What is Retail Arbitrage and How to Get Started

12 min read

Retail arbitrage has become increasingly popular over the years. But what exactly is it? Arbitrage is the practice of buying various products at discounted rates and reselling them through Amazon. When done properly, individuals can make a profit selling these products without ever handling them in person. This can be anything from books to makeup to musical instruments.

On the surface, this may seem like a quick and simple way to make money. In practice, retail arbitrage can be difficult and time-consuming, particularly in the early stages of learning. Many retail arbitrage businesses go through a learning curve in the beginning until they understand the process more thoroughly.

This article will give an in-depth look into retail arbitrage. We will discuss how to begin and what it takes to build an arbitrage business.

What Is Retail Arbitrage?

There are two main types of arbitrage: retail arbitrage and online arbitrage. You may be wondering, what is retail arbitrage and how is it different from online arbitrage? They are quite similar with slight differences.

Retail arbitrage is specific to Amazon. In fact, it is often called Amazon arbitrage. It works by purchasing discounted products from a brick-and-mortar store such as Target or Walmart, then reselling them for a higher price on Amazon. Those who are skilled at this practice know shortcuts of how to find heavily discounted products.

Online arbitrage is quite similar. Just like retail arbitrage, you would purchase products specifically from online retailers and resell them on a different online marketplace. With online arbitrage, it does not have to be resold on Amazon. You may also use online marketplaces such as eBay or Alibaba. eBay retail arbitrage is very popular for a variety of products.

What Are the Benefits of Retail Arbitrage?

There are many benefits to starting your own business. Retail arbitrage is a great place to start. Benefits of Amazon arbitrage include:

It is low risk and potentially high reward. In most cases, you do not have a huge amount of inventory to unload. Whatever product you choose, there is likely a market for it somewhere. If you are unable to sell them on Amazon, there are plenty of other marketplaces, such as LetGo, eBay, Craigslist, or Poshmark. Since you have ideally purchased your products at a discount, it is likely that you will at least make your money back.
Getting started is easy and affordable. Amazon makes the process of becoming an individual seller very simple. As a seller, Amazon will take $0.99 for each item sold until you reach 40 items a month. If you sell more than 40 items, then it will cost you $39.99, along with fulfillment fees (which are quite affordable).
You get to choose what to sell. When it comes to Amazon arbitrage, you can sell items that you’re passionate about. If you love mugs with puns written on them, there is a market for that. If you love Nike shoes, you can purchase and resell them as well. The beauty of arbitrage is that you get to create a business and sell products that you believe in.

Is There Retail Arbitrage Software?

A great way to maximize your business is to invest in retail arbitrage software. Finding quality software can give you a major advantage over other sellers. Some of these advantages include the following:

You will have an automation tool. This means that you will not have to manually track prices, place orders, or seek out profitable products. These little details often take up a lot of time, so having arbitrage software will allow you to put your focus on other things.
You will be able to build a scalable and efficient business. These tools allow you to manage inventory easily, access automated repricing tools, and simplify reselling from multiple accounts and sources.

Some of the more popular forms of retail arbitrage software include SmartScout, Keepa, Source Mogul, Tactical Arbitrage, and IP Alert. Software is available at different prices depending on what they offer. Be sure to do your research before purchasing.

Using a Retail Arbitrage App

In order to begin your retail arbitrage business, you will need to download an app. This allows you to research products and identify which ones you want to resell. A retail arbitrage app works as a scanner for product barcodes. It pulls up important product data and identifies which items are already saturating the Amazon marketplace and the cost of specific items.

Examples of these apps include the Amazon Seller App, Scoutly, and ScanPower. Apps are a great way of learning how likely a product will sell on Amazon.

What is Retail Arbitrage Sourcing?

When it comes to retail arbitrage, sourcing is the process of finding products that will be profitable on Amazon. As mentioned in the last section, retail arbitrage apps allow you to scan specific products to get information about their price and popularity.

If you prefer not to do this research manually, many types of arbitrage software are also able to simplify this process. Such software can make recommendations, follow your specific directions, and more. Sourcing is extremely important and is perhaps the most important part of building a profitable retail arbitrage business.

What Are the Best Stores for Retail Arbitrage?

The best stores for retail arbitrage are often places with a wide variety of products. Many of these stores offer discounts on a regular basis, which is essential for a retail arbitrage business. A great way to build your business is to go to these stores with your arbitrage app and start scanning the barcodes of various products. Popular stores to buy and resell products from include:

Target
Walmart
Kmart
Staples
Office Depot
Lowe’s
Home Depot
CVS
Rite Aid
The Vitamin Shoppe
Bath and Body Works

If you prefer not to go directly into these stores, you can go on their websites. Many of them can serve as retail arbitrage websites as you get started.

Is Retail Arbitrage Legal?

Some people may be wondering, is retail arbitrage legal? This is a fair question, considering retail arbitrage gives regular people an opportunity to sell brand-name products for profit. In the United States and the United Kingdom, retail arbitrage is legal.

As long as the product was obtained legitimately and legally, individuals are allowed to resell them on Amazon. It is also the responsibility of the reseller to offer accurate product descriptions and offer respectful customer service. Failing to do so may raise suspicion or affect your seller rating.

A Concise Breakdown: Retail Arbitrage for Beginners

If you are interested in Amazon retail arbitrage, this section will give a concise breakdown of the process. Following this guide will help you in the beginning stages of your retail arbitrage journey.

Before getting started, ask yourself, “Why am I doing this?” Most people love the idea of making easy money. However, many people don’t fully understand why they are going down the retail arbitrage route in particular. Without a clear understanding of why, many people give up before making their first sale.
Once you feel confident about your decision, you can begin sourcing. First, register for an Amazon Seller account and download a retail arbitrage app such as the Amazon Seller App.
Next, visit local retail stores (or websites) and start scanning products. Refer to the list of retailers above. Seek out discount offers that will allow you to earn more than $3 of profit per sale. Keep in mind fees and shipping costs when calculating profits. Remember, it’s important to find unsaturated items that will likely be sold on Amazon.
Purchase the products and list them for sale on Amazon. Once your research is done and purchases are made, it’s time to make money!
Start the process over again. Hopefully, if you are able to make a profit, you will feel motivated to keep going. Start over at the sourcing stage and continue to build your business!

Is Retail Arbitrage Worth It?

Thousands of people start a retail arbitrage business every year. While many individuals succeed and move forward, others never make a sale or fail to build a sustainable business. So, is retail arbitrage worth it?

If you are seeking easy money without doing any of the leg work, retail arbitrage may not be worth it for you. However, most people who remain committed to the process get a massive return on their investments. Once you have mastered the process, less time and effort are needed to sustain it.

Sign Up for Ecwid by Lightspeed to Enhance Your Arbitrage Business

Are you a retailer or aspiring retailer hoping to build or grow a retail arbitrage business? Ecwid by Lightspeed is here to help. Our role is to help growing businesses sell anything, anywhere, to anyone, at any time. Ultimately, Ecwid by Lightspeed makes building and managing a business easier than ever, all through its state-of-the-art POS system.

Ready to learn more about how to sell, market, and manage your up-and-coming businesses? Sign up for Ecwid today — you won’t regret it.

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Apr 30, 2023

About the author

Max has been working in the ecommerce industry for the last six years helping brands to establish and level-up content marketing and SEO. Despite that, he has experience with entrepreneurship. He is a fiction writer in his free time.