Online Arbitrage: The Ultimate Guide
My life took a turn I never expected it to, and online arbitrage was behind the whole thing.
The year is 2017.
I watched my best friend become financially free in a way I would have never guessed.
Then it happened to me—as I learned a little more about how he did it.
I was a week away from moving to a different city and going through another few years of college because I thought it was the only way I could provide for my family.
I’m going to share with you what changed everything for me, and how you can do it too…
Pop quiz. Which of these do you agree with?
- You have to have years of experience in business before you can be successful
- The only way to make money from home is to invest every second of your free time
- To be your own boss, you need to have large sums of money to get started
- You need to quit your full-time job before you can have your own rewarding business
If you agree to any of those statements above, in the next few minutes I’m going to blow your mind.
I became financially independent after a few months of selling on Amazon with online arbitrage. After two years and six figures, this is everything I wish I knew when I first started.
Just so you know, I’m not an exception, I’m not a unicorn, and I’m not making this up.
I was working 40+ hours a week, earning only a little more than minimum wage as an EMT in Texas. I was 22, newly married, and badly needed some extra income to cover our expenses.
In my mind, I knew that whatever side hustle I chose, I wouldn’t have a lot of time to dedicate to it, so I needed to make it as efficient and effective as possible.
Selling on Amazon fit the bill perfectly, and here are five reasons why:
- Amazon fulfills all of your orders, so you don’t have to ship anything directly to customers
- They take care of customer service, so you don’t have to talk to any customers
- The behemoth owns 50% of the e-commerce space (and their share is only growing larger)
- It’s incredibly easy to jump into a market where the blueprint is already laid out for you
- The barrier to entry and risk of loss if things go haywire is incredibly low
Online arbitrage is 100%, totally, completely do-able by someone with no experience. All you need is time and the right mindset.
While I can’t do much to give you more time, but in the next few parts I’m going to help give you the right mindset.
3rd party sellers like me contribute to over half of the sales on Amazon. That means that 3rd party sellers make up 25% of all the sales made on the internet.
Now you know why I chose fulfillment by Amazon (FBA) as my side hustle (and why it’s likely a good fit for you as well), so I’d like to talk about 49 things you’re going to need to know to make this passive income cash cow that is selling on Amazon work.
Table of contents:
The Most FAQs in Online Arbitrage
The Most Common Pitfalls Online Arbitrage Sellers Make
How To Source Profitable Products With No Experience
How To Run Your Business, Not Let It Run You
Here’s Where I Answer the Questions on Your Mind
1. What Is Arbitrage?
Arbitrage is simply taking advantage of a price discrepancy in two different marketplaces. It’s capitalism in its purest form. The opportunity we’re exploiting here is in physical products.
For example, you, with your sharp eye for a deal and a burning desire to make a little extra cash, notice that board game A is selling for $5 at Walmart. Most people think to themselves “Granny Gene would love this!” But you know that it’s selling for $23 on Amazon and think to yourself “I’ll take 20.” You flip the board game on Amazon, pocket the difference, and do the same thing with hundreds of other products, hundreds of times.
2. Is Arbitrage Legal?
You bet! There’s nothing wrong with providing a service to someone who prefers to pay more for it. The reason online arbitrage on Amazon works so well because (if you didn’t know) you, me, and everyone else in the world are impatient.
A lot of people are willing to pay a premium to have their product delivered to them within two days without them ever having to leave the house or talk to anyone else (gross). Arbitrage has been around for a long, long time and it will be around as long as there are goods being sold.
3. What Is Online Arbitrage?
The basics are covered above; it’s nothing crazy. There is one difference, though, that makes online arbitrage (OA for short) extremely appealing to people like me who had a limited amount of free time.
It’s all… online. Shocker, right?
Well, that little thing makes a big difference. Hypothetically, you could perform every step of the process without ever leaving your home, without ever touching a product, and without ever talking to a customer.
Keep reading, and I’ll show you exactly how.
4. How Does It Work?
I made this graph to make the process as easy to understand as possible.
This is online arbitrage at a 30,000 ft level. There are some intricacies about the process, and sometimes it can feel more like an art than a science. Very broadly, you buy a product at say, Walmart.com, ship it to you or a prep center that specializes in shipments for Amazon sellers, ship it from there to Amazon’s warehouse, sell the product, pocket the difference, and reinvest to go a little bit bigger next cycle.
