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Amazon Retail Arbitrage: The New Sellers' Guide [2024]

Threecolts
Emma Ritson
Published
February 17, 2024
Modified
March 26, 2024
Amazon seller app used for retail arbitrage on Amazon

Are you interested in selling on Amazon but don't have the budget to launch a private label product or don't know where to begin? Retail arbitrage is an excellent way to start, and it allows you to do so with as much or as little money as you're comfortable with, even without visiting a physical store.

To learn more about retail arbitrage, keep reading.

What is retail arbitrage?

Retail arbitrage is the process of buying discounted products from retailers, including online, to resell on Amazon for a profit. For example, buying a $5 product from Walmart and selling it on Amazon for $20, and thus pocketing a healthy profit.

Online arbitrage is a similar process but with products bought online. Retail arbitrage is legal according to the first-sale doctrine, which states that a legally purchased product can be resold if it is in an unchanged condition.

How retail arbitrage differs from other Business Models on Amazon

Private Label: This is when you modify an existing product and create your own label/brand. It requires capital to get started but can be highly profitable.

Wholesale: This is when you buy products in bulk directly from a brand or distributor with extra stock. This is a more sustainable business model as you can replace orders monthly. Since you are an authorized reseller, you needn’t worry as much about inauthentic claims that could get you banned.

Dropshipping: This is when you buy products directly from a manufacturer who fulfills and ships the order directly to the customer.

Handmade: This is when you create or craft your own products to sell on Amazon.

Why choose arbitrage over other models?

There are a few reasons to choose arbitrage over other models of selling:

Lower start-up cost: Arbitrage sellers can launch Amazon businesses with less than $500 - $1000. In contrast, private label sellers would need $1,000 or more to launch.

Faster to start: Retail arbitrage sellers can launch Amazon businesses in less than one month, whereas private label sellers would usually take longer.

Essentially, if you do not have an item or product to sell online—or cash to purchase products at scale—arbitrage is a great, low-risk way to sell on Amazon.

Also, if you do begin to sell arbitrage, then you can use your strategy to expand into other methods of selling, such as a wholesale business, a private label business, a dropshipping business, or a craft (handmade products) business.

So how does it all work?

Getting started with retail arbitrage

To begin selling retail arbitrage on Amazon, you need to find products to sell and then create an Amazon seller account.

You should also decide whether to use Amazon’s Fulfillment by Merchant (FBM) program or Fulfillment by Amazon (FBA) to handle packing, shipping, and customer service. It’s possible to use both FBM and FBA simultaneously.

Various tools and software are available to help you find products to resell, but the only essential tool is the Amazon seller app, made by Amazon for you. This app is free to use with your Amazon seller account and allows you to scan products in retail stores. You can use this app along with other apps  designed to help you increase your profits.

Scanning products with the Amazon seller app shows you different listings, sales rank, and whether you are authorized to sell that particular product; in short, it helps you determine profitability by entering your buy cost. You can even list products for sale directly from the app.

If you don't have the Amazon seller app on your phone, you can download it from the app store and sign in to your Amazon seller account. Once you have the app, take some time to familiarize yourself with its various features.

The Amazon seller app

The Amazon seller app allows you to:

  • Check a product’s profitability
  • Manage orders and their returns
  • Place items for sale on Amazon
  • Monitor your sales on Amazon
  • Answer all your Amazon customer messages
  • Scan item barcodes

Apps used to increase profitability

You can also use cutting edge apps created by software companies if you want to up your game. One tool that makes finding profitable items for retail and online arbitrage so easy and efficient is Tactical Arbitrage, which assists Amazon vendors in discovering lucrative products for online arbitrage. It’s known as the number one software app for Amazon arbitrage.

About Tactical Arbitrage

Tactical Arbitrage uses various data sources to identify products that are selling for a lower price on one marketplace, and then helps sellers to list those products for a higher price on another marketplace.

SellerRunning

Then there is SellerRunning, a hot new reselling app that helps you sell across borders in Global Amazon marketplaces. With intuitive capabilities and cutting edge technology, you can sit back and chill while SellerRunning’s advanced software manages the sourcing, pricing, and delivery process—and essentially runs the show.

From removing products from your store when they are banned to adding them back when the data supports it, this is a powerhouse of a platform. The software tracks all the orders for you—with swift automatic updates on confirmation, delivery, delays, or returns.

