Reselling on Amazon: Amazon Retail Arbitrage Guide for 2022
Junel at Seller Snap, June 9, 2022
Table of Contents
The eCommerce industry has proven its resiliency and stability during the pandemic. Despite the strict lockdown and quarantine protocols implemented worldwide, it still managed to showcase the growth while addressing the essential needs of consumers worldwide.
The Amazon marketplace, in particular, is among the thriving marketplaces amidst the pandemic. The global health crisis has accelerated consumers' shift towards digital transactions, including online shopping.
Amazon purchases increased during the pandemic, attracting traditional businesses and entrepreneurs to explore reselling on Amazon.
What Is An Amazon Reseller?
Before we delve deeper into reselling on Amazon and retail arbitrage, it is best to discuss what an Amazon reseller is. Newbie sellers on Amazon are often confused about Amazon sellers vs. Amazon resellers.
Amazon resellers are people or companies that purchase products from local or overseas suppliers and resell the products on Amazon at a higher price. Amazon resellers typically do not have any creative rights to the product. They simply resell an existing product to customers.
On the other hand, the term Amazon seller refers to an individual or company engaged in selling items on Amazon. Whether it is retail arbitrage, private label, or wholesale, they are considered Amazon sellers.
Simply put, all people reselling on Amazon are generally considered as Amazon sellers, but not all sellers on Amazon are resellers.
Is it Worth Reselling On Amazon in 2022?
The Amazon reseller program is among the many topics discussed when it comes to “making money on Amazon”. There are many gurus and influencers discussing the profitability of an Amazon business.
However, the ever increasing competition on Amazon can make reselling on Amazon hard. The fear of market saturation discourages some sellers from venturing into retail arbitrage and other ways to sell on Amazon.
According to Marketplace Pulse research, the Amazon marketplace currently has almost 10 million seller accounts across its global marketplaces. Additionally, over two thousand new sellers enter the global Amazon marketplaces every day.
Despite the increased competition in the marketplace, there is also a massive growth of potential.
In particular, the number of Amazon Prime members increases each year. Amazon itself reported that in Q1 of 2021, they already had 200 million Prime members worldwide, which contributed to the more than $11 billion Amazon Prime Day sales in 2021.
It is worth noting that the number of unique sellers on Amazon is lower than that of the registered accounts, i.e. accounting for Amazon business on multiple Amazon marketplaces. Furthermore, with global consumers transitioning to eCommerce due to the pandemic, more consumers will turn to Amazon for their consumer needs.
That’s why, even though it’s not exactly easy, reselling on Amazon can still be profitable in 2022.
What is Retail Arbitrage?
Retail arbitrage is one of the most common ways for sellers to earn money on Amazon. In general, retail arbitrage refers to an eCommerce business model centered on buying products at a discount.
These inventory items are ordinarily available at brick and mortar stores such as department stores, thrift stores, or liquidation shops. The items purchased from these retail arbitrage sources are then sold online for a higher price.
Comparing Retail Arbitrage to Other Amazon Business Models
Amazon Handmade: Local and global artisans can sell their genuinely handcrafted products under this seller program. This platform is exclusive only to handcrafted home decor, jewelry, accessories, gifts, and more.
Amazon Private Label: Private label on Amazon involves creating a product or modifying a product purchased from a supplier and then selling it on Amazon under a new, own brand. The modification process may include adding a logo or branding.
Amazon Wholesale: The main difference between arbitrage and wholesale method is the former entails individual purchases, while the latter involves bulk purchases directly from suppliers.
Amazon Dropshipping: The dropshipping method involves purchasing an item directly from a supplier and then having the purchased item sent directly to your customer's address.
Ways To Improve your Amazon Retail Arbitrage in 2022
Have an Amazon Scanner App
Since you will be spending your time searching items in retail stores, you should not forget to download an Amazon scanner app on your smartphone. This scanning app will scan barcodes to help you determine the profitability of a particular item.
An Amazon scanner app can display valuable data to help you make a reasoned decision. Some of this information includes but is not limited to an item’s price, sales rank, listings competitions, product history, and restrictions.
You have an option to use Amazon's own application or utilize a third-party barcode scanner.
One of the advantages of retail arbitrage is the opportunity to start small. Since you will not be ordering in bulk, you can have more time to check the profitability of an item without spending large amounts.
Starting with a small inventory means you can better grasp an item's sourcing, listing, shipping, and pricing. If an item fails to produce the desired ROI, you can quickly discontinue its sales without having a significant financial loss.
Remember that you should not invest anything that you are not prepared to lose.
Choose The Popular Categories on Amazon
When reselling on Amazon through retail arbitrage, you should ensure that your chosen category is a popular category for arbitrageurs for increased profitability.
Since there are many categories on Amazon, you should look into popular categories and sub-categories. Some of the trending Amazon product categories among arbitrageurs include Home & Kitchen, Toys & Games, Beauty & Personal Care, Health, Household, Baby, and Kitchen & Dining.
Follow Trends & Consumer Demand
When looking for retail arbitrage items, you should also consider the trend and seasonality of the product. Try to determine what products are currently in-demand or soon-to-be trending.
