Retail arbitrage is a viable business model for all types of people. It doesn’t matter if you’re in a major city, or in a rural area, anyone can leverage the power of retail arbitrage to create a great source of income.
Due to the explosive growth of Amazon over the years, anyone who is willing to put in hard work now has the ability to make a nice side income. Amazon has grown so large in fact, that in 2019, the annual net revenue was $280.5 billion, and this year has seen revenue continue to grow at a phenomenal pace.
With the rise of Amazon and other well-known retailers, retail arbitrage is a bigger opportunity than ever.
This article has all the information you need to take advantage of that opportunity so you can build and grow your retail arbitrage business.
But first, to make sure we’re all on the same page, let’s take a look at what retail arbitrage is and how it works.
- What is Retail Arbitrage?
- How Does Retail Arbitrage Work?
- Why Does Retail Arbitrage Still Work?
- How to Get Started With Retail Arbitrage on Amazon
- Step #1: Create an Amazon Seller Account
- Step #2: Get the Amazon Seller App
- Step #3: Check out Your Local Retail Stores
- Step #4: Scan Clearance and Sale Products
- Step #5: Source Products With Good Profit Potential
- Step #6: List Products for Sale on Amazon
- Retail Arbitrage Pros and Cons
- Retail Arbitrage Success Stories
- Retail Arbitrage FAQ
What is Retail Arbitrage?
Retail arbitrage is a simple concept: First, you purchase a product from a local retail outlet that is selling it at a discounted price, then you sell that same product at a higher price, thereby flipping it for a profit.
You can sell items via marketplaces like Amazon, Craigslist, Facebook Marketplace, eBay, Jet, Walmart.com, and many more.
Although there are lots of options available to retail arbitrage sellers, Amazon is one of the best places to sell for those who are just getting started with this business model.
The reason for this is that Amazon allows you to do something called “FBA”. Or, “Fulfilled by Amazon”.
Amazon FBA is a great program because it allows you to purchase products and then send them directly to Amazon for fulfillment. This means no need to handle emails, calls, or even returns from customers.
Although retail arbitrage may sound like it's the same as regular retailing, it's not.
The main difference between the two is that in regular retailing, the seller buys their products from wholesale suppliers or manufacturers. In retail arbitrage, the seller gets their products or stock from other sellers or retailers.
There are a few different aspects to consider if you’re planning on taking up retail arbitrage, and we’ll dive into each of them later on in the article.
But first, let’s take a look at how retail arbitrage works.
How Does Retail Arbitrage Work?
As you have seen from the description above, retail arbitrage is a very simple yet potentially lucrative concept. And it's one that's businesses of all sizes can use regardless of the types of products they sell.
Here’s an example of how retail arbitrage works:
Say you come across a sale at Target, where there are men’s leather wallets offered at a significantly discounted price of $15 when they normally go for $30. This may be either because the store is clearing old stock, or it might be due to seasonal discounts.
Whatever the case, if you can invest some cash into purchasing 20 units or so, you can then sell them through an online marketplace for a couple of dollars less than the product’s original retail selling price.
Doing a little math here:
Wallet Original Cost: $30
Wallet Purchase Price on Clearance: $15
Listing Price on Amazon: $28
Revenue From Each Unit: $28 – $15 = $13
Amazon FBA Fee: $0.99
Profit (After Costs/Expenses): $12.01
Multiply by 20 Units for a Total Profit: $240.20
And all of this happens without you having to deal with wholesalers, suppliers, or manufacturers.
This is the main difference between normal retailing and retail arbitrage. You are purchasing directly from the retail store, and while this can sometimes cut into your profit margins, it's often an easier process than trying to source products via suppliers.
Because of this low cost of entry, retail arbitrage is the perfect way for most people to get started as sellers online.
Here is another example of retail arbitrage at work:
Say you purchase an item from one of your local retailers for $7, and the same product sells for $18.99 on Amazon. Whenever a customer buys your item, Amazon pays you roughly $13 (after shipping costs and all the fees). This means you will have made a profit of $6 on your initial investment of $7.