How to source retail arbitrage products to resell through Amazon

With the Amazon seller app installed, now you can start looking for some items to sell! A good idea is to start at a local “big box” retailer or discount shop such as:

  • Target
  • Kohl’s
  • TJ Maxx
  • Walmart
  • Marshalls
  • Ross
  • Dick’s Sporting Goods
  • Dollar General or other dollar stores
  • CVS/Walgreens/Rite Aid or other convenience stores
  • Grocery stores

Types of products to resell on Amazon:

The 10 most popular Amazon product categories that arbitrage sellers sell in include the following:

List of top ten products

So here’s how you can proceed with three easy steps.

1) Go into any retail store and then begin scanning products

Starting to scan items in a retail store using your phone can be daunting and uncomfortable, but keep in mind that everyone has to begin somewhere.

To get started, open the Amazon seller app and tap on the camera button located in the top right corner. The camera function in the app works just like your phone's camera, allowing you to scan product packaging and search by image, or scan a barcode.

Scanning an item in a shop

2) Look at the search results and choose the best product

It is pretty common when scanning products with the Amazon seller app to discover multiple results. A lot of products have either duplicate listings or some listings will be a 2-pack, 3-pack, etc.

Let’s take a look at this listing for Crayola crayons, below, as an example. We went and took a scan of the “Crayola Washable Sidewalk Chalk 48-Count,” and it resulted in three items.

An Amazon listing

With the first result, you can understand right away that it is restricted. Clicking on this,  the screen will say “You cannot sell this product in new condition.” So don’t go near that listing.

With the second result, you’ll see the Buy Box price is currently $22.45, so go ahead and click on that listing.

3) Let’s analyze all the data

What to look for on this screen:

  • Details and features: Click on this first so you are aware of the precise details of this listing. Once we’ve looked at the numbers, we understand that this listing’s for one box of 48 pieces of chalk.
  • Sales rank: You can find the Best Sellers Rank for a product in two places: just below the title and in the Features & Details section. The Best Sellers Rank varies across different categories on Amazon, but a general guideline is to look for products with a sales rank of less than 100,000. The lower the sales rank number, the higher the product's sales volume. In the example we're using, a sales rank of 1,573 is considered very good for Office Products. However, keep in mind that this number may not always accurately reflect the product's sales performance, as it can be influenced by sporadic sales spikes. To determine consistency of a product's sales rank, it's important to use the History Graph included with Tactical Arbitrage so you can review the sales activity of the product.
An Amazon seller app page
  • Watch out for sellers on the listing: You’ll see in the second row down beneath “new” if Amazon is on the listing, the number of FBA sellers, and the total number of sellers, including FBM. We try to avoid all listings that Amazon is on because it doesn’t always share the Buy Box with third-party sellers, which may get you stuck with inventory you cannot sell.

There are a lot of FBA sellers on this listing, but with such a low sales rank, this product would still be a good buy as long as it is profitable.

  • Price and Gross Proceeds: The most important piece of the puzzle: can you now sell the product at a profitable price? If you click on the pricing section, you will be able to input your buy cost and Amazon will break down all of the fees so you can decide whether or not you should buy this product.

In the app, input your buy cost and it will automatically show you the potential profit.

For this particular product, I am able to purchase it for $5.74. Based on the current selling price minus FBA fees and buy cost, my profit would be $7.45. That is over a 100% ROI, so I would buy this product!

A listing for an Amazon good

Step 4: Decide the number of units to buy

When considering how many units of a product to purchase, especially when ample stock is available, it ultimately comes down to your own personal risk tolerance.

Using the previous example, where there were 22 FBA sellers with an estimated 5,000 monthly sales based on the product's sales rank, you can calculate your potential monthly sales by dividing the monthly sales figure by the number of FBA sellers.

In this case, the result is 227, indicating that you could potentially sell more than 200 units of the product per month. However, keep in mind that this estimate is subject to change if new sellers join the listing, if the product's sales rank decreases, or if the Buy Box price drops.

If you're new to retail arbitrage or selling on Amazon in general, it's recommended to start with a small amount of units to test the product's performance. For instance, in the sidewalk chalk example mentioned earlier, you could begin by purchasing just five or 10 units to gauge its sales potential.

Step 5: Determine your target profit margin and ROI

What is ROI?

