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Understanding Retail Arbitrage

Posted by Matt Perkins in

Whether you are already an experienced Amazon FBA seller or thinking about throwing your hat into the ring, you probably heard that many people are making thousands of dollars by selling or buying goods on Amazon Seller Central. This has become one of the most popular categories for selling businesses online with the support of a business broker, although you might assume that it’s too good to be true.

Extra cash with Amazon’s FBA service could help you to grow a business that is ultimately ripe for sale. Practicing the art of retail arbitrage is hard work, and it requires being selective about the items that you opt to buy and sell and using retail arbitrage tips to mitigate your risk. Retail arbitrage refers to when people purchase items in retail stores for a lower price than they can sell them online.

These items are then listed and resold online, and usually big marketplaces like eBay or Amazon are used to leverage maximum profit. These items and stores are typically found on clearance or on sale, which allows the use of coupon or has benefits from purchasing items in bulk. This helps to undercut retailers selling online and allows the reseller to reap potentially higher profits.

Fans of retail arbitrage might spend hours every single week exploring coupons and marketplace ads or combing through the clearance isles at local locations to sell something. While the vast majority of people who sell these items on eBay or Amazon, other sites like OfferUp, Facebook marketplace and Craig’s List can also be used to leverage retail arbitrage. The most popular method for retail arbitrage today, however, is using Amazon FBA.

The FBA platform is very intuitive and user friendly and taps into the massive reach and power of the Amazon marketplace. It also removes the shipping hassle from the seller, meaning that you can stop shipments until multiple items are being sent to the same location, thereby cutting down on your shipping costs. Even though an individual person owns the stock with Amazon FBA, Amazon fulfills the order.

Sellers have a few different options in the event that their items don’t sell within a certain time period. A fee can be paid for the items to be shipped back to you or storage fees can be provided to Amazon. Your entire stock might not sell every single time, so it is well worth thinking about the potential fees and downsides well in advance before committing to retail arbitrage as your primary earning strategy.

Discussing the benefits of using Amazon FBA at the outset of launching your business or choosing to buy an existing Amazon FBA business can be accomplished by scheduling a consultation with a trusted business broker. Our knowledgeable business brokers have extensive experience in the field of Amazon FBA sales.