads\/2023\/08\/Drop-Shipping-Policy-Amazon-Seller-Central-1-598x377.jpg 598w, https:\/\/www.ecommerceceo.com\/wp-content\/uploads\/2023\/08\/Drop-Shipping-Policy-Amazon-Seller-Central-1-768x484.jpg 768w, https:\/\/www.ecommerceceo.com\/wp-content\/uploads\/2023\/08\/Drop-Shipping-Policy-Amazon-Seller-Central-1.jpg 1301w\" sizes=\"(max-width: 998px) 100vw, 998px\" \/><\/figure>\n\n\n\n<p><strong>According to Amazon&#8217;s terms and conditions, dropshipping is allowed. However, to comply with the rules, you have to:<\/strong><\/p>\n\n\n\n<ul>\n<li>Be the seller of record of your products.<\/li>\n\n\n\n<li>List yourself as the seller of all of your products&#8217; documentation, including invoices,&nbsp; packing slips, external packaging, and other information that&#8217;s included or provided with them.<\/li>\n\n\n\n<li>Remove any mention of <strong>third-party shipping<\/strong> on the documentation mentioned above before it is shipped to a customer.<\/li>\n\n\n\n<li>Take responsibility for accepting and processing customer returns<\/li>\n\n\n\n<li>Abide by all other terms of the <strong>Amazon Seller agreement<\/strong> and <strong>Amazon policies<\/strong><\/li>\n<\/ul>\n\n\n\n<p>Amazon does not allow you to purchase products from another online retailer and then have you ship those items directly to customers because it does not remove identifying information of the third party. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Running Retail Arbitrage with Amazon FBA<\/h2>\n\n\n\n<p>If you want to use FBA to handle your order fulfillment, it&#8217;s pretty simple. You&#8217;ll sign up for FBA separately from your seller account.&nbsp;<\/p>\n\n\n\n<p>When you buy products to list for sale, you&#8217;ll send them to the <strong>Amazon warehouse<\/strong>. Amazon will store it for you. You&#8217;ll pay storage fees based on the number of items and\/or the amount of square footage your product takes up. You&#8217;ll also pay a fee for each order packed and shipped.&nbsp;<\/p>\n\n\n\n<p>You&#8217;ll get instructions from Amazon on how to pack and ship your items to them. Follow those instructions whenever you have new inventory.&nbsp;<\/p>\n\n\n\n<p>You&#8217;ll remove the hassle of storing and shipping items yourself. And, you&#8217;ll be able to offer your customers Prime benefits on your products &#8211; which puts you ahead of the resellers who don&#8217;t.<\/p>\n\n\n\n<p>Once you&#8217;re signed up with FBA, you can change fulfillment options from your item listings in Amazon Seller Central. This way, if you have a few items you don&#8217;t want to send to FBA, you can still take care of the fulfillment yourself as needed.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">The Verdict on Retail Arbitrage<\/h2>\n\n\n\n<p><strong>Retail arbitrage<\/strong> works well for some &#8211; but it&#8217;s really more of a side hustle. It&#8217;s all about your goals for <a href=\"https:\/\/www.ecommerceceo.com\/legit-ways-to-make-money-online\/\" class=\"rank-math-link\" data-lasso-id=\"330\">making money online.<\/a> I&#8217;ve done it successfully in the past, but I understand it&#8217;s not for everyone. The good news is that other business models offer more sustainable alternatives. If you&#8217;re ready to sell online, you can start your own brand with <a href=\"https:\/\/www.ecommerceceo.com\/amazon-private-label-fba\/\" data-lasso-id=\"331\">private label products<\/a> or wholesale suppliers, run an <a href=\"https:\/\/www.ecommerceceo.com\/amazon-affiliate-store\/\" data-lasso-id=\"332\">affiliate business<\/a>, or a dropshipping business.<\/p>","protected":false},"excerpt":{"rendered":"<p>What is Retail Arbitrage? A Simple Definition Retail arbitrage is an ecommerce business model. You purchase products from retail stores, then list them for sale &#8230; <a title=\"Retail Arbitrage For Beginners\" class=\"read-more\" href=\"https:\/\/www.ecommerceceo.com\/learn\/retail-arbitrage\/\" aria-label=\"Read more about Retail Arbitrage For Beginners\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"parent":11017715,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_acf_changed":false,"inline_featured_image":false,"_kad_blocks_custom_css":"","_kad_blocks_head_custom_js":"","_kad_blocks_body_custom_js":"","_kad_blocks_footer_custom_js":"","footnotes":""},"categories":[],"tags":[],"acf":[],"taxonomy_info":[],"featured_image_src_large":false,"author_info":{"display_name":"Darren DeMatas","author_link":"https:\/\/www.ecommerceceo.com\/author\/darren\/"},"comment_info":0,"_links":{"self":[{"href":"https:\/\/www.ecommerceceo.com\/wp-json\/wp\/v2\/pages\/11021939"}],"collection":[{"href":"https:\/\/www.ecommerceceo.com\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/www.ecommerceceo.com\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/www.ecommerceceo.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.ecommerceceo.com\/wp-json\/wp\/v2\/comments?post=11021939"}],"version-history":[{"count":0,"href":"https:\/\/www.ecommerceceo.com\/wp-json\/wp\/v2\/pages\/11021939\/revisions"}],"up":[{"embeddable":true,"href":"https:\/\/www.ecommerceceo.com\/wp-json\/wp\/v2\/pages\/11017715"}],"wp:attachment":[{"href":"https:\/\/www.ecommerceceo.com\/wp-json\/wp\/v2\/media?parent=11021939"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.ecommerceceo.com\/wp-json\/wp\/v2\/categories?post=11021939"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.ecommerceceo.com\/wp-json\/wp\/v2\/tags?post=11021939"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}