Most people don’t realize that the majority of products sold on Amazon are not sold by Amazon itself, but by more than 2 million merchants who use the company’s platform as their storefront and infrastructure.
Some of these sellers make their own products, while others practice arbitrage, buying and reselling wares from other retailers. Amazon has made this easy to do, first by launching Fulfillment by Amazon (FBA), which allows sellers to send their goods to company warehouses and have Amazon handle storage and delivery and then with an app that lets sellers scan goods to instantly check whether they’d be profitable to sell on the site.
The business model of a big brand store revolves around finding products that people buy, sending them to individual branches, and selling the items. If the sales volume for a branch is incorrectly estimated and there is no room for the excess, it gets discounted. Retail arbitrage involves buying the discounted products, then flipping them on Amazon (where people are paying full price) for a quick profit.
While some manufacturers do not care if their sellers are authorized or not, others look for this feature strictly and make it hard for you to promote or sell their products on Amazon. It all comes down to the:
- condition of the product you sell (new or used)
- product(s) that you sell
- brand of the product
However, if done right, this process can be very profitable.
The concept of retail arbitrage is simple. Retail stores (like Target, Walmart, etc.) sell products (either in-store or online) for a particular price. You source a few products, purchase them, sell for a greater price, and take the profit and put it in your own pocket.
Why would people actually pay full price for discounted products?
Because product deals/price differs based on the location.
Location plays a very important role in the trade business, especially for retail arbitrage on Amazon. Products that are slow-moving or common in a particular area can turn out to be in high demand in another location. That’s why there will almost always be a price difference from one zone to the other.
The other reason is convenience. With online, you don’t have to stand in line or drive in your car to buy the product. That’s why, millions of people are ready to even pay double for the product.
Since retail arbitrage is allabout speed and precision, apps are now available to help you list your items quickly and even price items as you go.
Item condition generators and competitive prices visualizers also help you make your decisions quickly when you’re listing or editing a product’s description. The apps also provide sales reports and access to inventory analytics. There are several app platforms that even help you find freelancers willing to do this work for you, including sites like Upwork, Fiverr, and PeoplePerHour.
If you’re between jobs, looking for extra income or considering retail arbitrage as a primary income, there are numerous videos on YouTube and article to help get you started.
The job market is changing fast and now, more than ever, it’s important to explore your options to generate multiple streams of income to give yourself economic stability.