The next question people normally ask is:
5. How Much Money Do I Need To Get Started With Online Arbitrage?
You’re not going to like the answer: It depends. The question you should really be asking yourself is “How much monthly profit do I want to make?” Reverse engineer the capital requirements and ROI you’ll need to meet that.
For example, if you set a goal of $1,500 in net profit per month, you’re going to need to invest $3,000 per month and buy products with an average 50% return on investment (ROI). In this realistic example, the next month you’ll have $4,500 to invest. At an average of 50% ROI, you can snowball your success into $2,250 in net profit.
Rinse and repeat.
6. What Can I Expect as an End Goal?
Ah, I see you’re playing the long-game. Smart.
I know a lot of sellers who revolve their Amazon business model 100% around online arbitrage. They’ve committed themselves to flipping products 24/7/365. They make a full-time income and are living the lifestyle they’ve always wanted. A lot of sellers leverage the capital and experience they earn with OA into other ways to make money on Amazon.
7. How Quickly Will I See Results?
Time for some more vagueness, in case you just really enjoy cryptic answers.
How fast you progress is really up to you. The information in this article should help you get a jump start, but the bottlenecks to your success are how much time you dedicate, how quickly you learn from any mistakes, and whether or not you’re going to invest the capital required to meet your goals.
I know this whole process can seem intimidating at first, and it’s totally normal to want to dip your toes in before you cannonball into the deep end.
That’s okay, but realize that you can’t expect to meet your goals the same way if you were committed all in.
From my experience helping other sellers become financially independent, it takes an average of 3 – 7 months before they’re earning passive income comparable to their full time job.
8. How Can I Find Profitable Products?
If you have a computer, you’re 90% of the way there.
There are lots of ways to find products to flip. You can manually go through websites and find opportunities.
This can be time consuming, but a good way to learn what attributes make a good product when you’re first starting.
Another way to source online arbitrage products is with software. There are tools, both free and paid, that allow you save time (and in the long run, money) when it comes to finding your next flip.
The learning curve with using this kind of software can be a little bit steep at first for new sellers, so another way to find profitable products is with a leads list.
In the end, though, you’re just going to need to try a little bit of everything and see what delivers the best results for your particular needs.
9. What Kinds Of Fees Does Amazon Take Out?
Let me start by saying this: The FBA fees are absolutely worth the amount of time they save you.
I can’t even imagine having to process and fulfill every single order we’ve made, let alone handle customer service as well.
We likely would have spent more money if we had tried to do it ourselves.
Here’s the basic structure:
- Amazon charges about 15% of the sale of the product just for selling the product on their marketplace
- Amazon charges an additional variable fee depending on the dimensions and weight of the product. Of course, this varies for different products, but a good rough estimate is another 15%
So at the end of the day, you’ll be charged about 30% of the revenue from the sale.
Steep? Yes. Worth it? Absolutely.
That wraps up the questions I get on a daily basis. If you’re hyped up, keep reading so I can tell you more about how to be successful at making a passive income machine.
This next section is all about not making the same mistakes every other new seller makes.
Here’s Where You Learn Not To Make the Same Mistakes Every Other New Seller Makes
10. Do What Everyone Else Isn’t
If you’re doing the same thing as everyone else, don’t be surprised when you get similar results.
The real money (in anything, not just online arbitrage) is found in doing what everyone else isn’t.
Whether it’s going the extra mile because you’re willing to do extra product research other sellers aren’t, or keeping your ear to the ground on a profitable brand you know will be releasing soon, you’ll find riches in the niches.
Keep an open mind and look for opportunities nobody else is looking at.
11. Chase Profits, Not Revenue
It’s not uncommon for new sellers to get blinded by the revenue they’re making.
It’s not hard at all to hit 10k/month in revenue, but if you’re only making a 5-10% profit margin, you should re-examine what you’re doing. There’s likely more room for profit.
Don’t be obsessed with how much you’ve sold, focus on how much you’ve made.
That’s all that matters at the end of the day, anyway. The amount of profit you’re making is going to be the determining factor for when you’re financially independent.
12. ROI, ROI, ROI
The return on investment you’re making on your flips is a key metric that determines how fast you can grow.
ROI is really personal preference. Some people, like myself, are perfectly fine with a 30% ROI, and some people wouldn’t even consider anything less than 100%.
There will be some products where you’ll get a 200%+ return and others where you might get 10%.
Let me give you some perspective, though: The average return on the US stock market is 8%.
I’ll say it again: 8%.
If you’re getting a 30% ROI consistently, you’re doing great.
