How to Get Started with Online Arbitrage
Written by Jessica Larrew
As a busy business owner, how would you rather do your shopping: driving to multiple stores and waiting in line or shopping online in some cozy sweats?
Personally, I’m doing most of my shopping online these days.
So why should my Amazon sourcing be any different?
Many Amazon sellers are interested in learning more about Online Arbitrage. If you’ve come from a Retail Arbitrage background, like I have, then there are a lot of perks that come with Online Arbitrage.
Like Retail Arbitrage, Online Arbitrage is a pretty simple concept and you can get started without a big investment. With RA, you’re going to retail stores and looking for items that you can resell on Amazon at a higher price. Well, with OA, you’re just going to the websites of those same stores and looking for items that you can resell for a higher price on Amazon.
There are lots of amazing tools for Online Arbitrage to help automate the process, but if you’re just getting started, you can do it on your own with just some basic (and free!) tools.
The Benefits of Online Arbitrage
Like any online shopping, Online Arbitrage is convenient. You can source online from any location and at any time of day. This makes OA a great fit for anyone trying to start an Amazon business as a side hustle.
But there’s a lot more to it than that. I think that these are the top 5 benefits of Online Arbitrage:
- It’s easier to get your hands on a larger quantity of items at once (more bang for your sourcing buck)
- You can have OA items shipped to a prep center which makes it easier to scale your business
- Saves time compared to driving to stores for RA
- OA deliveries often arrive in boxes that you can reuse for FBA shipments
- Access to stores that are outside of your geographic area
Still interested? Great, let’s take a look at how to get started with Amazon Online Arbitrage!
How to Compare Items to Amazon for Online Arbitrage
For new Online Arbitrage sellers, finding matching products on Amazon and another retail website can feel a little overwhelming. A little patience will go a long way in the beginning! It will help your workflow to have two windows open on your computer: one with Amazon.com and another with the website you’re shopping on.
Let’s work through an example. Today, I’m browsing for campaign 2 on the Barnes & Noble website. I could narrow down my options by category, price range, or even choose to only shop their Clearance campaign 2.
Once I find an item that looks promising, I want to search for it over on Amazon.com. I could copy the full product name from barnesandnoble.com and paste it into the search bar on Amazon. If you’re searching by name, make sure the two products are an exact match. Different stores might have slight variations in the title.
A safer way to search would be to see if the store website shows the UPC of an item. Barnes & Noble displays a product’s UPC in the “Product Details” section. So instead of searching by name, I’ll just copy the UPC code and paste that into the Amazon search bar. When I search by UPC, I should only get one matching product on Amazon.
Once you’ve found a match, you can study up on the Amazon product detail page. Unlike RA (where you might feel rushed in the store), you can take all the time you need to research your potential OA finds.
When you’re doing Online Arbitrage, having the Keepa extension installed is essential. It’s free so there’s no reason not to install it right away. Keepa will show you vital information that will help you make an informed buying decision.
At a minimum, use Keepa to check the average sales rank, average and current selling price, and the total number of sellers. Of course, it’s also a good idea to use Keepa to see if Amazon ever sells the item (it can be difficult to compete directly with Amazon!).
If it looks like you’ve found a winner, then the next step is to make sure the item will be profitable.
How to Check Profitability for Online Arbitrage
When you’re doing Retail Arbitrage, you rely on your scanning app to determine an item’s profitability. But when you’re sitting at your computer, you won’t have any barcodes to scan.
Luckily, Amazon has a free tool that you can use to see if an item is profitable as an FBA item or as an FBM item. It’s called the FBA Revenue Calculator and you’ll want to leave it open on your browser while you source.
Copy the ASIN from the Amazon Product Detail page (or URL) and paste it into the FBA Revenue Calculator. Fill in the blank boxes, press the “Calculate” button, and let Amazon crunch the numbers on Net Profit and Net Margin. The Revenue Calculator will take into consideration inbound shipping fees, FBA fees, selling fees, and your product cost.
If you’re looking at a low net margin, don’t despair. With Online Arbitrage, there are lots of creative ways to squeeze some extra profit out of your buys.
My favorite way is to stack coupons and cash back offers to increase the profitability of my OA sourcing. I’ve actually used Ebates cash back deals to earn over $11,000 in cash back on my online purchases!
Another way to save is to get on the email lists of the websites you want to shop from. That way they’ll send you coupons that you can use while you source. You can always set up a filter for those promotional emails in Gmail so they don’t clutter up your inbox.
Online Arbitrage is a flexible sourcing method that isn’t too time-consuming. OA can be a great supplement to RA, wholesale, or Private Label business models. Or if you discover that OA is your favorite way to shop, it can be your sole sourcing method! Hop onto your favorite retailer’s website today and give it a shot!