The best part about retail arbitrage is that there is no guesswork involved when it comes to profitability. The only thing you have to do is source the right products.
There are many ways you can go about identifying profitable inventory, but many sellers use scanning apps, like FBAScan, Profit Bandit, and the Amazon Seller App which allow them to scan the product's barcode so they can see exactly what a product is selling for, as well as how much they will have to pay in fees.
The scan tool provided by Amazon is completely free and it’s actually pretty darn good.
The best and most reliable sources of products are typically sales and the clearance racks of large stores like Target, Home Depot, and Walmart.
When you can get goods that are offered at significant discounts compared to their normal retail price, these offer great potential for making high profits when selling them online.
Why Does Retail Arbitrage Still Work?
At this point, you may be wondering why retail arbitrage still works, and why customers would even buy products that are being sold at a higher price instead of simply going where they are sold the cheapest.
The answer is simple: Convenience and Economics.
First of all, the products aren't priced the same everywhere.
The wallet you're buying for $15 in one city might cost $45 in another. And while leather wallets may be common or slow-moving in one area, they may be in very high demand in another place. This is something that sellers use to their advantage in order to turn a profit.
Secondly, there is the issue of convenience.
You will find a lot of consumers who are willing to pay extra for convenience. For instance, some people will gladly pay a bit more to have products delivered to them in order to avoid the hassle of going to the shop, searching for the item they need, and standing in long queues to purchase it.
Third, supply and demand.
One of the simplest rules of economics is supply and demand. With a low supply and a high demand, prices can skyrocket. For example, take the demand toilet paper and hand sanitizer in the midst of the COVID 19 pandemic in 2020. People were marking up these products by 100% or more on Amazon and selling out without a problem because the supply wasn’t available locally.
Another question most people have is:
“Why would the stores mark down products that they could simply sell online themselves?”
There are many reasons why a large store like Target or Walmart might discount products. For instance, they may be doing so to make room on their shelves for different products.
And remember, brick-and-mortar retail stores have limited space where they can stock inventory, which means they need to stock that space with whichever products will earn them the highest revenue.
This process is complicated and ever-changing. So it may happen that when a new shipment comes in, they simply need to cut ties with whichever product is not performing well, or one that doesn't have long-term potential, in order to make way for a hot new product.
It may seem crazy to you and me, but these big box retailers don’t mind taking a loss on these retail products if they can get something more profitable in it’s place.
This is what creates an opportunity for retail arbitrage sellers who are searching for clearance products.
So, while you may see it as the retail stores missing out on making money, the clearance or sale process actually allows them to increase their profits by focusing on something else and leaves you free to take advantage of that store’s leftover profits when you buy those products to sell them in other places (like online marketplaces where space is not a limiting constraint).
How to Get Started With Retail Arbitrage on Amazon
In this section, I'm going to explain the entire step-by-step process for getting started with retail arbitrage on Amazon.
Step #1: Create an Amazon Seller Account
The first step on your journey to becoming a retail arbitrage seller is to register for an Amazon seller account. This account will allow you to sell products on Amazon and also give you access to all the tools you need to help you succeed as a seller on the platform.
To get started, simply head over to sell.Amazon.com.
There are two options available to you:
- An individual seller account; and
- A professional account.
Let's take a look at each of them in a bit more detail.
Individual Seller Account: This account is free to create, but it requires that you pay $0.99 commission on each sale you make on Amazon. The sales also incur an additional 15% consolidated fee.
As an individual seller, you are only allowed to sell up to 40 products. This type of account is ideal for you if you don't intend to sell more than that number of products, and if you are not going to sell products from the restricted categories.
You can't even apply to sell in these categories unless you have a professional account. Over time, you may want to consider a professional account so that you can sell a broader range of products.
Professional Account: In order to register for a professional account, you have to pay $39.99 per month. This account also comes with variable closing fees and additional referral fees.
You can list more than 40 products on Amazon and you won't have to pay a fixed amount each time you sell a product on the platform.
