Today you’re going to learn exactly which online arbitrage sourcing method is best for your FBA business – no guesswork involved.
In 2019, there are pros and cons with each way to source online arbitrage products. After selling on Amazon for several years and helping hundreds of online arbitrage sellers, I’ve found some clear trends in the data.
The results are in: When it comes to finding reliable products to resell, there are some time wasters (please stop doing these right now), some situational picks, and some evergreen methods.
The sourcing technique you pick is likely going to depend on the stage your Amazon business is in. If you’re just starting out with arbitrage sourcing, there are some procedures you’re definitely going to want to avoid and others you’ll want to make sure you do. If your business is a bit more mature, it’s going to open up a few options that probably would be detrimental to a fledgling FBA seller.
Here are our topics for today – let’s get into it:
- Online Arbitrage Sourcing Defined
- Sourcing Products by Hand
- An Option to Work More Efficiently
- Outsourcing Sourcing
- How to Be Totally Hands Off
- The Best Next Steps
What Is Online Arbitrage Sourcing?
Online arbitrage sourcing is doing product research with the intent to flip those products for profit on an online marketplace – in our case, Amazon. This product research can be conducted manually, with software and programs, or outsourced completely.
If you want to brush up on some tried and true tips on how to resell things on Amazon, check out this ultimate guide on online arbitrage.
Our goal with all of these sourcing methods is to find products at retail stores cheaper than they’re selling for on Amazon. If that price difference is big enough, and the product has the right key metrics, we can make a profit by flipping it.
Arbitrage businesses are all about opportunity; being in the right place at the right time with the right product. As a result, sellers need to strike a balance between finding products with low enough competition that they sell well and sourcing at scale to have enough products to sell.
There’s no perfect solution, but some are clear winners. Based on hundreds of sellers I’ve worked with, many mix and match methods to fit their needs – that’s not only perfectly fine, it’s encouraged! My goal is to help you find the best solution for YOU, whatever that might be.
What we’re going for here is cost-efficiency. If you’re starting up your Amazon business, you’re lucky if you have a partner to help out. In the likely scenario it’s just you running this operation, time is money. We’re going to optimize for the time-to-profit ratio.
Let’s start with the least practical method first, move into the situational techniques, and finish with the solution I believe fits sellers at any level.
Sourcing Products Manually
Finding profitable products by hand has a lot of drawbacks and few benefits. Sourcing manually is tedious, time-consuming, and inefficient.
If you’re going through page after page of a retail website, having to look up the matching product on Amazon, and compare prices to see if it’ll be profitable, you’ll burn out very quickly with little to show for it. At best, it’s an unreliable way to source products for Amazon.
You’re wasting precious time on your business by doing the sourcing equivalent of cutting the front lawn with a pair of rusty scissors. There’s only one way this ends: with a lot of frustration and probably carpal tunnel syndrome.
The only advantage it has over other methods is that you’ll have complete control over where and what you source.
For example, not all websites are available to scan on sourcing software. If you’re able to go through an extremely niche website and find profitable products by hand, you’ve found a diamond in the rough! Other Amazon sellers might not have found that site yet, so there’s inherently less competition.
Doing all this work by hand is a massive time-waster. There’s a better way to automate sourcing niche sites, which I’ll talk about in the next section.
Online Arbitrage Sourcing with Software
Using sourcing software automates everything you’re doing by hand. You can set up scans for thousands of retailers and have them run in the background. With software, you’ll be able to set up filters and criteria so you can eliminate results that don’t fit your standards.
The scale of sourcing software is truly impressive. The system will check hundreds of thousands of items and show the ones it thinks matches your ideal product. You’ll cut days worth of sourcing into a few hours.
Once the scan is complete, you’ll likely have some results to sort through. Time to do some quality control! You’ll need to make sure that the product from the retailer matches the product on Amazon (if it’s not a match and you try to sell it, you risk getting your account suspended).
After you know it’s a match, check to make sure the product is actually profitable and in-stock. Sourcing programmatically is a great way to save time, but it’s not always totally accurate. Therefore, before you order anything, check everything manually to ensure that it’s correct.
One of the big downsides to online arbitrage software is that there’s not really a guarantee of results. Sometimes you can scan an entire site and find nothing. Especially if you’re a new seller, even if you DO find a lot of results, you might be gated (i.e. restricted) from selling those products.
Amazon is very particular about what brands and categories emerging sellers can sell. Finding ungated (unrestricted) profitable products can be very tough for someone starting out.
It also doesn’t help that the learning curve with software can be very steep for new arbitragers. I’ve found that many sellers I’ve worked with have experienced frustration trying to learn how to use these tools effectively. The benefit to being able to filter and sort through data becomes a negative experience as new sellers are overwhelmed by the number of options. Unfortunately, some sellers give up because they couldn’t find products using programmatic tools.
If you dedicate the time required to learn how to use the tool, it can be an invaluable resource – particularly if your seller account is ungated and able to sell many of the products you find. Furthermore, you’ll even be able to expand into less competitive, niche sites by using custom x-paths (from sites like Tactical Bucket) and plugging that into your sourcing tool of choice. It opens up an opportunity to source relatively untapped retail stores at scale.
