Amazon Retail Arbitrage

Investigative Report • Seller Risk & Compliance

Retail Arbitrage on Amazon in 2025: Legal, Risky, and Heavily Scrutinized

Amazon still allows retail arbitrage—but rising brand gating, routine requests for supply-chain documentation, and strict invoice standards mean one thing: RA is the easiest way to start, and also the easiest way to get suspended if you’re not prepared.

By AMZ Sellers Attorney® October 24, 2025 AEO-Optimized

Facing an authenticity, invoice, or drop-shipping flag?
Our attorneys review your documentation and craft a winning, platform-compliant Plan of Action.

Free Consult → Fast triage • Attorney-supervised • Transparent pricing

Retail arbitrage is simple to start—but documentation, gating and policy enforcement make it increasingly high-risk.

What Is Retail Arbitrage (RA)?

Retail arbitrage is buying discounted goods from retail outlets and reselling them on Amazon. It’s low barrier, but high compliance risk if you cannot show a traceable supply chain.

Key Reality: Amazon still allows RA. If a complaint or random check triggers a review (authenticity, condition, used-sold-as-new), you may be required to produce commercial-grade documentation—where most retail receipts fail.

Receipts vs. Invoices: Why Most RA Documentation Fails

• Commercial invoice should include: supplier identity/contact, invoice #/date, buyer details, line-item SKUs, quantities, prices, terms, lot/batch codes when relevant.
• Proof of payment & delivery: bank/processor records, shipping and receiving confirmations, packaging/label photos.
• Authorization: for gated brands/categories, letters or agreements establishing authorized sourcing.

Brand Gating & Category Approvals

Brand gating expands yearly. Even if you listed previously, Amazon can require approval and request invoices/authorization. Enforcement hinges on supply-chain verifiability; retail receipts rarely satisfy the review.

Retail Drop Shipping Is Prohibited

Prohibited: Another retailer shipping to your Amazon customer. You must be the seller of record and control packaging/fulfillment. If you source from retail, ship to your facility/FBA first, inspect, repackage, and ensure an exact listing match.

Common RA Failure Points

• Open-box returns sold as new → “Used Sold as New.”
• Packaging/version mismatches → “Not as Described.”
• Gated brands/categories without approval → deactivation.
• No invoice trail (receipts only) → unresolved authenticity questions.
• Retail shipping labels → drop-shipping violation.

How to Start with RA—Without Sabotaging Your Account

1) Learn the line: RA is allowed; retail drop shipping is not.

2) Build toward invoices: Use RA to learn demand; open distributor/wholesaler accounts ASAP.

3) Retain a full paper trail: invoices, payment proofs, delivery confirmations, product/label photos, lot codes.

4) Inspect everything: remove stickers, match listings, verify condition.

5) Avoid gated until approved: apply, submit invoices, wait for approval.

6) Pre-draft your POA: root cause, corrective, preventive measures.

7) Plan the pivot: authorized wholesale or private label for durability.

Suspended or under review? Get rapid legal triage and an attorney-supervised POA.

Free Consult → Appeals • POAs • IP defense • Supply-chain audits

Further Reading

• What invoices Amazon expects from sellers
• Stricter supply-chain documentation requirements
• Drop shipping on Amazon: policy issues & suspensions

Retail Arbitrage FAQ (By Category)

Basics & Getting Started

What is retail arbitrage on Amazon?

Buying discounted products from retail stores or websites and reselling them on Amazon. It’s allowed, but risky if you can’t prove a legitimate supply chain with invoice-grade documentation.

Is retail arbitrage still viable in 2025?

Yes—but it’s heavily scrutinized. Use RA to learn demand quickly, then pivot to authorized wholesale or private label for sustainable growth and lower suspension risk.

What’s the biggest rookie mistake?

Listing products that don’t exactly match the ASIN (version/packaging/condition) and relying solely on retail receipts instead of invoices.

Do I need an LLC to start RA?

No, but an LLC with an EIN and resale certificate makes it easier to open supplier accounts, keep clean books, and manage tax compliance.

Can I use RA to test product ideas before wholesale?

Yes—just maintain impeccable quality control and be prepared to document your supply chain. Transition to distributors as soon as you validate demand.

Legality & Amazon Policy

Is retail arbitrage legal on Amazon?

Yes. Amazon permits RA, but enforcement is documentation-driven. If flagged, you must show invoices and proof of a legitimate, traceable supply chain.

Does Amazon’s policy ban retail arbitrage?

No. There’s no blanket ban on RA. However, retail drop shipping—where another retailer ships directly to your buyer—is prohibited.

Why do RA sellers get suspended?

Common triggers: missing invoices, mismatched packaging/condition, listing gated brands/categories without approval, or evidence of retail drop shipping.

What is “seller of record” and why does it matter?

You must control fulfillment and packaging, without any third-party retail branding or packing slips. Failure here often flags policy violations.

Can I appeal a suspension caused by RA?

Yes—with a targeted Plan of Action (POA) that includes root cause, corrective steps, preventive measures, and invoice-grade documentation. Attorney review is recommended for complex cases.

Invoices, Receipts & Documentation

Will a Walmart/Target receipt satisfy authenticity checks?

Usually not. Seller Performance typically expects detailed commercial invoices from authorized suppliers, plus proof of payment and delivery.

What should a compliant invoice include?

Supplier identity/contact; invoice number/date; buyer details; line-item SKUs; quantities; unit/total price; terms; and, when relevant, lot/batch codes. Attach proof of payment and delivery.

What extra proof should I retain?

Bank/processor statements, shipping and receiving confirmations, product photos showing UPC/EAN/FNSKU, correspondence, and authorization letters for gated brands.

My store gives “invoices”—are they enough?