Furthermore, a professional account also allows you to sign up for Fulfillment by Amazon (FBA). As an FBA seller, your only task is to ensure that your products get to Amazon's warehouse. After that, Amazon will take care of everything else, including:
- Customer support
- …and more.
Although beginners in retail arbitrage may feel that this service is a bit costly, it's definitely worth the fee.
In addition to being able to enjoy all the benefits listed above, professional account holders also stand a higher chance to win the Buy Box and are eligible for Prime delivery.
If you want to ensure reliable shipping and quality customer service by outsourcing to Amazon, then FBA is a great option for you.
But, if you’re not looking to invest that much to start your retail arbitrage journey, you can go with the free option. Just consider the fees they charge as you start to list your items.
Step #2: Get the Amazon Seller App
After signing up for the account, your next step is to download Amazon's free seller app. This app will provide you with all the details you need to easily figure out the best products to buy.
It works in a very simple way by using the camera on your phone to scan product barcodes. It will then show you how much the product is selling for on Amazon.
The app will also display the fees for selling the item, as well as other helpful information to allow you to evaluate the profitability of products.
There are a few other seller apps out there available, but I personally think this one is all you’ll need to get started.
Step #3: Check out Your Local Retail Stores
Now, it's time to visit your local retail stores. Depending on where you live, you will likely have tons of options to choose from. I would recommend that you begin with the stores that are closest to you.
You want to start where you have easy access so that you make things as simple for yourself as possible.
Over time, you can add on to your list of stores, but when you're getting started, try to limit the number you visit so that you don't get overwhelmed.
Listed below are some of the best retail stores for you to consider.
- Sam’s Club
- Home Depot
- Big Lots
- Rite Aid
- Toys R Us
- Office Depot
- Bed Bath & Beyond
- Ocean State Job Lots
These are just some of the best stores for retail arbitrage sourcing. And remember, you don't have to go to all of them, just choose the ones that are closest to you and start with those.
Pro Tip: Check out all the Walmarts within a 150-mile radius of where you are as each store may have different items on clearance. This increases your chances of being able to find great products to resell on Amazon.
Step #4: Scan Clearance and Sale Products
Once you're in a local store, you can then use the app to scan clearance or sale products so you can choose profitable items to get you started on your retail arbitrage journey.
Many beginners often wonder which are the best items to start with.
The answer to that question is…unfortunately it depends.
For the most part, the best items to choose are those that sell fast and have a healthy ROI. However, you may need to do some serious hunting to find these products.
The best thing to do is to not narrow yourself down to just one type of product, especially when starting out.
During your scanning research, you may come across products that you haven't considered, but that would be excellent for selling on Amazon.
Scan all products with the Amazon app before making the decision to purchase. Once you know what the fees are for sending it and having it fulfilled by Amazon, you will have a good idea of the profit you can expect for any given item.
Step #5: Source Products With Good Profit Potential
When choosing which products to purchase, you must first check what the ROI is on potentially profitable products.
As a general rule, you should buy any items that offer you over $3 in profit and a 50% return after shipping and fees.
To get this information on your app, you need to enter the product selling price, your cost to purchase the item, and the cost per pound for shipping to Amazon.
Once you have entered this information, the app will show you your expected profit on the product based on that information.
There are 3 important things you should check at this stage:
- Are You Eligible to Sell The Product?: The first thing to check is whether or not you are eligible to sell that particular item. You can quickly find out by looking at the category list here. If you screw this up, you’ll never be able to sell the product at all. Make sure to avoid this mistake.
- Will You Make a Profit?: Check to see if the figure shown for net profit is higher than the minimum profit threshold. You can set the minimum profit threshold to whatever figure you like, but I recommend setting yours at least at $3 per unit. What this means is that you will not purchase any product that offers less than $3 profit per unit.
- What is the ROI Percentage?: If your product meets the minimum profit threshold you've set, you must now calculate the ROI percentage. To do this, simply divide your expected profits by the cost of the product.
So, for instance, if your profit is $4.80 for a product that costs $6, then your return on investment is 80%. As a beginner in retail arbitrage, it's a good idea to look for items that offer an ROI percentage of more than 50%.
