Amazon arbitrage is one of the most popular ways for entrepreneurs of all backgrounds to get started in ecommerce. By purchasing products from retailers and reselling them on Amazon, sellers can build a steady stream of income without needing to develop or manufacture their own goods, opening a traditional brick-and-mortar store, or building an audience from scratch.
While the concept sounds simple, there are many nuances to master, from adhering to Amazon’s policies to understanding profit margins. In this article, we discuss how you can launch and grow a successful arbitrage business. We’ll show you how to find profitable products, research competition, and optimize your listings to stay competitive in Amazon’s vast marketplace.
Amazon arbitrage is a retail strategy where sellers buy products at a lower price from one marketplace or retailer and resell them on Amazon at a higher price to make a profit. This method leverages price differences across different stores—both online and offline—to capitalize on market inefficiencies.
Amazon arbitrage can be done in two ways: retail arbitrage and online arbitrage. Both follow the same principle (buying low and selling high), but the ways products are sourced in each method differ.
This method involves physically visiting retail stores, such as Walmart, Target, or local discount shops, to find products at clearance or sale prices. Sellers then scan these items with the Amazon Seller App to check their sales rank, price history, and estimated profit margins. The biggest advantage here is that you can inspect the product in person before purchasing.
On the other hand, online arbitrage involves sourcing products exclusively through ecommerce websites. Sellers browse online marketplaces or specialized clearance websites to find discounted or sale items. Tools like price-tracking websites and browser extensions can help you spot profitable deals. Online arbitrage is often more scalable, as you can source items from various suppliers remotely.
Starting an Amazon arbitrage business is relatively straightforward. However, each step requires due diligence, so here’s a step-by-step guide to get started effectively.
Before you do anything else, you need to sign up on Amazon Seller Central. You can choose between two types of account for this:
After selecting the account type, complete the registration by providing your business information, tax details, and bank account details. Once done, you will have access to Amazon Seller Central—your hub for managing products, orders, inventory, advertising, and reports.
Although Amazon permits arbitrage, the platform has certain rules that you must follow:
Staying compliant is critical. Selling counterfeit or restricted items—intentionally or not—can lead to policy violations and account suspensions.
Once your Seller account is active and you understand the policies, focus on finding profitable products. To identify profitable deals in retail and online stores, consider:
Effective arbitrage often hinges on using the right tools. Arming yourself with these tools can save time and lower the risk of investing in the wrong products:
Effective product sourcing is crucial for Amazon arbitrage profitability. This means ensuring the best possible purchase price for every item. Let's explore both retail and online sourcing methods below.
Major retailers like Walmart, Target, Home Depot, and TJ Maxx often run clearance sales where prices are heavily marked down. Smaller discount chains or local mom-and-pop shops can also be treasure troves for bargain hunters.
While shopping, use the Amazon Seller App to scan barcodes. This provides real-time insights into the sales rank, current Buy Box price, and estimated fees. Don’t be afraid to ask store managers if they can lower the price on clearance items—especially if you’re buying multiple units. This allows you to increase your profit margin even further.
Websites such as Rakuten (formerly Ebates), TopCashback, and Honey provide cashback or coupon codes for many online stores. By stacking these deals on already discounted items, you can further increase your profit potential. Keep an eye out for big online sales events such as Black Friday, Cyber Monday, or holiday-themed promotions. Limited-time offers and flash sales provide huge savings, especially on seasonal items that people often buy around certain times of the year.
Wholesale liquidation platforms sell overstock or returned items from major retailers at deeply discounted prices. While these can be profitable, ensure that the merchandise is in resalable condition and not restricted or damaged beyond repair.
Once you’ve sourced profitable inventory, the next step is to list your products on Amazon and decide how to fulfill orders—either by leveraging Amazon’s Fulfillment by Amazon (FBA) services or shipping products yourself (FBM).
A well-crafted product listing includes clear, keyword-rich titles and succinct product descriptions. Ensure you’re using the same product detail page (listing) as the matching UPC or EAN code. Creating a new listing is only necessary if one doesn’t exist for your product.