At the end of the day, whether you’re a sourcing software newbie or a total pro, you still need to vet all these online arbitrage products yourself. If you’re a one-man-band, sourcing might take up all the time you dedicate to your business. That’s why in the next section, we’re going to cover a method that strikes a better time-to-profit ratio.
Online Arbitrage with Virtual Assistants
A virtual assistant (VA for short) is a self-employed freelancer who offers services to a client, which in this case, is you. Implementing a virtual assistant to help out with day-to-day tasks for your business is gaining a lot of traction in recent years, especially in the Amazon community.
VAs are substantially less expensive than hiring a full-time employee. There are several ways to recruit, but I’ve had a great experience with onlinejobs.ph to get help with all kinds of tasks. The VAs on that platform are friendly, helpful, and (for the most part) ready to be a productive member of your team as soon as they start.
Essentially, you can assign them to do everything we talked about in the section above on your behalf: starting scans, vetting products, and ensuring quality. Once you establish trust and feel more comfortable in their sourcing decisions, you can even have them handle purchasing.
Now you’ve freed up your time to manage the bigger aspects of your business. The output of profitable items should substantially increase compared to when you were doing it yourself. If you ever hit a plateau, just hire another VA to scale!
Let’s talk about the barriers to sourcing online arbitrage products this way: The biggest hurdle is obviously going to be the financial expense. A good virtual assistant ranges in price, but it can cost anywhere from $200-600 per month.
That’s also not taking into account the fee of any sourcing software you’re having them use, or any managerial programs or tools to streamline workflow. Communication is key – apps like Slack and Google Sheets are low cost, yet effective.
Ideally, your VA will have experience sourcing Amazon products. If not, it can be a challenge to train them to meet your expectations if you personally don’t know the technical aspects of the tool they’re using to source with.
After working with hundreds of FBA sellers, I’ve found that the most successful decide to take on a VA after they have a strong foundation in sourcing products themselves. Therefore, I consider this method of arbitrage sourcing best for intermediate-level sellers.
Online Arbitrage Sourcing Lists
Using online arbitrage leads lists is an evergreen method to source products. Manually sourcing products takes days, scanning with software takes hours, and using leads lists takes seconds. When you use a sourcing list, you’re guaranteed a set number of products that meet specified criteria. No more guesswork – you know exactly what you’re getting every day to grow your online arbitrage business.
With reliability at the core of arbitrage lists, they’re extremely ROI positive. Say, for example, you subscribe to a list that costs ~$4/day and guarantees 10 products with a minimum of $4 profit each. All you need to do is sell 1 unit of 1 product to break even. If you sell 2 units, you’ve made a 100% ROI on your subscription.
Due to this high return on investment, lists make a great addition to any online arbitrage business. If you’ve been sourcing with software or VAs and want a little bit of a boost in product leads, it’s a low-risk, plug-and-play option to find more products.
If you don’t have much experience sourcing, it can be a great way to guarantee products to invest in every day. Rather than crossing your fingers for a good day of product research, you don’t have to stress knowing exactly what you’re going to get.
Atlas is the only service to have 100% ungated products, so totally new sellers can have 50+ products/week they can sell as soon as they make their Amazon account. Once you’ve built up the metrics by selling enough ungated products, you can start getting auto-ungated in restricted brands and categories, opening up new opportunities for your business.
Another big plus to a total service like Atlas is that members to the online arbitrage leads get inventory management software, exclusive discounts with product preppers, and OA training totally complimentary with their subscription.
Like I said earlier, no sourcing technique is perfect, and lists are no exception. The downside to leads lists is that other sellers are seeing the same products you are. Normally, these lists are capped at a maximum number of sellers (Atlas is actually capped at 35 members/list – 40% less than most other services).
What you lose in exclusivity, you make up for in volume. It would be tough to buy all 10 products every weekday – the capital required for that would be crazy – so there is plenty to go around.
Since the goal is to be as cost-effective as possible, I believe this is the best all-in-one solution to start and scale your Amazon business. You’ll have a reliable, guaranteed, and predictable way to source products. Atlas Leads is the total package that provides a much-needed solution to a critical problem: where to get high-quality ungated leads at an affordable price.
There are a lot of different ways to source online arbitrage products. As a quick recap, sourcing software is a great situational pick if you have the patience to master a not-so-user-friendly tool. Once you eventually get the hang of it, you can find many good products.
It can be time-consuming though, which is why the sooner you can outsource that task to a VA, the better. Hiring, training, and managing a virtual assistant (or a team of virtual assistants) is a great way to scale, but comes with inherent risk and a bigger up-front cost.
Online arbitrage leads provide a great way to source no matter how mature your FBA business is. Since Atlas is a complete solution, you can get everything you need in one place. With all the necessary parts of your business centralized, you don’t have to worry about unreliability, and paying for multiple tools to get the job done.
Each has its pros and cons, but now you have all the information you need to choose which solution is best for you. At the end of the day, whatever you’re going to be consistent with and enjoy doing is the best option. After you get comfortable with one technique, our team highly recommends diversifying your online arbitrage sourcing.
No matter which one you go with, now you have all the information you need – go out there and source!