If the item you are looking at meets all the criteria, you can go ahead and purchase it.
I recommend purchasing about six of each item so that you diversify your inventory and keep your risk low, especially when you’re just starting out.
Of course, as you gain experience, you're likely to come across scenarios where it makes more sense to buy larger quantities, particularly if you find a high demand item that offers a healthy profit.
Step #6: List Products for Sale on Amazon
Your final step is to list your products for sale on Amazon. If you are using Fulfillment by Amazon, which I recommend as it’s the easiest way to do things, you can then ship the items to the FBA warehouses.
There are certain conditions where fulfilling the orders yourself could make sense. But, for the most part, you will find that FBA will almost always provide more benefits than merchant fulfillment.
Pro Tip: When you're first getting started, it's a good idea to scan as many products as you can. Try not to make any assumptions as to what will sell and what won't, otherwise, you may miss out on a lot of profitable products.
Some products you may not value, but they may still be extremely profitable to sell. Let the numbers guide you in making the best decisions for which products you should buy.
Use the evaluation process outlined above as an efficient way to help you choose the right products to sell. As a beginner, this will help you to avoid wasting time on products that don't meet your buying guidelines. However, as you become more experienced, you can adjust these guidelines in any way you wish.
Retail Arbitrage Pros and Cons
As with most other business models, retail arbitrage comes with its own benefits and drawbacks. Before you decide whether or not this is how you want seven Amazon, check out the pros and cons of retail arbitrage:
Retail Arbitrage Pros
- Low Barrier to Entry: Becoming a retail arbitrage seller typically has a lower threshold than most of the businesses. With this type of business, you can get started with as little as $100.
This low cost of entry is one of the main benefits of retail arbitrage. Since you will not be buying products in large quantities directly from suppliers, it means that you don't stand to lose much money if your product doesn't fly off the shelves.
- Short-Term Earnings: This business model presents an opportunity to make money very quickly. Since you're not trying to build a brand or create lasting relationships with suppliers, you can focus on quickly making your first profit instead.
For people just getting started selling on Amazon, this is one of the fastest ways to make profits.
- eCommerce Authority: When you conduct retail arbitrage in conjunction with Amazon, you get the benefit of working with one of the largest and most trusted retailers in the world.
As a third-party seller sourcing products from elsewhere and selling them on their platform, you give Amazon a cut of your earnings, which makes you a valuable source of revenue for them. Because of this, they generally work hard to keep your business by offering you great benefits for using their platform.
- Private Labeling Gateway: Retail arbitrage is a great way to get into private labeling. A lot of retail arbitrage sellers on Amazon gravitate towards using the platform's FBA services because of its ease-of-use and the many benefits that come with it.
They use Amazon's Seller Central Dashboard, and once they get the hang of the way the system works, they typically end up creating their own brands selling under private labels. This is a stable and more scalable way to create a business online.
Retail Arbitrage Cons
- Brand Registry Protection: One major hurdle when using an online marketplace like Amazon is that certain products may be “brand gated”. Brand gating is a process where Amazon gives brands and private labels greater control over product listings. This means that if you are selling a brand restricted product, you will have to ask for permission to sell those products.
Listing products without getting permission may result in your account being flagged and taken down by Amazon. These types of brand regulations make retail arbitrage a risky venture and you must always make sure that the products you sell are not part of the platform's brand registry prior to listing them.
- Lower Margins: Since you don't have any ownership of the products you're selling, you have limitations placed on you and this hampers your profit margins. For instance, if the products you want are very popular, the retailers may place buy limits.
This means that in order to purchase more stock than they allow you to, you might have to ask others to buy the stock for you. This not only takes up more of your time and effort, but it also may cost you money as some people may ask for a cut.
- Increased Risk: When conducting retail arbitrage and Amazon, you risk losing a large portion of your investment if your inventory is not good. For instance, it may turn out that some products that you purchased were on sale because of certain defects or recall issues that you didn't know of.
