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Welcome to the Complete Guide to Online Arbitrage for Beginners! This series of articles is designed to provide you with a comprehensive understanding of online arbitrage, from the basics to advanced strategies. Whether you're a complete newcomer to selling online or looking to expand your business, this guide will equip you with the knowledge and tools you need to succeed. (You’ll find a list of all the articles in the series at the end of this post.)
What you’ll find in this article: This article explains two ways to get your products to customers when you sell on Amazon: FBA and FBM. FBA means Amazon handles everything, like shipping and returns, but it costs money. FBM means you handle everything yourself, which can save money but takes more time. The best choice for you depends on what you want your business to be like.
Running an online arbitrage business requires efficient logistics to get your products from point A to point B. For Amazon online arbitrage, there are two main storage and shipping options: FBA and FBM. The choice between the two will depend on your specific business needs.
FBA basically tells you that Amazon has your back. Even new sellers will thrive with this business model.
Arguably, the main benefit of FBA is this. Once you sign up, you only need to send your products to Amazon warehouses for storage. When a customer orders, they'll also handle the packing and shipping.
FBA comes with benefits like eligibility for Amazon Prime. This allows you to provide free two-day shipping to Prime members. This service can significantly boost your product visibility and attract buyers looking for free and quick shipping.
The FBA model also provides customer service and returns. This encompasses answering customer questions, processing returns, and handling refunds. Offloading these responsibilities to Amazon ensures that the company handles customer interactions professionally.
FBA opens the door for you to reach international customers. You can list your products to access the platform's global marketplace.
FBA enables you to scale your business without stressing over the logistics of managing a more extensive inventory. FBA also has your back if you want to scale down. It will flex with your business needs.
With these benefits come fees that you should keep in mind:
There is also the infamous low inventory level fee, but this only becomes an issue if you sell a specific item repeatedly over a long period of time. For most arbitrage sellers, who snap up a deal once and then look for something else to sell, it isn’t a problem.
To get the best results with FBA, check your costs and set your prices to cover these fees. Also, keep an eye on your inventory to prevent extra storage fees from having too much unsold stock.
Fulfilled By Merchant is the opposite of FBA. It's a more hands-on approach:
Unlike FBA, you'll have complete control over how and when your products are shipped with FBM. You can choose your preferred carrier and time to ship your products.
Using FBM means you can shop around for the best shipping deals. You have two options:
In either case, you’ll want to deal with negative ratings immediately. FeedbackWhiz Emails alerts you of poor seller feedback, helps you request revisions or offer support, and tracks any changes. Learn more here.
FBM lets you personalize your packaging with custom branding or thank-you cards. Customization is great for unboxing videos. This can improve the customer experience and inspire people to be loyal to your brand.
Just be careful not to violate Amazon’s policies about product inserts. Watch this Amazon Seller University video in Seller Central to make sure you understand the rules.
Fulfilling your own orders means you're not obligated to pay fees associated with FBA. This can be a good choice if you have few products or low profit margins.
That being said, FBM takes more effort:
If you go with FBM, consider getting shipping software to help you handle orders better and cut down on mistakes. You can also reduce the customer service workload with ChannelReply.
Even if your product is fantastic, bad packaging and shipping can spoil the experience. Here are some essential tips for effective packaging:
Cheap packaging might save money, but you're just wasting resources if it can't protect your item. Use bubble wrap or foam peanuts for fragile items and sturdy boxes with enough padding for larger ones.
Also, consider using sustainable packaging. Highly recyclable or biodegradable alternatives to styrofoam and plastic can make a difference.
Nothing is quite as stressful as a package with seals hanging on for dear life. A short distance or a tumble can open the package and ruin the product. To prevent this mishap from happening, always use strong packaging tape and reinforce the seams and edges.
One reason products aren't delivered on time or to the right person is mislabeling. Your shipping labels must be clear and easy to read. If you're using FBA, follow Amazon's specific labeling requirements. If using FBM, add the correct addresses (destination and return) and special handling instructions. Print the address using a non-cursive font if your penmanship is hard to read.
Also, write or stick labels like "Fragile" or "Handle with Care" for delicate items to alert the carriers.
A packing slip contains information about the package's contents. It's to verify that the customer is receiving the right product. This is valuable in case of product returns.
Returns are bound to happen. Mistakes or miscommunications sometimes occur even if you're the most diligent online arbitrageur. And that's okay. How you handle returns will impact your business.
A straightforward return policy helps prevent misunderstandings between you and your customers. If you’re only selling on sites like Amazon and eBay, their default return policies usually do the job just fine. Just make sure you understand them.
If you’re selling on your own site or want to create a custom policy, outline the conditions and timeframes within which returns are acceptable. Include any associated costs. Also, ensure that the policy is visible on your website, storefront, and product listings.
Don't let your customers wait. If the return is acceptable, handle it quickly to keep your customers happy. With FBA, Amazon takes care of returns for you. With FBM, ensure a smooth process for checking, restocking, or dealing with returned items.
Upon receiving the returned item, check it immediately for damage or missing parts. Determine if it can be resold. Keeping detailed records of returns helps you identify patterns or issues with specific products.
Looking at why returns happen can give you clues about issues with your products or descriptions. Use this info to make improvements and cut down on future returns.
How you handle returns affects customer loyalty. Give clear return instructions, reply to customer questions quickly, and address any issues professionally.
Whether you choose FBA or FBM, staying on top of shipping and storage is key. Smooth logistics will help you maintain a good reputation and achieve business success. As you master these aspects, you'll be ready to explore how to scale your online arbitrage business effectively.
Bookmark this guide! It's a complete, easy-to-follow resource for learning about online arbitrage. Even if you have zero knowledge about it, don't get overwhelmed. We'll walk you through everything. In this section, we'll tackle the basics and see if this business model is right for you. We're dedicated to helping you build your business with the right knowledge and tools.
> [Part 4] Shipping & Storage
[Part 5] Scaling Your Business
[Part 6] Overcoming New Seller Challenges