ROI stands for Return on Investment, which refers to the amount of money you earn from a business venture that exceeds the amount you initially invested.

For instance, if you purchase a product for $10 and earn $12 in gross proceeds after a sale, your ROI would be calculated by dividing the profit ($2) by your investment and expressing it as a percentage. In this case, your ROI would be 20 percent.

It's crucial to aim for a high ROI, not only to increase your earnings per sale, but also to leave some leeway in case the Buy Box price drops.

The minimum acceptable ROI varies among sellers and depends on personal preferences. While some sellers are content with earning a small ROI (such as 20 percent) as long as they sell the product within a month, others require at least 50 percent ROI for it to be considered worthwhile.

Online arbitrage

Online arbitrage is similar to retail arbitrage, but instead of searching for products in-store, you browse through retailer websites to find profitable items.  

The beauty of online arbitrage is that you can do it from the comfort of your home. While there are paid tools available that automatically scan through thousands of products, you can still manually browse through e-commerce stores to uncover hidden gems. Look for sale and clearance pages on retailer websites, as these typically offer discounted products that can be sold for a higher price on Amazon.  

This process can be time-consuming, but it's worth the effort if you're consistent. Once you find a product you're interested in, search for it on Amazon to see if the price is higher. If it is, you can use Tactical Arbitrage to estimate how many times the product sells per month, determine the potential profit, and view historical price and sales data.

If the product looks promising, order it and have it delivered to your home. From there, prep, pack, and ship the inventory to Amazon so it can be fulfilled through FBA!

Arbitrage tips:

Look at trends and seasonal products

Rather than just randomly searching for products to resell on Amazon, it can be beneficial to conduct some research and plan ahead for certain types of products that you would like to sell. Seasonality is an important factor to consider, as you can identify which products are currently or soon-to-be trending or sell more during a particular time of year.

For instance, toys tend to be in high demand during the holiday season, while inflatable pools or floats are popular during the summer, and can be highly profitable. Due to the increased demand during these times, the supply in retail stores tends to diminish rapidly, resulting in higher prices online.

In the summer of 2020, for example, you could buy an inflatable pool for $20 at Walmart and resell it on Amazon for $80. Even at this higher price, customers are still willing to purchase the product if they cannot find it in-store and are eager to obtain the item.

By keeping up with current events and trends like these, you can establish a successful Amazon reselling business.

Sell discontinued products for huge profits

Have you ever had a product that you adored, but then the brand inexplicably chose to discontinue it? We've all been there, and it's no secret that many of us would happily pay a premium to bring those beloved items back into our lives. In fact, some consumers are willing to shell out exorbitant sums for products that seem to have vanished from the market entirely.

You might be wondering: if a product is no longer being produced, how can I possibly get my hands on it? It turns out that certain discontinued products are still in circulation and may occasionally appear in retail stores, discount outlets, grocery stores, and other locations. The key is being in the right place at the right time.

How to find discounted items to sell:

  • Consider shopping at local stores instead of big box retailers like Walmart as small businesses are more likely to carry obscure, discontinued items. Keep an eye out for items that appear old and outdated, as these may be discontinued products. Even dusty or faded packaging may indicate a hard-to-find item.
  • Pay attention to products labeled as "refills" in the cleaning category, as many of these items may have been discontinued but are still in demand. These refill packs allow users to continue using the product, but may not be available for purchase in stores.
  • Another option is to search for discontinued products on eBay by using the keyword "discontinued" and filtering by sold listings only. This will show you all the products that have recently sold on eBay, and may give you a better chance of finding that elusive item.

Some extra tips, tricks and ideas for arbitrage:

  • It's important to stay patient when searching for profitable products to sell on Amazon. It can be exhausting and frustrating to scan through numerous retail items without any success, but don't give up! Keep at it, and eventually, you will find items that will generate profit.
  • Make informed buying decisions by referencing data from the Amazon seller app and Tactical Arbitrage. It's crucial to avoid purchasing products that won't sell, so analyze the data and make sure you have a clear understanding of what is in demand.
  • Be aware that prices can change quickly if another seller drastically lowers their price. This can make your purchase less profitable, so check the price history and keep an eye on the market to make informed pricing decisions.
  • Start small and work your way up to get accustomed to the selling process. Don't go all-in and invest a large amount of money on products to resell on Amazon until you have a better understanding of sourcing, listing, shipping, and pricing. Starting small will help you learn and refine your skills before taking on more significant investments.