Oftentimes, larger retailers know when newer versions of products are coming out, and therefore they put the older products on clearance in order to make way for the new stock. Unsuspecting resellers may buy such products only to face a large loss when the new versions hit the shelves.
- Low Customer Retention: Since you are unlikely to find the same products on clearance, again and again, it means you will have to sell all kinds of different things. You will likely get to meet new clients every time you change your inventory.
In addition to that, all your products will bear other people's brands, which means that if they’re great, those people get praise, and not you. But, if the products are of poor quality, it damages your seller rating on Amazon.
Having said that, minimal investment and fewer risks make it easier to live with the fact that you may never have client attention.
- Very Difficult to Scale Business Model: While this is a tested method for making a bit of cash on the side, and while it's possible to make big margins on any of the products you choose to sell, this business model isn’t great as a long-term strategy if you want to build a scalable, sustainable business that you can sell for profit.
With other business models like private labeling or creating your own brand, you're able to automate processes in various verticals. You also have full control over the way things function. However, with retail arbitrage, you must have a hands-on approach in order to have any control or consistency over the process.
- Gas Costs and Time Spent Sourcing Products: For most people, this is one of the major downsides of retail arbitrage on Amazon. You have to spend a lot of time and energy looking for awesome deals in your local retail stores. Also, you have to quickly find resale opportunities, otherwise, you risk having to pay storage fees.
Although retail arbitrage seems simple, in reality, this business model requires a lot of hard work to make it successful. But, the good news is that for those willing to put in the time and effort, this can prove to be an extremely lucrative source of income.
Retail Arbitrage Success Stories
If you are reading this guide about retail arbitrage in 2020, you've probably heard a lot of stories about how other people have made a killing with this business model on Amazon.
In this section, we are going to look at three examples of people who have had massive success with retail arbitrage.
Use their stories as inspiration so you can get started building toward your own success.
Run by a wildly successful retail arbitrage seller, Stephen Smotherman, Full-time FBA is a blog that helps individuals turn their part-time hours into full-time incomes.
Stephen consistently provides free actionable tips and tricks designed to help you grow your profits on Amazon by making the most of your money, time, and resources.
Online Selling Experiment is a website that is dedicated to people who are serious about online retail. They offer free in-depth training on retail arbitrage and other business strategies that will help you replace your job with an online retail business.
Simply sign up for their newsletter to receive a free copy of a free guide to building a 7 figure business online.
Everything that they teach has been tried and tested over the years, and their system will help you build an online retail business from scratch and scale it to 6, 7, or 8 figures.
3. Kevin Howard
Kevin Howard is an attorney-turned-entrepreneur. He is a small business owner who teaches others about the entrepreneurial side hustle.
He discovered retail arbitrage in 2014 and has since built a profitable online business that provides him with a consistent source of semi-passive income.
In his book, retail arbitrage money machine, Kevin shares his experiences and discoveries in the world of reselling sale and clearance items from local stores on Amazon.
The book was written to help those searching for legitimate methods to build consistent income in simple ways that can be done at your own pace, and with minimal money invested.
Retail Arbitrage FAQ
Many people who are just getting started in retail arbitrage have a lot of questions about the business model.
The goal of this article is to answer all of these questions and provide you with all the information you need to get started building your own retail arbitrage business.
Read on to discover the answers to some of the most commonly asked questions related to retail arbitrage.
Is Retail Arbitrage Illegal?
The biggest concern most beginner sellers have when it comes to retail arbitrage is whether or not it's actually legal. If you have been wondering the same, you can put your mind at rest because retail arbitrage is perfectly legal.
According to the US Supreme Court, retailers can't stop anyone from reselling their products as long as the merchandise has been acquired legally. So basically, all you need to practice retail arbitrage is your receipt from the store where you bought the stock.
But, keep in mind that just because it's legal, doesn't mean that it comes without challenges.
You may face a lot of problems if you decide to sell branded items. Although, legally, there is nothing to stop you, if you are not an authorized reseller, some brands could try to intimidate you to get you to stop commercializing their products.