Products must be listed in the proper category to remain visible to potential buyers. Double-check you’ve included correct specifications like size, color, and brand. Include accurate images, disclaimers, or warnings when necessary—especially if your product is in a sensitive category (e.g., toys, beauty, electronics). Failing to meet these requirements can lead to suppressed listings or even account suspensions.
Your choice between FBA and FBM depends on your budget, how you want to handle shipping operations, and your own personal risk tolerance.
Competition among arbitrage sellers on Amazon can be intense, and profit margins may fluctuate rapidly. To maintain an edge, you need an agile approach to pricing, sourcing, and sales analysis.
Given Amazon’s dynamic marketplace, prices change frequently. Manually adjusting prices can be tedious and error-prone, causing you to miss sales opportunities or lose the Buy Box. Using an automated pricing tool like Informed Repricer will empower you to:
While Amazon is a massive marketplace, expanding to other platforms, like eBay, Walmart Marketplace, or even your own Shopify store (if you have one), can diversify your revenue streams and reduce dependency on a single channel. You can even integrate an automated repricer and your inventory management tool with these platforms to keep track of stock levels and pricing in one place.
Keep a calendar of major events, holidays, and seasons (e.g., back-to-school, Halloween, Christmas). During these peak periods, demand spikes for certain products, often pushing up prices and profit margins. Targeting these trends early can help you secure inventory before prices rise and cater to the market demand.
To scale your arbitrage business, you must focus on constantly finding and replenishing profitable products.
Some key strategies to do this include standardizing your research with spreadsheets or software to track leads and costs, building relationships with suppliers for better bulk pricing, and automating product searches using tools like Tactical Arbitrage to efficiently find price differentials across multiple websites.
With a data-driven approach, you can continuously refine your arbitrage business for sustained profitability. Regularly review metrics like units sold, average profit margin, and sell-through rate. Use this data to:
While Amazon arbitrage can be lucrative like other business models, many sellers make mistakes that lead to wasted time, lost profits, or account suspension. Here are some pitfalls to watch out for:
Even though arbitrage items are purchased from reputable retailers, damaged or defective stock can sometimes slip through the cracks. High return rates or poor product quality can tarnish your seller metrics and lead to negative feedback. Always double-check product condition before listing.
When arbitrage sellers sell products in a single category or niche, it makes them vulnerable to market fluctuations and Amazon policy changes. So, spread your risk by exploring new categories or seasonal items. This approach safeguards your revenue if one market segment becomes saturated or restricted.
With FBA, large or slow-moving items can rack up high storage fees. Continually review your inventory performance. If a product isn’t selling quickly, consider lowering the price or opting for a removal order to minimize costs. Over time, excessive storage fees can erode your profits.
Note: When calculating your overall profitability, factor in not just the purchase price and Amazon’s fees, but also the inbound shipping price. This cost is incurred when you transport your inventory to Amazon’s fulfillment centers (if using FBA). The higher this cost, the lower your profit margins.
Amazon updates its policies frequently, and sellers who fail to stay informed can inadvertently violate new guidelines. Regularly check your Seller Central notifications and Amazon’s Seller University resources. Maintaining a high account health rating is essential to avoid suspensions.
The Buy Box is where most Amazon sales happen, so if you’re priced too high or fail to adapt to marketplace shifts, you’ll likely lose this button. By using Informed Repricer, you can continuously scan your competitors’ pricing and ensure you stay Buy Box-eligible without manual intervention.
Amazon arbitrage can be a lucrative business model for online sellers. However, if you're a seller looking to grow your business, manually managing more SKUs, engaging in additional sourcing, and staying on top of the competition 24/7 can become less feasible as you expand. Our tool allows retail arbitrage sellers to automate these tasks with features such as:
So, if you are ready to take your Amazon retail arbitrage business to the next level with Informed Repricer's real-time automated repricing, start your free trial today!
Informed Repricer helps professional sellers on Amazon and Walmart increase their sales and profits by keeping their prices competitive 24/7.
