Amazon is one of the biggest marketplaces in the world. It’s a place where anyone can start selling and make money. But how do you get started without creating your own products?
That’s where online arbitrage (OA) comes in. With OA, you buy products online at a low price and resell them on Amazon for a profit. It’s simple to understand and perfect for beginners.
In this guide, we’ll break it all down. You’ll learn what online arbitrage is, how it works, and whether it’s worth your time.
What is Online Arbitrage (OA)?
Online arbitrage, or OA, is a way to make money by buying and reselling products. You find deals or discounted items from online stores and list them for sale on Amazon at a higher price. The difference between your buying cost and selling price is your profit.
Unlike creating your own products or managing a physical store, OA is straightforward. You don’t need to design or manufacture anything. Instead, you focus on finding profitable products that are already in demand.
How does this differ from retail arbitrage? Retail arbitrage involves buying products from physical stores, and selling them on Amazon. Online arbitrage is similar but done entirely online. This makes it more accessible and scalable since you can source products from anywhere.
Online arbitrage is part of Amazon’s thriving third-party seller ecosystem. Over 60% of sales on Amazon come from independent sellers like you. It’s a beginner-friendly way to tap into this massive marketplace.
If you’re new to selling, OA can be a great starting point. It’s low-risk, requires minimal investment, and doesn’t need advanced skills. All you need is a computer, an internet connection, and some research tools to find deals.
Is Online Arbitrage Allowed and Supported by Amazon?
Yes, Amazon allows online arbitrage. Many sellers successfully use this model to grow their businesses on the platform. However, there are some rules and guidelines you need to follow.
Amazon’s policies permit you to source products from retail stores or online websites, as long as the items are authentic and in good condition. Selling counterfeit, fake, or restricted products is strictly prohibited and can lead to account suspension. So, always ensure your sources are reputable.
It’s important to note that Amazon verifies sellers when they sign up. This includes submitting personal or business details, such as a valid ID, bank account, and tax information. This process is designed to protect buyers and maintain trust on the platform.
Another common concern is whether Amazon will penalize sellers who source from retail or online stores. The answer is no—as long as you provide excellent customer service and stay compliant with their policies. Many top sellers use online arbitrage as their primary strategy without any issues.
In short, Amazon supports online arbitrage as a legitimate selling model. Follow the rules, source responsibly, and you’ll be off to a strong start.
Is Online Arbitrage Profitable?
Online arbitrage can be very profitable if done correctly. The key lies in finding the right products to resell.
Profitability depends on several factors:
- Product Selection: Not every product will make money. You need to find items with high demand, low competition, and enough margin to cover Amazon’s fees and shipping costs.
- Amazon Fees: Amazon takes a portion of your sales through referral fees and FBA (Fulfillment by Amazon) fees. Understanding these costs is essential to calculating your profits.
- Tools and Research: Using tools like Actorio, Keepa or SellerAmp can help you analyze product sales history, prices, and trends to make smarter decisions.
What about profit margins? For online arbitrage, margins typically range from 10% to 30%. This may seem small, but when scaled up across multiple products, it can add up to significant income.
Can you really make money buying and reselling on Amazon? Absolutely. Many sellers make thousands of dollars a month by consistently sourcing profitable products. However, it’s not a get-rich-quick scheme. Success requires research, patience, and a willingness to learn.
Online arbitrage can also work as a side hustle. If you have a few hours a week, you can start small and grow your business over time. With the right strategy, it’s possible to make steady profits—even with limited time.
In short, online arbitrage is profitable for those who are consistent, strategic, and willing to put in the effort. The more you refine your process, the more successful you’ll become.
Getting Started with Amazon Arbitrage
Starting your online arbitrage journey on Amazon is simple, even for beginners. Here’s a step-by-step guide to help you get started:
1. Create an Amazon Seller Account
To sell on Amazon, you need a seller account. You can choose between:
- Individual Plan: Suitable for those just starting out or selling a small number of products.
- Professional Plan: Ideal for those planning to sell more items or grow their business quickly.
During the signup process, Amazon will verify your identity. You’ll need to provide personal or business information, a valid ID, and a bank account. Yes, you can use a personal bank account when starting out.
2. Learn to Source Products
The success of online arbitrage depends on finding profitable products. Here’s how:
- Look for deals and discounts on popular online retail sites.
- Use tools to analyze product sales history, pricing trends, and demand.
For even faster results, consider using Actorio, a powerful software platform designed specifically for Amazon sellers. Actorio simplifies product sourcing by helping you identify profitable opportunities across multiple online stores. It saves time and ensures you focus on products with high profit potential.
3. List Your Products on Amazon
Once you’ve sourced a product, create a listing on Amazon. If the product already exists in Amazon’s catalog, you can list under the same ASIN (Amazon Standard Identification Number).
Set your selling price strategically to remain competitive while ensuring profitability.
4. Use Fulfillment by Amazon (FBA)
FBA is Amazon’s fulfillment service, making it easier to manage inventory. You send your products to an Amazon warehouse, and they handle storage, shipping, and customer service.
With FBA, you save time and increase your chances of winning the Buy Box—a key to higher sales.
5. Start Small and Scale Gradually
You don’t need a huge budget to begin. Start with a small investment to test the waters, learn the process, and build confidence. Once you see success, reinvest your profits to scale your business.