Can You Make Money With Retail Arbitrage?
Yet another question that comes up often is “Can you make money with retail arbitrage?” The answer to that question is an absolute YES.
With the right retail arbitrage strategies, you will be able to make a healthy income with this business model. The amount you make will largely depend on how much money and time you can invest initially. The more money you can put into buying inventory, the more you will be able to sell, and therefore the more profits you will make.
One beginner seller was able to earn $16,376.35 profit from just $5000 in startup capital in his first three months selling online full-time.
However, you don't need to have that much to get started. In fact, you can even get started for free by selling some items you already own on marketplaces like Craigslist or Facebook Marketplace and then reinvesting profits into new products to sell on Amazon.
The bottom line is, even if you don't have a lot of money to start with, you will still be able to earn substantial amounts in short order just as long as you're willing to work hard and invest the time necessary to grow your business.
What Are The Best Categories For Retail Arbitrage?
There are a lot of categories that you can choose for retail arbitrage.
Listed below are some of the products and markets that have a huge scope this year and are expected to continue selling well in the coming years.
Sports and Outdoors: You will find tons of shops that offer discounts during the different seasons of the year. For instance, you may find great products during football season, hunting season, and swimming for summer.
There are plenty of great products to choose from and you can either focus on a variety of products in one category or just one product from each category.
A great product that has been popular for years and will continue to sell well is fitness leggings. This product caters to multiple niche markets and is a versatile commodity for anyone who is just getting started in retail arbitrage. Fitness leggings are also extremely light which means they are less expensive to ship.
Bath and Kitchen: This is yet another growing industry on Amazon. New products are continually coming out and there are a ton of things you can do to make your bathroom and kitchen look and function better. This gives retail arbitrage sellers a massive opportunity to find and sell products that customers will love.
One bath and kitchen product that sells really well is bamboo toothbrushes. With minimalism increasingly becoming a lifestyle choice for many people around the world, retail arbitrage sellers can take advantage of this trend by selling products like bamboo toothbrushes.
A lot of customers are consciously making the choice to search for more sustainable alternatives for many of the products they use in their homes and that's why products like bamboo toothbrushes are trending at the top of the list.
Toys and Games: This is a great category that allows you to make sales throughout the year. It's ungated, which means you don't have to get approval to sell products in this category and you can get started making money right away.
When choosing this category, just keep in mind that you may have to go through certain steps to get approval to sell toys that contain very small parts that children could accidentally swallow or toys with sharp edges that could potentially harm a child.
Plush toys are the perfect example of products that you can get started with as a retail arbitrage seller. The toys have always been, and continue to be popular, and you can even bundle them with other products from your inventory to create a great opportunity to upsell your customers.
Clothing and Shoes: With this category, you won't get approval automatically as it is a gated category. In order to sell clothing and shoes on Amazon, you have to be selling for quite a while before you can apply.
Once you get approval, you will be in a much smaller group of sellers which means there are fewer people for you to compete with. If you find clothing and shoes that have high brand value, it's possible to make a killing on Amazon.
For instance, there are some brands that can sell for $90 retail, and if you can get the products for $25-$30 and then sell them on Amazon for $50-$60, you will make money very quickly.
There are of course many other categories that you can focus on, including beauty products, books, handbags, and many more. But as a beginner, try to keep your focus on just a few categories to avoid getting overwhelmed by the sheer number of available products that you can choose from.
Pro Tip: Look for gift items as these offer massive opportunities over your competition. Also, make sure you check the best sellers rank (BSR) of the items you choose in order to see how high its chances of selling are.
For the most part, you should avoid selling anything that has a BSR that is greater than 100,000. A BSR on the lower end means that it is selling well, and ideally, you want a BSR of under 25,000.
25,000-50,000 is also okay, but if it’s above 50,000, then you need to do additional research to ensure that your chances of selling the product are strong.
What Are The Best Retail Arbitrage Apps?
As a seller on Amazon using retail arbitrage as your sourcing strategy, you need a reliable scanner app to use when scouting for products in your local stores.