How to create a listing for your arbitrage products on Amazon

The next step in the process of reselling products on Amazon is to list the item for sale. Since you are not dealing with a private label product, you don't necessarily need to create a brand new listing. Instead, you can locate the existing listing that matches the product you want to sell and add its unique ASIN to your catalog in Seller Central.

Because you're not the only seller of the product, you'll end up sharing the buy box with other sellers, unlike in private label, where you're the sole seller. Keep in mind that if a product typically sells 300 times a month, you won't be receiving all 300 sales if there are other sellers on the listing.

There are several methods for adding the product to your catalog, so let's explore each one.

Option 1: List the item from the Amazon seller app

Once you've scanned a product in the seller app, you'll have the choice to list it as Fulfilled by Merchant (FBM) or Fulfilled by Amazon (FBA). If you decide to list the product as FBM, you can enter the available inventory directly into the app, which will make your offer available for sale immediately.

Chalk for sale on Amazon

To get started with listing a product, look for the "List" button located in the bottom right-hand corner. You'll be prompted to provide information such as the product's condition, price, SKU, and fulfillment channel.

For the condition of the product, select "New."

When it comes to pricing, it can be a bit challenging, so pay attention to this part. You'll see an option for Amazon to "Match Low Price." While this may sound like the right choice, be sure to check the FBA prices before selecting it.

If Amazon is showing you the lowest price for a new item at $6.72, it may not be profitable for you to sell at that price. However, that's only the lowest price for Fulfilled by Merchant (FBM) offers, not for Fulfilled by Amazon (FBA) offers.

If you refer back to the pricing section, you'll see that the lowest FBA price is $22.39, which is the price you should aim for. Going any lower could cause you to become the seller that drives the price down and decreases profitability.

In our experience, we usually set our price a couple of dollars higher than the current Buy Box price. You can always adjust the price once your inventory is ready to sell from an FBA warehouse.

Here's a tip: to make better pricing decisions for your products, consider adding your own custom seller stock-keeping unit (SKU). While leaving it blank isn't a big deal since Amazon will assign one for you, it's helpful to format your SKU so that you know exactly what you paid for the product, where you bought it, and your breakeven price. For example, if you purchased chalk at Walmart for $5.75 and your breakeven price is $14.00, you could format your SKU as follows:

WM_5.75_BE14

This information indicates that the cost of the chalk was $5.75 and the breakeven price is $14, meaning that the product needs to be sold for at least $14 to avoid losing money.

Next, you'll need to select the Fulfillment Channel. If you opt for "I will ship this item myself," you'll be using FBM and can input your available inventory in the app.

Alternatively, if you choose "Amazon will ship and provide customer service," you'll be using FBA and will need to set up your shipment in Seller Central instead of the app.

When you select the FBA option, the app will automatically add the listing to Seller Central for you. You'll then need to create an FBA shipment so that your listing offer can be made available for sale.

Option 2: List in seller central on your desktop/laptop

The best and swiftest way for seamless listing of your retail arbitrage products on Amazon is the following:

First, you will locate the listing to sell on. After this, you will copy the ASIN and put it into Seller Central.

Once you’re in Seller Central, you can head to Inventory > Add a product and then quickly paste the ASIN. You may search for it in this section, too.

Select  “New” as the products condition and then choose “Sell this product.”

After you have pressed “Save and finish,” Amazon creates a listing that will be in your Manage Inventory page. It may take 15 minutes or so to become searchable, after which you can create a shipment.

If you look in your Manage Inventory, this is what you will see on the screen. You’ll notice that the status shows up as “Inactive” as you don’t at this point have any of your inventory at Amazon’s warehouse.

Let’s create your FBA shipment

Congratulations on purchasing inventory and adding the listing in Seller Central! Now it's time to send in your inventory and take one step closer to reselling products on Amazon.

Step 1: Find your product in Manage Inventory

Good work team. Now we are going to look at the "Edit" drop-down menu on the far right, and we will select "Send/Replenish Inventory."

Step 2: Choose what inventory you want to send

You can edit the packing template, including the template name, how many units per box, dimensions, weight, and prep needed. After that, choose the number of boxes you're sending to Amazon. For example, you might send 1 box filled with 20 units. Click “Confirm and continue."