With these steps, anyone can start online arbitrage on Amazon. The process is beginner-friendly, and tools are available to make it even easier. The key is to take action and learn as you go.
Comparing Business Models
When starting out in the e-commerce world, it’s important to understand the different business models available and how they relate to online arbitrage. Let’s compare online arbitrage to other common Amazon business models to help you make an informed decision about the right path for your business.
Online Arbitrage vs. Retail Arbitrage
Both online arbitrage and retail arbitrage involve buying products from one source (like a retailer or wholesaler) and reselling them on Amazon. The key difference is where you source your products:
- Retail Arbitrage: You visit physical retail stores to buy discounted or clearance items and resell them on Amazon. While this method can yield great profits, it often involves more time spent physically searching for deals and may be limited by local store inventories.
- Online Arbitrage: In this model, you source products from online retailers. The advantage is that you can search from the comfort of your home and take advantage of online deals from multiple stores. Additionally, you can scale much faster by using automated tools like Actorio to find profitable products across different online platforms.
Both models can be profitable, but online arbitrage offers more flexibility, scalability, and ease of operation, making it a preferred choice for many sellers.
Online Arbitrage vs. Private Labeling
Private labeling is another popular Amazon business model where you create your own brand and sell products under that brand name. It’s a different approach compared to online arbitrage:
- Private Labeling: Involves sourcing generic products from manufacturers, customizing them with your brand, and selling them on Amazon. It requires an upfront investment to design and market your products but offers more control over pricing and branding.
- Online Arbitrage: In contrast, online arbitrage allows you to source existing products that are already sold on Amazon. You don’t have to worry about branding, manufacturing, or large upfront investments. You can start small, test the market, and scale quickly.
While private labeling can lead to higher profit margins and more control over your business, it also comes with higher risks and complexities. Online arbitrage is a low-risk, flexible model that’s easier to get started with but may have more competition, especially for popular products.
Online Arbitrage vs. Wholesale
Wholesale is a model where you buy products in bulk from suppliers and resell them on Amazon. It shares similarities with online arbitrage, but there are key differences:
- Wholesale: You purchase large quantities of products from suppliers at a discounted price and sell them for a profit. It often requires more investment upfront but can offer better margins on bulk purchases.
- Online Arbitrage: This model focuses on sourcing discounted products from online retailers and reselling them on Amazon. You buy smaller quantities at a time, which reduces your upfront costs.
Wholesale tends to work best for those who can manage bulk orders and have the capital to invest. Online arbitrage is a great starting point for beginners since you don’t need to commit to large volumes right away.
Online Arbitrage vs. Dropshipping
Dropshipping is often compared to online arbitrage, but it’s important to clarify that dropshipping is not allowed on Amazon, making it a poor choice for those who want to sell on the platform. Here’s how the two models differ:
- Dropshipping: In dropshipping, you sell products on Amazon or another platform without holding inventory. When a customer makes a purchase, you forward the order to the supplier, who ships the product directly to the customer. However, Amazon’s policies prohibit dropshipping unless you are the seller of record on the order and are responsible for ensuring that the product is delivered as expected. In practice, this means you can’t list products from third-party suppliers without having a direct relationship with the supplier.
- Online Arbitrage: With online arbitrage, you buy products from online retailers, hold inventory (usually through FBA), and resell them on Amazon. This model gives you more control over pricing, product quality, and customer experience. You also don’t need to worry about violating Amazon’s policies, as you are the direct seller of the product.
While dropshipping might be a popular model elsewhere, Amazon’s strict rules mean that if you want to build a successful business on their platform, online arbitrage is the way to go. It offers more control, better margins, and compliance with Amazon’s seller policies.
Is Arbitrage Worth It for You?
Arbitrage can be a highly profitable business model, but whether it’s worth it depends on your goals, resources, and willingness to put in the work. While online arbitrage offers flexibility, low startup costs, and the potential for scalable profits, it’s not without its challenges. To help you decide if it’s the right fit for you, let’s look at the pros and cons of online arbitrage and what you need to succeed.
Why Arbitrage Could Be Worth It for You
- Low Startup Costs: One of the biggest advantages of online arbitrage is the low barrier to entry. You don’t need a large initial investment in inventory or infrastructure to get started. With just a computer, internet connection, and access to online retailers, you can begin sourcing products and listing them on Amazon.
- Scalable: Online arbitrage allows you to start small and scale as you grow. Initially, you might want to test a few products to see what works, and as you gain more experience and confidence, you can expand your inventory and increase your sales volume.
- Flexibility: This model is highly flexible. You can work from home, set your own hours, and choose how much time you want to dedicate to your business. This makes online arbitrage a great side hustle for people with full-time jobs or other commitments.
- Profit Potential: If done correctly, arbitrage can offer strong profit margins, especially if you’re able to find products that are significantly undervalued on other online platforms. The key to maximizing profits is sourcing efficiently, tracking trends, and continuously optimizing your listings.
- No Need for Manufacturing or Branding: Unlike private labeling, you don’t need to deal with manufacturers, branding, or product development. You’re sourcing already existing products, which eliminates a lot of complexity and upfront costs.
- Tools to Help You Succeed: Platforms like Actorio can make it easier to find profitable products, track pricing trends, and manage your inventory. These tools save time and help you make better decisions, increasing the likelihood of success.
