The major population in the seller community still don’t know the method of selling goods without leaving the comfort of your home. This module of business, the online arbitrage, allows you to do just that in more easy terms.
This module of business fits in the schedule of every type of seller, from a side hustler to a large-scale business owner.
All thanks to technology, online arbitrage has now been improved into a lot easier module.
With the rise of eCommerce in the year 2021, online arbitrage is now more beneficial than ever to invest in.
As per Statista, “Walmart U.S. eCommerce sales grew significantly in the four quarters of FY 2021, compared to the same quarter a year earlier. In the fourth quarter of the fiscal year 2021, the company’s eCommerce sales grew by 69 percent. In the fiscal year 2021, walmart.com registered net sales of around 28.9 billion U.S. dollars”. These stats show the growth of eCommerce in terms of Walmart alone.
Imagine how big the market has become. There are numerous reasons why online arbitrage is going to be one the most profitable ventures out there for the decade. When performed correctly this module of the business provides all the benefits of retail arbitrage. At the same time, it can be done without extra fatigue of moving from one departmental store to another.
Introduction to online arbitrage: What is it?
Definition: It is the act of buying a product from one market to only sell it in another market for a marginal profit. It is simply as per the definition.
For example, You buy it from a marketplace say Walmart, and resell it for a higher margin on Amazon.
Note: There are no licenses or certifications needed for selling online through arbitrage. It is as simple as creating an Amazon account, registering it with Amazon FBA (Fulfillment By Amazon), listing the products, and waiting for sales.
Those who have proficient knowledge of retail arbitrage, have a potentially greater possibility of understanding online arbitrage. Although this module might prove a blessing for some, it is not for all and everyone.
Let me share some thoughts on the pros vs cons of online arbitrage over retail arbitrage.
|01.||Much more time-efficient as you don’t have to move between departmental stores.||More technological knowledge needed in online arbitrage.|
|02.||Much easier to scale as there is no limit to online inventory i.e. you can buy as much as you want.||Sometimes, the profit margin is lower than retail arbitrage.|
|03.||Products arrive directly at your home address, and you can use the packaging again.||Risk of mismatching inventory.|
Is online arbitrage legal?
Just like other markets, online arbitrage makes the market more efficient. The only reason ‘why online arbitrage is profitable?’: is probably because the current market structure is highly inefficient.
Over the course of the era of development in technology, the markets are continuously becoming efficient, thus decreasing the profitability of the module of business.
Despite technical advancements, online arbitrage is highly pre-eminent on Amazon. Over time, we should preassume the possibility of decreasing profit margins in online arbitrage. The advancements will surely reduce profit margins and burn down profit margins.
In spite of the disadvantages of the business module, we will witness a rise in the percentage of module lovers in the year 2021, as pros continue to cover up for the cons. For some, the advancements in technology might hurt business aspirations while some take it as an advantage to scale up the business even faster.
Nowadays the industry has gone a bit further and discovered software for particular arbitrage needs. We at Renown Genius offer software as well.
Online arbitrage on Amazon FBA: How to make money?
Just like any business, the secret sausage to this business is, too the same principle: ‘buy low and sell high’. Sounds easy, doesn’t it?
Anyone in the business would say, “it is too good to be true”. Furthermore, every business, in the beginning, requires a solid grip for gaining traction.
Note: The key to success in online arbitrage is to source tools, data, and applying a methodical approach in finding the right product source.
Online arbitrage is slightly slow i.e. less beneficial at the beginning. However, once you start performing in the business module, you will find new ways and unique ideas that boost up the business.
This will simplify your revenue, and continue doing so will make you a profitable seller of experience.
The acquisition formula
The profit formula is probably the most important perspective of selling on Amazon online. The more tactical you are the more you make a profit. Ensuring a marginal profit in this module is a bit tricky and not easy.
The factors affecting the acquisition formula here are:
- The initial investment for the inventory.
- Amazon fees (FBA charges, storage costs)
- Shipping costs
- And, finally the selling price on Amazon.
There are numerous fee and profit calculator tools and extensions are available. These will help you get ease with the profit formula. Amazon provides a totally free profit calculator on their site. All you have to do is put ASIN and product name, the calculator tells you the potential profit on the specific product.
How to get started?: Online arbitrage on Amazon
The first step in selling arbitrage on Amazon is simple as other modules: Register yourself with Amazon Central.
The best way to selling arbitrage on Amazon is to sell through the FBA program. Amazon buyers love to take advantage of their Prime membership. It is a proven fact that sellers who use Amazon FBA get sales often get a buy box presentation. This helps them get consistent sales.
For those who are not aware the Amazon buy box is the box on the product page where the customers click to buy the product. The buy box is rotated among Amazon sellers based on price, seller feedback, FBA or non-FBA, etc. Sellers who are non-FBA often do not get the buy box, which reduces their performance metrics and ODR (Order Defect Rate). This affects their overall sales in a bad manner.
Amazon FBA is a fabulous service offered by Amazon. By opting for Amazon FBA you order Amazon, Amazon ships your product for free, handles fulfillment, return, and customer service. This ultimately gives you more time to source inventory, optimize your business, etc.
Inventory sourcing list: Where to get the right product?
This was the topic you were waiting for. We will discuss here the right inventory to source the product.
The following is a complete list of inventory websites where you can source your products.
- Disney Store
- Academy Sports
- Home Depot
- Renown Express
- Sams Club
- Office Depot
- Best Buy
- Big Lots
- Dick’s Sporting Goods
- Sierra Trading Post
Conclusion: Final thoughts on online arbitrage and relatable success
Online arbitrage is one of the trending business modules of the decade. On the other hand, it is diminishing as well due to advancements in eCommerce as we discussed earlier.
Keeping both sides in focus, I conclude that Online arbitrage had recently gained popularity and has gained traction in the eyes of people. And a seller should continue selling in the module, if not already. What do you think about it? Please do comment in the box given below.