The simple idea of it is to find a retail store, a clearance section or any sales – your task here to search for a good quality product (because you don’t want to be suspended for an inauthentic item) and a great deal on it, so that you are able to add a good margin.
This can take some time, but after a while, once you know what you are looking for and how the system works, the process will go faster and smoother.
There are also pitfalls and dangers in this type of arbitrage, so please read this article carefully and do proper research before your start.
Sellers that use Retail Arbitrage to start their business on Amazon often recommend the following marketplaces in the USA:
• Dollar General
• TJ Maxx
• JC Penney
• Home Depot
• Ace Hardware
• Bargain Hunt
But if you sell in Canada, Europe, or Asia – it can be any big store, where you can find great deals for quality goods.
Benefits of using Retail Arbitrage:
• You can start your business, investing small amount of money
• You don’t waste your time on branding, packaging, shipping
• You learn Amazon Policies and how to use Seller Central without having to create your own label
Disadvantages of using Retail Arbitrage:
• You don’t offer a unique product - there are many competitors, who are doing the exact same thing as you do and your product can be easily lost in the huge volumes of similar proposals
• You may even make sales, but your margin will be very low. Of course, you wish to sell as much as possible and make your product noticeable, however only colossal volumes will bring you the profit you are dreaming about.
• There is always a chance to get your account suspended for selling inauthentic products. Even though you purchase the items at the reputable stores and have receipts for them – it is not the same thing as to find a direct manufacturer, get an authorized letter to resell his products online and always having on hands proper legal invoices.
Some advice and warnings
If you decide to give it a try and start your business with amazon using Retail Arbitrage, here are some advices for you to follow:
1) Use Amazon FBA (Fulfillment by Amazon) – it will save your money, time, nerves.
Instead of delivering every item, you simply send entire package to amazon warehouse and Amazon takes care of the storage, packaging, shipping, and customer support.
2) Be careful with clearances! Check attentively every single item you purchase, because while it is not stored in amazon Warehouse – the way the product looks, whether it is damaged or not – is your responsibility.
3) Always save ALL receipts. And not just save them, but keep in a god standing, as if needed you can make a clear visible picture of it to prove your sourcing.
4) Save your time by using special apps. There are many apps, which are already created for your convenience: scanning app to hunt for deals at the store, FBA calculator to check if you can make profit on a specific items and others.
5) BEWARE! Amazon does not allow drop-shipping from any other online retailer. Also, if you drop-ship, you cannot do it from any retailer who will not show your name and address as the seller. You MUST NOT drop-ship to customers using the packaging of any other retailer.
6) BEWARE! Amazon has very strict requirements for invoices to authenticate products, and can ask you to provide them at any time. Many retail receipts do not satisfy their stringent standards. Please see our blog article on what Amazon expects from invoices: https://www.amazonsellers.attorney/what-invoices-amazon-expects-from-amazon-sellers
7) BEWARE! Not all products can be sold by three-party sellers on Amazon. To be sure, buy the program, “Get Permission” at www.getpermission.com. To check if a product may not be sold on Amazon or requires free approval without the program (subject to updates) check: https://thesellingfamily.com/the-known-brands-that-are-not-allowed-to-be-sold-by-amazon-third-party-sellers/
We wish you good luck with any strategy you choose for your business!
If you wish to keep your account in a good health and prevent any types of suspensions, check out our Amazon Suspension Prevention Plan.