Listed below are the top 5 barcode scanner apps to choose from that will allow you to check prices on Amazon or eBay.
1. Amazon Seller App (Available on: Google Play, iTunes, and Amazon)
This is a free app offered by Amazon that you can start using right away as a registered seller on the platform. Once you have your seller account, simply download the app and you can get started scanning products right away.
The app will help you uncover the following:
- Official Amazon category
- FBA fees, product price
- Approximate profits
- Total number of sellers
- Bestsellers rank
- …and much more.
But, it doesn't show you custom fees or taxes, which means you only get an estimate of profitability.
Also, the app doesn't integrate with eBay or Google, so it can be tough to find information on the product price history and trends.
2. Scoutly (Available on Google Play, iTunes, and ASellerTool)
This app comes with a great feature that allows you to switch from live search to local database mode. So if you ever find yourself in a wifi/reception black hole, you won't have to stop your product scanning.
The app contains all the information that you will find in other scanning apps, including:
- FBA prices
- Sales ranking
- Product Type
- … and so on.
Although this information is also available on all the other scanners, this app’s data/wifi-independent feature helps it to stand apart from the competition.
3. Scoutify App (Available on Google Play and InventoryLab)
This is an amazing app with lots of great qualities. But it does come with one major downside: In order to use the app, you must sign up for the entire package.
Having said that, you get what you pay for with Scoutify, and there are a lot of excellent features that will drive your success as a retail arbitrage seller on Amazon.
If you are just getting started, this app may not be the right choice for you because of its cost. However, if you are a seller with a high monthly volume, then this is absolutely the right app for you as it will afford you the following benefits:
- Integrated third-party apps like Keepa and CamelCamelCamel
- The app works in taxes so you will get a more accurate final price number
- It allows you to scan with Bluetooth
- A shopping list keeps the history of your purchases
- You get access to sourcing, reporting, and bookkeeping tools
4. Profit Bandit (Available on iTunes and SellerEngine)
As with the option above, you need a paid subscription to use this scanning tool. However, it's affordable and offers great features to help you research products in real-time.
This means you can make the best-informed decisions possible as you will have the most up-to-date information right at your fingertips.
Because of its affordability, profit bandit is a great app for low-volume sellers looking to find ways to increase their profitability.
5. Scan Power (Available on Google Play, iTunes, and ScanPower)
Scan power costs more than the other apps on this list. However, it also has the features to put you ahead of other retail arbitrage sellers on Amazon. It comes with the best and most accurate live data straight from the platform.
If you are someone who operates most efficiently on the go, then this is the app for you. It has some amazing features, such as the ability to send information to your desktop while you're out and about so you can look it over later.
It also allows you to create 2-D barcodes, which is convenient so that when you ship your items, the barcodes are already there, giving you one less thing to worry about.
What is the Average Retail Arbitrage Profit Margin?
Your profit margin with retail arbitrage will differ depending on how much you pay for the items you sell, and how much customers are willing to pay for them.
Many retail arbitrage sellers use 10 to 30% as a strict benchmark. In order to help ensure your success as a beginner, it's a good idea to use the same figure as a rule of thumb. Only source products that you can get for 10 to 30% lower than their minimum cost.
How Do Taxes Work for Retail Arbitrage?
As a retail arbitrage seller, there are some important things you need to know about filing taxes. First, you need to stay on top of sales tax. This is the tax on products that are not deemed “essential”.
This varies from one state to the next, and you need to check the regulations where you operate your business.
You also need to focus on your deductibles. As with all other self-employed individuals, an Amazon retail arbitrage seller can claim deductibles on education costs, home office expenses, and various other items. Make sure to keep all receipts that are related to your online activities.
And there you have it. Everything you need to know to help you get started as a retail arbitrage seller in 2020.
Now that you’ve seen how lucrative it can be selling items from your local stores on Amazon, use the information in this article to start your own small business with very little risk and build it up to create a reliable source of income for yourself.
Do you think the retail arbitrage business model is the ideal home-based business for you? Let me know in the comments section below!