Step 3: Confirm shipping

Set the ship date you want, select the shipping mode (e.g. "small parcel"), and confirm what the inbound shipping price is.

If you previously entered the weight and dimensions, there isn't much else to do. When using Amazon's partnered carrier (UPS), you'll get very low shipping rates. For instance, a 15-pound shipment might cost only $8.69 to ship into FBA. Click "Accept charges and confirm shipping" if you agree.

Step 4: Print FBA labels Now that your shipment is confirmed, print the FBA label and affix it to the outside of your box.

The label will have two barcodes, one for UPS and one for Amazon to identify the shipment's sender and contents. Make sure both labels are visible on the outside of your box. For more information, check out our in-depth guide to creating FBA shipments.

You are now in the process of becoming a retail arbitrage seller on Amazon!

The Amazon seller app enables you to oversee your daily sales, manage orders, and make pricing adjustments when necessary. In case your products are selling well, try to source more inventory to keep the sales momentum going. Conversely, if your products are not selling as expected, consider adjusting the prices to attract more buyers. Always remember to format your SKU to help you track your expenses. In the reselling business, success relies on your dedication to constantly hunt for new products. If you enjoy scouring stores and the thrill of the hustle, retail arbitrage may be the right business model for you. So go out there, find some products and keep hustling!

About TacticalArbitrage

While Tactical Arbitrage is primarily designed for online arbitrage, it is possible to use it for retail arbitrage as well. Retail arbitrage involves buying products from physical retail stores, and then reselling those products online. While it can be more challenging to use Tactical Arbitrage for retail arbitrage, it is still possible to find profitable products using this tool.

To use Tactical Arbitrage for retail arbitrage, you will need to have access to a scanner or a smartphone with a scanning app. You can use the scanner to scan barcodes of products that you are interested in reselling, and then upload that information into the tactical arbitrage software.

The software will then analyze that data and compare it to other marketplaces to identify potential opportunities for profitable sales. This can include identifying products that are selling for a higher price on Amazon or other e-commerce platforms, and then helping you to list those products for a higher price.

SellerRunning

SellerRunning is the breakthrough new e-commerce app that helps you sell across borders in Global Amazon marketplaces. With intuitive capabilities and cutting edge technology, you can sit back and chill while SellerRunning’s advanced software manages the sourcing, pricing, and delivery process—and essentially runs the show.

From removing products from your store when they are banned to adding them back when the data supports it, this is a powerhouse of a platform. The software tracks all the orders for you—with swift automatic updates on confirmation, delivery, delays, or returns.

The software will then analyze that data and compare it to other marketplaces to identify potential opportunities for profitable sales. This can include identifying products that are selling for a higher price on Amazon or other e-commerce platforms, and then helping you to list those products for a higher price.

About us

Threecolts acquires, launches, and grows e-commerce software with a robust suite of offerings such as SellerRunning, SmartRepricer, SellerBench, Tactical Arbitrage, Bindwise, RefundSniper, ChannelReply, and FeedbackWhiz.

Reach out to SellerBench for help with shipment reconciliation and FBA fee reimbursements; it's the most robust profit recovery platform for Amazon and Walmart. Because 99% of FBA sellers are owed money. Get your free audit today.

If you are more interested in the #1 Amazon Arbitrage software, try TacticalArbitrage. With over 6,000 users, TacticalArbitrage will help you discover profitable products to resell on Amazon.

SellerRunning is an entirely new way of selling on Amazon. Discover a global network of Amazon marketplaces for seamless listing, smart pricing strategies and increased profitability. Outdo the competition and win the Buy Box with prices that are automatically updated according to your rules.

Bindwise will help you to identify costly issues with your Amazon seller accounts. Receive instant Bindwise Alerts about everything related to your store on Amazon.

RefundSniper is an international Amazon reimbursement service that runs audits on both Vendor Central and Seller Central. Find out how much you are owed by Amazon today.

Try effortless, instant and automated repricing today with SmartRepricer. It's the world's #1 repricer to safely automate your Amazon pricing, win the Buy Box, and increase your sales.

If you're looking for a way to streamline multi-platform e-commerce support, ChannelReply has you covered. Cut your customer response time in half by having all your customer information in one hub.

FeedbackWhiz is an Amazon sellers management software that helps merchants scale their business by automating email campaigns, improving seller feedback, getting more product reviews, monitoring listings, and analyzing profit and accounting data.