For example, if a particular holiday is fast approaching, you should look for sale items relating to that specific celebration. To be updated with the critical dates or events, you should determine critical eCommerce events, such as Black Friday, Amazon Prime Day, and other Q4 holidays.
Improve Your Product Listing
Reselling on Amazon does not end when you find a profitable product to sell online. You must also ensure that Amazon shoppers can discover your product listing.
You should see that your listing is optimized correctly to increase your product's discoverability. According to Amazon, you can increase product visibility and sales if you provide relevant and complete information for your product.
Moreover, using the right keyword for the title and description of your item will likewise help increase product discoverability. Take advantage of “Search Terms” to enhance the discoverability of your listing.
Competitive Listing Price
The price change is a common occurrence on Amazon. According to Business Insider, Amazon changes product prices 2.5 million times a day, which translates to an average product price change every 10 minutes.
One of the reasons why sellers change a listing price is to attract Amazon shoppers into buying their products. There are many ways Amazon resellers can implement a product price change. Depending on your need and business goal, sellers can choose to use manual, rule-based, or automatic repricing methods.
If you have multiple listings, utilizing an algorithmic AI repricer like Seller Snap is beneficial. AI repricers can automatically make price adjustments based on competitors' price change, marketplace conditions, and other relevant factors.
An automated Amazon repricer will see that your listing price is highly competitive. Furthermore, repricing software can prevent unnecessary Amazon price wars that can be detrimental to your profit margin.
Ask For Help
If you wish to expand your retail arbitrage business, you can always ask others for help. You can hire other people who can check items on other brick-and-mortar stores on your behalf, especially when there are discount promos. You can maximize your product sourcing when you have other people doing the same thing for you.
Use High-Quality Images
Reselling on Amazon will require you to upload images of your product. When uploading an image for your listing, see to it that you use only high-quality product images.
High-quality images can significantly increase the likelihood of Amazon shoppers' clicking your product listing. Detailed images of your products can help prospective customers determine the quality and features of your item. Hence, influencing the customers purchasing decisions.
Practice Patience At All Times
Like in any other form of business, reselling on Amazon requires patience. Your Amazon business will not immediately experience an overnight success, which is why constant improvement and optimization are necessary.
Patience is also necessary for product research and sourcing, especially when checking discounted items in retail stores. It could take time, especially if you check multiple brick-and-mortar stores in your locality.
Always Check Amazon Guidelines
To prevent any issues with Amazon or any penalties, be sure to check Amazon product listing and restriction guidelines. Amazon has a strict policy for listing an item on its platform. Hence, reviewing these rules and regulations can help you succeed in the Amazon reseller program.
Benefits of Retail Arbitrage on Amazon
Retail arbitrage is still a viable method sellers can try in 2022. Many Amazon sellers still engage in retail arbitrage because of its profitability. Here are some reasons why Amazon sellers turn to retail arbitrage when reselling on Amazon.
Retail arbitrage is an excellent alternative source for inventory items that are unavailable on online sources or traditional suppliers.
Retail arbitrage likewise helps Amazon sellers earn quick cash. A newbie Amazon seller can even sell items purchased from thrift stores, yard sales, or liquidation shops.
Amazon retail arbitrage also requires little starting capital. Hence, newbie sellers who cannot afford bulk purchases of inventory items can start their Amazon business with the help of retail arbitrage.
Retail arbitrage, in general, offers more straightforward and lower-risk options for online entrepreneurs to start reselling on Amazon. It is ideal for online sellers who have difficulty launching their own brand or securing their websites.
Is Amazon Retail Arbitrage for You?
Admittedly, retail arbitrage may not be suitable for all entrepreneurs. Retail arbitrage is highly suggested for those people:
who can easily source products in their locality
who can leverage the method for future purchases at a lesser cost
who have time to scout clearance, discount sections of department stores, and even visit liquidation shops or facilities
On the other hand, retail arbitrage is not well suited for Amazon for sellers who:
are unable to sell their purchased items online
do not have a vehicle to go from one store to another
do not want to compete with other shoppers during clearance sales
Is Retail Arbitrage Legal?
The very essence of retail arbitrage is buying an item from a brick-and-mortar store and then reselling the item online for a higher price. However, a few are hesitant to venture into retail arbitrage because of its legality.
Some sellers are questioning whether or not retail arbitrage is legal.
Retail arbitrage is an established and industry-accepted practice. Amazon retail arbitrage is not illegal as long as your resell price is reasonable and complies with the law and the guidelines set by Amazon. By reasonable price, it would suggest avoiding the practice of price gouging.
Furthermore, as a general rule, a legally purchased product provides the owner with a right to sell that product.
Reselling on Amazon - Complementary Approach
Running your own Amazon business does not mean that you are limited to reselling on Amazon once you have chosen such a method. In reality, you can combine other approaches to the business.
Whether retail arbitrage, online arbitrage, private label, dropshipping, or handmade, Amazon does not restrict you from venturing into those selling methods. What is important is that you can focus on each method for each selling method to drive customers to your business and increase the profitability of your Amazon venture in its entirety.
To further boost the success of your Amazon business, the use of Amazon seller tools and services is highly advantageous. It will not only improve your seller performance, but it will also save you time, effort, and money.
To get started or learn more about how Perpetua can help you scale your Amazon Advertising business