Online arbitrage is one of my favorite methods of sourcing product to sell on Amazon.
Before we really get into the meat of this guide let's discuss a little about what online arbitrage is.
Then we can discuss tools to help you succeed (both free and paid), skills that will be helpful, and answer some common questions about online arbitrage.
What is Online Arbitrage?
Online arbitrage is the practice of buying products (toys, health products, shoes, clothing, etc) from online retailers and selling them for a profit on another marketplace.
This can be Amazon (my preferred marketplace), ebay, Facebook, Craigslist, and so on.
The practice of online arbitrage can be done manually. Scouring sites for products and comparing them to the matching products on your preferred marketplace.
It can also be done using software like Tactical Arbitrage or employing a virtual assistant.
In a nutshell, you are looking for price discrepancies between marketplaces and taking advantage of that, pocketing the difference as profit.
The price discrepancies can be further leveraged by using tactics including discounted gift cards, cash-back, and sales to make your initial purchase price lower and your profit higher.
Tools for Online Arbitrage
First, we will start with some free tools that will help you while you are practicing the art and science of online arbitrage.
We will start with one of my favorites and an absolute necessity.
Keepa (free with some paid options) – Keepa is both an online tool and an extension that is useful inside the Amazon marketplace. It allows you to see price drops, track products, see sales rank history, price history, amount of reviews historically, number of sellers, and so much more.
It is an absolute powerhouse of a tool that is extremely helpful to the arbitrageur.
The image above shows you a keepa graph from an Amazon product detail page.
You can see that it shows when Amazon is in and out of stock, the price history, how many sellers there are, the sales rank, the buy box prices for FBA, FBM (fulfilled by merchant, and even used sellers.
Again, this is an absolute workhorse and this tool alone really needs its own post to dive deep into nuances of how to properly read and use keepa to it’s full advantage.
I, personally, don’t think it is anywhere near as powerful as Keepa. However, it deserves a mention because it will occasionally have information when Keepa does not.
Plus, it’s FREE!
Tactical Arbitrage – I’m going to be incredibly up front here. I’m an affiliate for Tactical Arbitrage. However, if I weren’t i would still sing it’s praises.
This online arbitrage tool makes the work of doing online arbitrage much simpler.
Rather than comparing items from retail stores one by one to find products that are profitable this suite of tools that include an online arbitrage module, Amazon Flips module, Reverse Search module, and a Wholesale module make the “manual labor” out of online arbitrage.
You plug in filters, sites you want to search, profit levels you would like to achieve, discounts you may have available, and Tactical Arbitrage goes out and looks at all the items at over 400 sites and brings back products that fit your criteria.
I wrote an extensive how-to guide for Tactical Arbitrage that you can check out.
Finally, if you would like an extended 10-day trial to Tactical Arbitrage just use the code CLEARTHESHELF if you decide to give it a try. It will cost you $1 for the trial.
revROI – This is a google chrome extension that I built. It is not a necessity but it helps you quickly see what kind of cashback and discount gift cards you can get to lower your cost of goods sold.
This extension shows you an easy to read graph at hundreds of sites to see who offers the biggest cashback and the steepest discount on gift cards.
You can check out the explainer video I made below.
revROI will set you back $39.95 for a lifetime license but it should pay for itself in a shopping trip or two.
BrickSeek – BrickSeek.com is an incredible site that will help you find stock of items that may be sold out online locally.
Currently it works for Walmart, Target, Lowe’s, and Office Depot.
The reason this is so powerful is that you may find an incredible deal online but it’s sold out. Brickseek will allow you to see if there are any in local stores that you may be able to go pick up.
They also offer a paid version that will show you discounted products and track items for you.
Storefront Stalker Pro – Storefront Stalker Pro is a tool built by a good friend of mine.
It allows you to stalk the storefronts of Amazon sellers. This gives you the ability to find people who are successful and “follow the leader” to find products they may be profitably flipping.
This chrome extension also allows you to download ASINs from Amazon searches and categories so that you can use them inside of Tactical Arbitrage or your preferred sourcing software to reverse search for these items.
This tool will also unlock some really cool features inside of Tactical Arbitrage that are extremely helpful. They are the best sellers reverse search feature and the storefront downloader which will allow you to download very large storefronts.
I wrote a pretty extensive post about Storefront Stalker Pro you can check out.
Poly-Bags – These are used for bagging items that need to be protected from an Amazon warehouse if you plan to use fulfillment by Amazon.
You can easily buy these on Amazon and many other places.
I always suggest you pick up a multitude of sizes.
These are my favorite poly-bags.
Scotty Peelers – These handy little tools will help you remove stickers from products you get.
Sometimes when you order an item it may have a price sticker on it that needs to be removed. It may even have a shipping label or other stickers that should be removed without damaging the packaging.
Scotty peelers are excellent to help you do this.
