What is Amazon Seller Arbitrage?
Setting the Scene
Amazon Seller Arbitrage is the practice of selling products on amazon that are bought either locally (retail arbitrage) or from other websites (online arbitrage).
The term ‘arbitrage’ is used in this instance because products are not being sold by official resellers, they are instead being sold by sellers who find pricing differences between marketplaces.
An Example of Seller Arbitrage
To explain this a little more clearly, lets imagine two grocery stores on a High Street.
Store A sells a pint of milk for 50p, while Store B sells the same milk for 75p.
There is nothing fundamentally wrong with this, as both have their own free authority on what prices they sell their products for.
Where it drifts into arbitrage would be if Store B went round to Store A, bought up their 50p milk, and then sold it in their own store at 75p, knowing that their neighbouring store now had no milk left to sell.
When looking at it like this, you can see that the arbitrage has taken away consumer choice. Store A has not lost any money, but the customers certainly will if they choose to buy the higher priced milk out of necessity.
So, is Seller Arbitrage Actually Illegal?
Seller arbitrage is not in itself illegal, but there are times when it will drift into illegal practices, and certainly could border on unethical a lot of the time.
In the above example, there is nothing stopping Store A or Store B selling the same milk.
There is also nothing stopping one store pricing it at 50p, while the other chooses to sell at 75p.
Even if a manufacturer recommended retail price is below the sale price, again this is not illegal to sell at the stores chosen price (unless their contract states otherwise).
So, when does Amazon arbitrage become illegal?
One clear point where arbitrage drifts into illegal practice is when a brand aggressively protects its trademark and only ever permits official channels and distributors to sell their brand.
Examples of this might be Nike, Apple, Sony etc.
Not only do they want their reputation being questioned by erratic pricing strategies, but there is also a high chance that anyone buying a product from an unofficial seller will not have the same consumer rights of return or repair.
Do amazon Stop Arbitrage Sellers?
Retail and Online Arbitrage is declared as being against amazon Terms of Sale, and this is most aggressively enforced when sellers use cross-marketplace selling, such as selling ebay products on Amazon, or Amazon products on ebay.
They do not seem as rigid on other products, especially where there are no trademark or intellectual property infringements.
Why Do MoneyMaking.Expert Promote Retail and Online Arbitrage?
If blatant illegal behaviour is avoided, there are still many ways in which arbitrage can offer people a reliable side hustle, or secondary income stream.
When MoneyMaking.Expert feature an arbitrage opportunity in their Wealth Hacks, the products have been checked for non-compliance to the best of our awareness.
The products are checked to see if any selling limitations are in place on Amazon, whether the product is classified as HAZMAT (hazardous materials), and whether either the manufacturer or Amazon are the only sellers on the Amazon marketplace.
The Benefits of Selling Through Online or Retail Arbitrage
Without doubt, if the pitfalls are avoided, arbitrage selling is the easiest way for people to start their online selling business.
To sell arbitrage products, you do not need to negotiate distributor deals, which can be difficult for Amazon sellers.
You also do not need to buy large quantities or hold excessive stocks that might not sell for months or even years.
You can instead, find a bargain, buy just a handful, sell, and get out of the market with a nice profit.
Choosing Amazon FBA for Retail Arbitrage
A question that often crops up when discussing selling on amazon is whether to use FBA (Fulfilled by Amazon) or FBM (fulfilled by merchant).
This is mostly down to personal preference, although we will mention a few points below to help you assess your own preference.
Pros of Fulfilled by Amazon:
- Shipping costs are slightly lower than seller fulfilled
- Amazon store, pick, pack, and ship for you, removing that hassle
- Amazon deal with customer support enquiries
- You might get priority listing and buy box wins
Cons of Fulfilled by Amazon:
- You have extraordinarily little ability to challenge product returns
- You have no control over packaging quality or protection
- Amazon will start penalising for slow moving items
Pros of Fulfilled by Merchant
- You have full control of shipping quality
- You have full control of refunds and returns
- You do not lose stock when Amazon changes the rules.
Cons of Fulfilled by Merchant
- You must store a growing number of stock items
- You must buy different packaging products and protective wrappings
- You must manage shipping, which can be unreliable at times.
You could of course strike a balance. Once you are confident that a product is safe and sells well, then you could move that from FBM to FBA, keeping more vulnerable and ‘test’ products in-house.
Where to Find Amazon Arbitrage Lists for Deals and Opportunities
MoneyMaking.Expert lists regular Amazon arbitrage deals.
In fact, we try to list a personally selected offer every Tuesday and Thursday.
You can find these deals listed in our Wealth Hacks section, or follow us on YouTube or any other social media channel.in
While these Amazon arbitrage product lists are not extensive, we do cover the details you need to make an investment choice, but certainly suggest that you only look to invest in 2 or 3 deals each month, to build up a good stock rotation.
Can I ship Amazon FBA Retail Arbitrage Products Directly to Amazon Warehouses?
This would not work.
You must follow a very precise process when shipping goods into Amazon, and it is highly unlikely that another retail outlet will collaborate with you on this.
If you were buying wholesale, then of course this is highly possible, but not when arbing.
If you really wanted to ship directly to Amazon, then you would need to go via a fulfilment centre, of which there are several to choose from.
Alternatives to Retail Arbitrage on Amazon
Retail arbitrage does not only exist on Amazon. It is also used on ebay, Facebook and most every other marketplace.
The reason that Amazon is popular is because the customer engagement is much easier than with some other platforms.
Amazon customers tend to hold an inherent trust in Amazon service provision, whereas other sites do not hold that same buyer perspective.
While buyers will have loyalties to a brand for a variety of reasons, Amazon does have a strong affinity to Prime, and free deliveries and returns.
In most cases though, Prime is only automatically open to FBA sellers. Seller Fulfilled products and vendors can only be invited to use the prime badge once their accounts have passed several tests for high standards of delivery.
Are You Ready to Start with Retail Arbitrage on Amazon?
You should be able to find all the details you need within these pages to get you up and running.
If, however we are missing or unclear on any information, please reach out to email@example.com and we will be most happy to help.