The world has experienced significant changes over the last few years, especially with the ongoing COVID-19 pandemic. With the rapid growth of eCommerce, online marketplaces like Amazon have become increasingly popular.
In particular, Amazon reselling has become a profitable business model for many entrepreneurs, especially with retail arbitrage.
But with increased competition, is retail arbitrage on Amazon still a viable option for sellers in 2023?
What is Retail Arbitrage?
Retail arbitrage is a popular business model for Amazon sellers that involves buying inventory from brick-and-mortar stores like department stores, thrift stores, or liquidation shops at a discount and then selling them online for a higher price on Amazon.
It’s a simple but effective method that doesn’t require a significant investment to start, making it ideal for new sellers.
Retail arbitrage offers various advantages. For instance, it’s an excellent source for inventory items that are not available from traditional suppliers or online sources.
Additionally, it helps new sellers earn quick cash, and they can even sell items purchased from thrift stores or yard sales. It requires little starting capital, so sellers can start their Amazon business with the help of retail arbitrage.
Retail Arbitrage vs. Other Amazon Business Models
Amazon has several business models for sellers, and each has its unique advantages and disadvantages. In contrast to retail arbitrage, Amazon handmade is an exclusive seller program only for local and global artisans.
A private label on Amazon involves creating a product or modifying a product purchased from a supplier and then selling it on Amazon under a new brand.
Amazon wholesale involves buying inventory in bulk from suppliers, while Amazon dropshipping involves purchasing an item directly from a supplier and then having the item sent directly to your customer’s address.
While retail arbitrage is a viable option for new sellers, the competition in the Amazon marketplace has increased significantly. As of 2023, Amazon has almost 10 million seller accounts across its global marketplaces, and over two thousand new sellers enter the global Amazon marketplaces every day.
Despite the increased competition, there is still massive growth potential, especially with the increasing number of Amazon Prime members each year. Amazon reported that it had 200 million Prime members worldwide in Q1 of 2021, which contributed to more than $11 billion in Amazon Prime Day sales in 2021.
With global consumers transitioning to eCommerce due to the pandemic, more consumers will turn to Amazon for their consumer needs.
Ways to Improve Your Retail Arbitrage on Amazon
If you’re interested in retail arbitrage, here are some tips to improve your Amazon business in 2023:
- Have an Amazon scanner app: Since you’ll be spending time searching for items in retail stores, download an Amazon scanner app on your smartphone to scan barcodes and determine an item’s profitability.
- Start small: One of the advantages of retail arbitrage is the opportunity to start small. Since you won’t be ordering in bulk, you can better understand an item’s sourcing, listing, shipping, and pricing. If an item fails to produce the desired ROI, you can quickly discontinue its sales without significant financial loss.
- Choose popular categories: Ensure that your chosen category is a popular category for arbitrageurs for increased profitability. Popular categories and sub-categories include Home & Kitchen, Toys & Games, Beauty & Personal Care, Health, Household, Baby, and Kitchen & Dining.
- Follow trends: Consider the trend and seasonality of the product when looking for retail arbitrage items. Try to determine what products are currently in-demand or soon-to-be trending.
- Improve your product listing: Ensure to Follow Trends & Consumer Demand.
While looking for retail arbitrage items, it’s essential to consider the trend and seasonality of the product. Try to determine what products are currently in-demand or soon-to-be trending.
This will allow you to stay ahead of the competition and maximize your profits.
For example, if a particular holiday is fast approaching, you should look for sale items relating to that specific celebration. To stay updated with the critical dates or events, you should determine critical eCommerce events, such as Black Friday, Amazon Prime Day, and other Q4 holidays.
Improve Your Product Listing
Reselling on Amazon doesn’t end when you find a profitable product to sell online. You must ensure that Amazon shoppers can discover your product listing. A well-optimized product listing will increase your chances of selling your product.
According to Amazon, you can increase product visibility and sales if you provide relevant and complete information for your product.
Using the right keywords for the title and description of your item will also help increase product discoverability. Take advantage of “Search Terms” to enhance the discoverability of your listing.
Competitive Listing Price
Price changes are a common occurrence on Amazon. According to Business Insider, Amazon changes product prices 2.5 million times a day, which translates to an average product price change every 10 minutes. One of the reasons why sellers change a listing price is to attract Amazon shoppers into buying their products.
There are many ways Amazon resellers can implement a product price change. Depending on your need and business goal, sellers can choose to use manual, rule-based, or automatic repricing methods.
If you have multiple listings, utilizing an algorithmic AI repricer like Seller Snap is beneficial. AI repricers can automatically make price adjustments based on competitors’ price changes, marketplace conditions, and other relevant factors.