The metal ones are even sharp enough to double as a box cutter!
Lighter Fluid – This one seems like it doesn’t fit, right?
Lighter fluid is excellent at helping you remove the tough to remove stickers on products.
Surprisingly, it doesn’t leave any scent and is relatively safe to use on anything from cardboard to plastic.
If you don’t currently use this, try it. It will change your life!
Bubble Wrap – If you plan to sell any items in glass jars they need to be able to withstand a three foot drop test.
Bubble wrap will easily help you make this a reality. Be generous with it.
It seems expensive but it is a lot cheaper than having a bunch of damaged inventory you can’t sell.
Boxes – These are an absolute must if you plan to sell on Amazon.
You need a way to send your inventory to the Amazon fulfillment centers.
I prefer Home Depot boxes. They are sturdy and inexpensive.
However, don’t forget to check places like freecycle, craigslist, and even the Facebook marketplace. You can often find free boxes that you can go pick up if you need to save some coin.
There is nothing wrong with saving your pennies to buy more inventory.
Other Tools – There is no shortage of tools you can use in your online arbitrage business.
I have listed my favorites but i would love if you shared tools that you find useful that I may have forgotten or may not even know about.
Leave me a comment below. I’ll <3 you forever!
Skills Need for Online Arbitrage
Patience – There is a learning curve to becoming a proficient practitioner of online arbitrage.
You will be well-served to spend time in Facebook groups like FBA Today (which I co-admin) asking questions and soaking up the knowledge of veterans who sell on Amazon. The community is a giving one and people are extremely willing to share what they have learned.
You will also find a ton of tutorials, stories, webinars, and so much more on YouTube.
I have several playlists and videos on my own YouTube channel.
Not Selling from Your Own Pocket – This may sound odd but hear me out.
Many people who fail at online arbitrage do so because they don’t understand why someone would pay more for a product on Amazon or ebay when they may be able to purchase it cheaper at Walmart or Target.
It boils down to one word. Convenience.
People are busy but they need or want stuff. This will lead them to making a purchase where the “pain of purchase” is as low as possible.
Being able to open up the Amazon app on your phone, finding, ordering, and receiving what you want in a day or two has a perceived pain that is lower than getting in your car, driving to Target, battling all those latte sipping Target moms for the item you want, and coming home.
It’s so much simpler to Netflix and chill, order my groceries and a new iphone case, and wait for it to show up on my doorstep.
I, and millions of others, pay for this convenience every single day.
A Willingness to Learn – I have been in this game for several years. I still learn new things regularly.
There is always a new tactic, a new shortcut, or a “hack” you may be able to pick up.
Always be willing to learn, try new things, and “get your hands dirty” in the practice of online arbitrage.
Actually paying a little tuition with real money to learn can teach you some of the most valuable lessons in this business.
Common Questions about Online Arbitrage
Is it legal? – Yes. Arbitrage has been around since the days of the Dutch West India Company.
Actually, arbitrage has been around longer.
You have the right to resell items that you purchase legally. It is known as the First Sale Doctrine and it has been upheld by The Supreme Court of The United States multiple times.
Now, there may be some times when you shouldn’t sell something. Particularly if a warranty won’t transfer or if Amazon or another marketplace tells you that you can’t.
You have to play by their rules.
Is online arbitrage easy? – Yes and no. Like i said before there is a learning curve.
However, I believe online arbitrage is more scalable than other forms of arbitrage like selling books or retail arbitrage because you have the ability to use tools to make things go faster, to process results for you, and to offer you the ability to easily outsource some of the labor.
What types of products should I sell? – That will be up to you. I always suggest that you begin with items you know something about.
This may give you an edge because you may already know what people want. Then it is just a matter of finding it at a price that is profitable to flip.
Alternatively, you should sell anything you can that will make a profit as long as it is legal and ethical.
Can you make consistent profits? – Yes. As long as you do the work.
Online arbitrage is not a get rich quick scheme. It is a process that needs to be worked.
You can outsource much of it once you start to become proficient at it by hiring a prep center to handle some logistics of prepping and packing inventory for you.
You can also hire a virtual assistant to find profitable products for you.
As long as you consistently find and flip products you can grow an online arbitrage business to something that is consistently profitable.
What kind of capital do I need? – I always tell people to start where they are.
If you have no capital at all start by selling items that you may have around your home or that you can source extremely inexpensively.
Did you know that the dollar store has profitable products you can sell?
If you do have some money to invest you can start with $500 or $5,000.
The more you have the faster you can scale your business. But, there are plenty of stories of people who started with very little and now have a flourishing business.
It just takes time and effort.
I’m just a man. Some would even say an incredibly good looking man. But, I’m sure I may have forgotten something.
Please, leave me a comment and let me know what tips, tricks, or tools you find helpful in your online arbitrage endeavors.
Also, if you have a friend who might find this useful, please share it.
It means a more than you know!