Retail Arbitrage is an act of buying products at your local retail stores and then selling those products through an online marketplace like Amazon, eBay, Etsy, and many other marketplaces for a profit. Wholesale and Retail Arbitrage are not the same. The key difference is that a seller who is handling Retail Arbitrage does not purchase their products and stock from manufacturers or wholesale suppliers, but rather, buys the products from other sellers or retailers.
Most people think Amazon is the best place to sell when starting a Retail Arbitrage business. Some Pros of Amazon Retail Arbitrage are below:
- One of the main advantages of Retail Arbitrage are the benefits you get when you use the business model in alignment with Amazon. Because there are several products that are not available on Amazon through the supply chain agreements that are traditionally used. That means, as a third party seller if you are sourcing the products from other sources and selling it on Amazon’s platform. Each of these products that are sold by the third-party seller also earns Amazon a cut, thus making you a source of revenue for their platform, which means you are a valuable asset to them and without any doubt, they generally work really hard towards keeping your business by providing you some great benefits for using the platform.
- The barrier to entry for a person to become a Retail Arbitrage seller is relatively lower than in any other business. For example, if a person could get started with a small amount like $150-$250 as the capital for arbitraging and if you are only making a few sales a month for some extra cash, Amazon won’t charge you for any subscription fee. However, if your sale reaches more than 40 sales a month, then Amazon will give you the option to upgrade to the Professional Seller account from the Individual Seller Account. This low expense, low capital, and minimum risk aspect of arbitrage makes it extremely attractive to the resellers.
- Most Retail Arbitrage sellers are using Amazon’s FBA services due to their easy use and benefits. Once resellers get the hang of the way Amazon Seller Central works and start making sales, retail arbitrage serves as a gateway to private labeling, which is a more scalable and stable way of creating an online business.
There are some important skills to learn if you want to run a business smoothly in the future. A few things that sellers pick up while using the Amazon platform include how to create an Amazon Seller Account, how to use it, creating the best shipping strategies, how to get around the dashboard, how to price products, and more. These challenges come along with setting up an actual business.
If you have any questions regarding the Amazon Retail Arbitrage business model then let me know and I’ll help you start or scale your Amazon e-commerce business.
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