What is Retail Arbitrage?
Retail arbitrage is simply buying products from one retailer and reselling them another (usually Amazon, Walmart or eBay) for a profit.
Check out the nine-step guide to retail arbitrage on Amazon below from an experienced reseller.
Is Retail Arbitrage Legal?
Retail arbitrage is legal in the US and the UK. The US Supreme Court ruled that a retailer cannot stop someone from reselling their products as long as the products have been acquired legally.
However, you should avoid sourcing counterfeit products and selling branded products that are only to be sold through authorised resellers.
Buying low from a retailer and selling at a higher price online is the key to retail arbitrage
Retail Arbitrage on Amazon (9-Step Guide for Sellers)
Ok, so I’ll finally get round to sharing with you what I’d do with this possible retail flip.
1. Check Potential Profit With Scanning App
I scanned the item with Scoutify. The item is ranked 215,544, and the lowest FBA seller is Amazon selling it at $29.96. The app does the math for me and states that if I match the lowest FBA price, then I’d make a profit of over $18 per item.
2. Check Amazon
I clicked through to the Amazon sales page to check out the possible competition. The lowest FBA price is indeed Amazon at $29.96. I also confirm that there is only one other current FBA seller, selling it at $29.99.
3. Check Keepa
I looked at Keepa and it looks like in the past year there have only been about 4-5 sales.
4. Look at the Item’s Sales Rank
Currently, the sales rank is 215,544.
5. Check Customer Reviews
Currently, this Stylus Pen has over 1700 reviews. If over 1700 people left a review for this item, then it’s safe to say that it’s at least sold 1700 times, and most likely more.
6. Check Recent Customer Reviews
It looks like there were only two reviews this year so far. Most of the bulk of the reviews were from years ago.
7. What About Bad Reviews?
There are occasional bad reviews, but plenty of positive reviews. If I sell all 20 of this item, then maybe one will be returned. I’m ok with that one return, with the possibility of making almost $18 per stylus.
8. Do I Compete with Amazon?
Amazon has not been in stock for a long time, so this is nothing to worry about now.
9. Possible Future Competition
There are 20 of these stylus pens on clearance at Target. The good news is that it might be possible that you could go to more Targets and find even more. The bad news is that if this item is on clearance at every Target, then many other resellers will also find these and join you in selling. More competition and the possibility of that competition lowering prices are something to consider.
Retail Arbitrage is Not Dead
You can absolutely still do retail arbitrage. There’s nothing stopping you. Get in your phone out and go into a store and scan everything. Scan everything you can sell and ship it to Amazon.
But, some questions that you need to ponder upon. What’s the competition like nowadays? Is it getting more difficult? What does Amazon think about retail arbitrage?
I guess the answer to the question, “Is there more competition?”, well of course.
The fact is whenever there is a good opportunity, you’ve got people that are going to get involved. The information is everywhere, so it’s really getting more competitive.
Final Thoughts
So there you have it. Remember, there is no right or wrong answer. I’m not telling all of you who wanted to pass on this item that you are wrong. We all have different Amazon business models and risk tolerance for sourcing. Continue to do what works best for you, and occasionally try something different.
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