An automated Amazon repricer will ensure that your listing price is highly competitive. Furthermore, repricing software can prevent unnecessary Amazon price wars that can be detrimental to your profit margin.
Ask For Help
If you wish to expand your retail arbitrage business, you can always ask others for help. You can hire other people who can check items on other brick-and-mortar stores on your behalf, especially when there are discount promos. You can maximize your product sourcing when you have other people doing the same thing for you.
Use High-Quality Images
Reselling on Amazon will require you to upload images of your product. When uploading an image for your listing, see to it that you use only high-quality product images. High-quality images can significantly increase the likelihood of Amazon shoppers clicking your product listing.
Detailed images of your products can help prospective customers determine the quality and features of your item, thus influencing their purchasing decisions.
Practice Patience At All Times
Like in any other form of business, reselling on Amazon requires patience. Your Amazon business will not immediately experience overnight success, which is why constant improvement and optimization are necessary.
Patience is also necessary for product research and sourcing, especially when checking discounted items in retail stores. It could take time, especially if you check multiple brick-and-mortar stores in your locality.
Always Check Amazon Guidelines
To prevent any issues with Amazon or any penalties, be sure to check Amazon product listing and restriction guidelines. Amazon has a strict policy for listing an item on its platform. Hence, reviewing these rules and regulations can help you succeed in the Amazon reseller program.
Benefits of Retail Arbitrage on Amazon
Retail arbitrage is still a viable method sellers can try in 2022. Many Amazon sellers still engage in retail arbitrage because of its profitability. Here are some reasons why Amazon sellers turn to retail arbitrage when reselling on Amazon.
Retail arbitrage is an excellent alternative source for inventory
In addition to the retail arbitrage method, Amazon sellers can also consider online arbitrage, private label, drop shipping, or handmade products to complement their Amazon business.
These methods are not mutually exclusive, and sellers can focus on each one to drive customers to their business and increase overall profitability.
Amazon seller tools and services can further boost the success of an Amazon business. These tools can help improve seller performance, and save time, effort, and money.
For instance, Amazon repricing software can help sellers adjust their prices based on competitors’ pricing and marketplace conditions, while an Amazon scanner app can help determine the profitability of a product.
Don’t Forget About Online Arbitrage
In addition to retail arbitrage, another popular way of reselling on Amazon is online arbitrage. This method involves purchasing items online from various retailers and then reselling them on Amazon for a higher price.
With the increasing popularity of online shopping, online arbitrage has become a popular way for Amazon sellers to source inventory.
One of the benefits of online arbitrage is the convenience of sourcing products from the comfort of your own home. With just a few clicks, Amazon sellers can find potential products for resale from a wide range of retailers.
Additionally, sellers can easily compare prices and select products that offer a good profit margin.
To make the process even easier, some Amazon sellers use online arbitrage tools such as FBA Wizard to help them find profitable products.
FBA Wizard provides detailed reports, including sales ranks, historical sales data, and pricing trends, which can help sellers make informed decisions and select the best products for their business.
One of the most significant benefits of using these tools is the time savings they provide. Instead of manually searching for products, Amazon sellers can use the tool to quickly find and evaluate potential products. This frees up time to focus on other aspects of the business, such as marketing, inventory management, and customer service.
Overall, online arbitrage with the help of tools like FBA Wizard can be a lucrative way for Amazon sellers to source products for resale. By combining online arbitrage with other Amazon reselling methods, sellers can create a successful Amazon business that can generate significant income over time.
Conclusion: Is Retail Arbitrage Still Viable for Amazon Sellers in 2023?
In conclusion, retail arbitrage remains a viable option for Amazon sellers in 2023, despite the increased competition. The potential for growth is still significant, given the increasing number of Amazon Prime members and the shift towards eCommerce.
With the right strategies and tools, sellers can find profitable products and optimize their listings for increased discoverability.
Remember to start small, choose popular categories, and follow trends to maximize your profits. Utilizing an Amazon scanner app can also help you determine an item’s profitability, while Amazon repricing software can adjust your prices automatically based on relevant factors.
While retail arbitrage is an excellent alternative source of inventory, don’t forget about online arbitrage as another profitable way to source products for resale. Online arbitrage can provide the convenience of sourcing products from the comfort of your home, and tools like FBA Wizard can make the process even easier.
Whether you choose retail arbitrage or online arbitrage, combining them with other Amazon reselling methods can help you create a successful Amazon business. Check out this helpful, how-to sell on amazon for beginners guide.
With patience, hard work, and the right tools, you can build a profitable and sustainable Amazon business that can provide a significant source of income over time.