The jury is still out on if selling on Amazon has gotten tougher. Nonetheless, the barrier to entry into Online arbitrage considerably puts it as one of the easier business models to start, making it quite appealing for sellers with a small budget. It’s important to highlight that Amazon Online Arbitrage is not a get-rich-quick scheme, it's a game of patience, and rewards are not immediate.
For people looking to try their hands at online arbitrage, selling through Fulfilled by Amazon (FBA), is the most popular route. Amazon is one of the most popular online stores (hogging about 40% of the e-commerce market share in the US and 13% globally). Also, about 85% of shoppers search for products on Amazon even if they don't end up buying on Amazon - making Amazon the default search engine for shoppers. You get the idea, if you want to start online arbitrage, Amazon is the best place to start.
Growing your Amazon OA business is easier if you have the right answers. So we have answered a few Frequently Asked Questions (FAQs) that new and potential sellers want answered.
How much money do I need to start an Amazon online arbitrage business?
Obviously, you need money to start any business. Selling on Amazon requires significantly less than many other business models.
But how much is enough?
Technically you could buy 10 bars of soap and make double-digit profits If they sell on Amazon at a good profit margin.
So to answer that question; putting numbers on it is personal for everyone. Basically, work out what you can stand to invest.
It's very rare that an Amazon OA seller with the right experience and tools won't turn a profit on their initial investment, that's why it's considered by many as low risk. New sellers also need to be realistic with their expectations; as expecting to turn 3 figures into 6 figures in a few months is not particularly likely. It's not impossible however, there’s also a lot of hard work that goes into Amazon FBA before you become profitable. You'd require patience to turn it into a big profitable business.
Many Amazon online arbitrage business owners will set their expectations at 20% profit as a decent return at the start. More importantly, if you nail your sourcing you can easily succeed. A resource like One Good Deal is a great place to start. You have deals sent to your online deals portal, Monday to Friday. And you know they are good ROI and good profit deals.
What Amazon Categories are the most profitable in 2022?
The initial assumption of many new sellers is that they need to find an Amazon category to focus on - that could be slippery. It's important to diversify categories. Broaden your opportunities to find profitable ASINS.
More seasoned Amazon sellers will know that the broad answer is – absolutely anything and everything that will make a profit.
There could be some more profitable products than others, but they could be in any category. This is where the opportunity arises for Amazon sellers because prices that move mean there are millions of listings that will make a profit at one time or another. But there aren't always categories to solely focus on because top selling categories on Amazon change from year to year or even quarter to quarter and unfortunately new sellers never like to hear this. For example, the Toy category tends to do pretty well in Q4. For the most, they want to have one thing to focus on because finding products can get daunting.
Nevertheless, according to Jungle Scout’s 2021 report, the most profitable Amazon categories were as follows:
Categories like toys, health, and beauty topicals make massive profits. It’s important to be able to sell those, but as a new Amazon OA seller, you usually are gated. One of the reasons new sellers could get gated in the beginning in these categories may be resulting from the fact that Amazon and these brands have not developed a relationship yet with you.
RELATED: How to get ungated in toys on Amazon
How Do I know I can sell a product through Amazon online Arbitrage?
Amazon sells in any category you can dream of and millions of products will be within those categories. However, when you first set up your Amazon account, you won't immediately be eligible to sell in all of those product categories. A part of the reason is a combination of brands wanting to protect their interest and also Amazon wanting to screen you as a seller. The whole point is to essentially find out if you are a serious seller that can contribute to their profits, also if you are legitimate and won't damage their reputation.
So how can you tell if you are eligible to sell the product you found on a retail website?
The best way is to attempt to list the product on Amazon before you go ahead to buy them so that you are clear on brand restrictions and if you are allowed to sell a product. If you’re using OA sourcing tools like SellerAmp, when you’re viewing a deal, it will show if you are eligible to sell that product on Amazon.
A good rule of thumb might be to see whether or not there are other sellers - a single seller listing might indicate potential intellectual property complaints. Another good method of testing the water is to Google the product and also check the forums on Amazon to see if other sellers have been having problems with that product or brand.
Will I make sales on a listing that Amazon is selling on?
A widely contested view is “what to do when AMAZON IS SELLING ON A LISTING ?”. There are no hard or fast rules here when this is the case. Each seller has its own criteria whether that's minimum ROI, BSR benchmark or a number of competitive sellers, or all the above.
The majority of experienced Amazon online arbitrage sellers avoid those listings because they know that often Amazon won't share the Buybox. Nevertheless, you can analyze the product using OA tools to know when last they sold on that listing, how many stocks they have left, the 90-day sales rank, the 90-day FBA price e.t.c
What Quantities Should I Purchase when Starting My Amazon Online Arbitrage Business?
This question is an important one. We recommend you don't go too deep and be left with a load of products. For someone who’s just starting and really needs that cash flow, It’d be more advantageous at that level to sell out of a product and get that money to reinvest as opposed to you being too heavy in a product and then you're stuck with stock.
A great tip is to find replenishable products and have a good replenishing system so you can guarantee demand is always there.