13. Don’t Go Too Deep
The best way to minimize risk and maximize profit is to go wide, not deep.
For example, it’s better to diversify with 10 products with a 30% ROI than with one product that has a 300% ROI.
Another benefit of spreading your portfolio evenly is that you’ll typically be able to keep your cash flow more open as some products will sell faster than others.
This allows you to take advantage of any more potential opportunities that come your way instead of tying all your capital up with one product.
If you’re not sure if a product is going to sell well, don’t feel pressured to buy more than you’re comfortable with, silly goose.
There will be more opportunities to take advantage of in the future, I promise.
14. Keep Track of Your Monthly Expenses
I hate bookkeeping, I loathe accounting, and I know how important they are.
Too many sellers, no matter how much experience they have, don’t keep good records of their purchases and expenses.
If you don’t have the data staring you in the face, you’d be surprised how much you can under or overestimate things when they really count.
Don’t fail because you didn’t know how much money you had left. A simple spreadsheet should do you just fine, and Google Sheets is free, so I don’t want to hear excuses.
15. Data > Feelings
You’re going to be a sad little seller if you base your purchasing decisions on emotion.
If at any point, you catch yourself thinking “I feel like people would buy this because I would buy this,” you’re doing something wrong.
If there’s one thing I’ve learned after selling tens of thousands of units, it’s that people are just plain weird. They’ll buy things you’d never expect in quantities that would make your head spin.
Let the data speak for itself, do your best to interpret why it is the way it is, and follow what it’s telling you.
Don’t take this advice and lose obscene amounts of money. I know that’s what it took for me to learn this lesson.
16. Don’t Get Antsy
Patience is a virtue. Don’t get nervous or frustrated if the products you sent in on Monday aren’t sold by Friday.
Those products aren’t hurting anything for a few months (Amazon charges long-term storage fees), so take your time.
If a few new sellers are engaged in a price war, stay out of it for a while and wait for them to sell out. You’ll be there when the prices shoot back up to take advantage of larger margins.
In the next section, we’re going to be talking about how find the products that make you money.
If you need to be hyped up, go grab a double shot of espresso and do, I dunno, 50 jumping jacks. And by the way, what’s wrong with you? This stuff is exciting!
Here’s Where You Learn to Source Online Arbitrage Products Like an Amazon Master
17. Product Sourcing: Level 1
I want to start off by saying that making well informed sourcing decisions is going to take time and experience.
That experience is going to come from good and bad situations, and the faster you learn from both, the faster you’re going to be successful.
If you test-buy a small quantity of a product and it goes well, analyze why you think so and buy some more.
Likewise, if a product goes sour, study why it did and what you can avoid in the future so that it doesn’t happen again.
The golden rule of Amazon sourcing (that I just made up) is “Don’t make the same mistake twice.”
18. The Easiest Place To Start Sourcing…
Here’s your first sourcing mission in three easy steps:
- Get up
- Go to your closet
- Figure out what you don’t need
I’m not kidding. That’s exactly how I and a ton of other sellers got started. The capital investment is zero (you’ve already bought the stuff), and there’s nothing to do but learn patterns of what sells and why.
My very first sale on Amazon was a philosophy book, and my first sale over $100 was a used textbook I didn’t need anymore. I sold both of those books in my first two days on Amazon. It’s not hard stuff.
You’re likely going to make a bit of profit; but even if you don’t, you’ve cleaned out your closet a little bit and learned valuable (free) lessons.
19. Think About Where You’re Buying From
It’s very common sense, but you’d be surprised how many new sellers try to cut corners.
Trust me, it’s just not worth it. Your seller account integrity will thank me.
Do not buy used things and try to sell them as new. Do not source from stores like eBay, and do not sell products that you know are close to, but not exactly the same thing.
Some angry customer WILL report you to Amazon, and your selling journey will be over as soon as it started.
20. Product History Trackers Are Love
Remember when I was talking about using data to your advantage? This is where that comes in.
There are two major tools (in the form of Chrome extensions) you can use to track a product’s history:
CamelCamelCamel is a great tool that performs the same function as Keepa. To be honest, though, I prefer Keepa.
It embeds on the Amazon page directly so you can source faster and more efficiently.
Keepa used to be a free tool (RIP), but now it’s a monthly subscription to use. However, it’s pretty inexpensive and will be the best $17 you could spend on your business each month.
The point of these tools is to give you the historical price, sales history, and number of sellers for each and every product you’ll ever buy.