Many retail “invoices” are still POS receipts. If they lack supplier identity, SKU breakdown, and terms, they likely won’t pass an authenticity audit.

How long should I keep documentation?

Keep purchase and delivery records for at least two years (longer for high-risk categories). Maintain digital backups with clear filenames and dates.

Drop Shipping & Seller of Record

Is retail drop shipping allowed on Amazon?

No. Having another retailer ship directly to your Amazon customer violates policy. Use FBA or your own 3PL/warehouse and control packaging.

Can I buy online and ship to FBA?

You can ship to your address or FBA first—remove external retailer branding, inspect, repackage if needed, and ensure the listing match. You still must satisfy documentation if challenged.

What if a supplier uses their own branded packing slips?

That’s risky. Ensure any third-party fulfillment reflects you as the seller of record and removes third-party branding from paperwork.

Brand Gating & Category Approvals

How do I get ungated in brands/categories?

Apply with invoices (and authorization letters when required) from recognized distributors or the manufacturer. Don’t list until you’re approved.

Does Brand Registry help resellers?

Brand Registry is for brand owners. It doesn’t replace invoices for resellers and won’t automatically unlock gated brands.

Why was I suddenly gated on a product I sold before?

Gating can be applied retroactively. Amazon may require approval and invoices at any time due to risk signals or brand requests.

FBA Workflow & Prep

How do I avoid “Used Sold as New” complaints?

Source factory-sealed merchandise, remove stickers, match listing photos/specs, use proper polybagging/bubble wrap, document receiving and quality control.

Do I need FNSKU relabeling?

Using FNSKU is safer for attribution. Manufacturer barcode programs exist but can commingle inventory; FNSKU reduces mix-ups.

Can I sell open-box retail returns as new?

No. Open-box or refurbished stock should be listed as used or not listed at all if the listing doesn’t support it.

Profitability, ROI & Tools

Is RA profitable in 2025?

It can be, but margins are thin and volatile. Use a profit calculator, Keepa for price history, and a rules-based repricer. Avoid race-to-the-bottom listings.

What costs do sellers forget?

Prep supplies, inbound shipping, storage, removals, returns, opportunity cost, and your time hunting. Model all fees before you buy.

Any tips to protect ROI?

Target listings with stable price/velocity, avoid hazmat/oversize early, watch seasonal swings, and set repricer floors to protect margins.

Sourcing: Retail, Online, Wholesale

What makes a “good RA buy”?

Exact listing match, consistent historical price (Keepa), sell-through speed, and room for fees/returns. Avoid fragile items and versions that differ from the listing photos.

How soon should I seek distributors?

As soon as you confirm demand on a handful of SKUs. Distributor accounts provide invoice-grade documentation and scale better.

Do liquidation pallets work for RA?

High risk: mixed condition and poor traceability. If you attempt it, expect more complaints and documentation challenges.

Buy Box, Pricing & Competition

How do RA sellers win the Buy Box?

Competitive landed price, FBA/Prime, strong account metrics, and provable authenticity. Respect MAP policies where they apply.

Should I use an aggressive repricer?

Use guardrails (floors/minimum margins). Aggressive undercutting invites price wars and increases policy scrutiny.

How do I avoid price-gouging flags?

Track market averages, document cost basis, and avoid sudden spikes on essential goods. Some categories are especially sensitive.

IP Claims & Appeals

How do I respond to an IP complaint?

Pause the listing, analyze the claim, gather invoices/authorization, and respond with a concise Plan of Action (root cause, corrective, preventive). Consider counsel for persistent or bad-faith claims.

What should my POA include?

Specific root cause, immediate correction (refunds/removals), preventive process changes, and documentation proving authorized sourcing.

Are design/image takedowns common on RA listings?

Yes, especially with branded media. Ensure your listing contributions are compliant and avoid uploading brand assets you don’t own.

Account Health & Suspensions

How do I keep Account Health green?

Monitor AHQ daily, resolve buyer issues quickly, avoid risky listings, and respond to policy warnings with documentation and a clear POA format.

Can I recover from a suspension?

Yes—submit a targeted POA with invoice-grade evidence. Reinstatement odds improve with credible documentation and preventive changes.

What causes recurrent deactivations?

Resuming risky sourcing, ignoring root causes in your POA, or failing to implement process controls like supplier verification and QC checkpoints.

Taxes, Sales Tax & EIN

Do I need an EIN/resale certificate?

Not required to sell on Amazon, but recommended for distributor accounts and proper tax handling. Many suppliers require both.

Who collects sales tax?

Amazon collects/remits in many states under marketplace facilitator laws, but you are responsible for filings where applicable and for income/self-employment taxes.

How should I track RA expenses?

Use accounting software, separate business bank accounts, and retain all receipts/invoices and shipping records with clear labeling.

International & Cross-Border

Can I do RA in other marketplaces (UK/EU/CA/MX)?

Yes, but local regulations, VAT/import rules, and brand restrictions differ. Documentation expectations may be stricter than in the U.S.

Should I export RA inventory?

High risk. Source locally within each region and keep region-specific documentation to satisfy audits.

Transition to Wholesale/Private Label

When should I pivot away from RA?

As soon as you validate demand signals. Move to authorized wholesale/private label for stability, better margins, and clean documentation.

How do I open distributor accounts?

Form the business, get an EIN/resale certificate, prepare trade references, and present a professional pitch (channels, volumes, compliance controls).

Does private label eliminate risk?

It shifts risk. You control the brand/documentation, but must manage product quality, trademarks, and IP enforcement yourself.

Need a clean paper trail—or help after a flag? We audit documentation and draft attorney-supervised appeals that speak Amazon’s language.

Free Consult → 24–48h turnaround options • Experienced Amazon counsel