Does product “X” sell at $15 at least 100 times a month? Keepa will tell you in about 3 seconds.
Sourcing without leveraging the power of history trackers is essentially playing roulette.
Don’t do that.
21. Did Someone Say Free Tools?
There are a few free Chrome extensions I wouldn’t source without.
- The FBA calculator tells you the estimated Amazon fees, sales per month, profit, and ROI at the click of a button
- The Jungle Scout Chrome extension is paid, but has a great free alternative. This nifty little tool gives you a second data point for estimated sales per month.
- The How Many? extension helps you track your competitor’s stock more easily. If they’re about to sell out, you could potentially play things more aggressively.
22. Don’t Assume Sales
Just because a product is set a price point, it doesn’t mean it sells at that price. You’re going to need to make sure that it has historically sold at a certain price before you commit to flipping it.
Don’t let your imagination go crazy when you see something priced at $50 when it’s only ever sold at $12.
Stay realistic, and you’ll eliminate a lot of heartache. The good online arbitrage products are out there, you just have to be patient.
23. Be Wary of Price Spikes
If Amazon has historically been selling a product for the last three months (you can see this using Keepa) and just recently ran out of stock, there’s a good chance the price just shot up as well.
If there’s no history of Amazon running out of stock, it would be very risky to try to capitalize on these kinds of opportunities. By the time you get it in stock in the FBA warehouse, Amazon could likely be back in stock and not run out again for a while.
24. Use a Sales Rank Chart
There are a lot of categories on Amazon, and they’re perpetually growing as new products are added.
If, for example, you want to know how well a bar of chocolate compares to every other product in the Grocery & Gourmet Food, you’ll need to look at the sales rank.
Think of sales rank like a race: Being #1 is the best, and everything else is relative to that position.
A sales rank of #1 means it’s the best selling product in it’s category. Sales rank fluctuates every minute, and is updated every hour.
Using tools like the free sales rank chart I made, you can estimate how the product you’re interested in fares in its category. The top 1-3% is probably a safe bet to flip.
25. Sourcing Software
One of the best tools for product research yourself is Tactical Arbitrage. It basically does all the heavy lifting for you by scanning entire websites and comparing the data of a product to the offer on Amazon.
You can set filters to match exactly the criteria you want, start the scan, and come back a few hours later to products saying “buy me, buy me!”
TA has a free trial, but since the learning curve can be a bit steep, I recommend learning all you can before you take advantage of it.
If you know what you’re doing before you jump in, you could very likely find profitable products with no risk to you.
After you realize how effective it can be, you can’t go back. It’s like having a whole team bringing leads to you; all you have to do is sort through it.
26. Online Arbitrage Lists Put Sourcing on Easy Mode
If you want an even lower risk way to find things to sell, an online arbitrage list is a good way to go.
The basic concept is experienced, battle-hardened product sourcers send out OA leads to a small group of people.
These online arbitrage leads have been vetted according to strict standards, and are ripe for purchasing. They’re delivered directly to you. All you have to do is order the recommended products and you’re done with your sourcing for the day.
27. Don’t Be Afraid To Copycat
It’s pretty easy to replicate the success of other OA sellers. It’s like how the kids say, “there’s an app for that.”
Of course, you can do it manually (ew), or you can use Chrome extensions like Storefront Stalker to grab the information from another seller’s entire storefront (sometimes hundreds of products).
Plug that information into a tool like Tactical Arbitrage and now you’ve reverse engineered an already-profitable recipe.
Another strategy to completely cut out your competition is to bundle products together.
If you sell similar or complementary products together, you can create a listing and be the only seller for it. More for you!
Steven Smotherman over at FullTimeFBA has a great article about bundling online arbitrage products.
28. Amazon To Amazon Flips
Sometimes you need to look no further than Amazon itself to make a little extra cash.
It’s a little more manual than some of the other methods, but that’s not a bad thing; if fewer people are willing to do it, it means less competition.
If you notice that there’s a huge price difference for a product after Amazon runs out of stock, purchase directly from them, ship it to yourself, prep it, and send it back into Amazon to sell.
You can set alerts in Keepa to notify you if a product you’re interested dips to a price that would be profitable to flip.
PS: Be careful…Amazon is totally fine with your flipping products from them as long as you don’t abuse their 2-day Prime shipping when you do it.
Otherwise, you’re golden!
29. The Mix and Match The Batch Strategy
I’m not going to lie, I just made that name up. It’s a real thing, though.
The idea is to balance your product portfolio. Some products might have a smaller margin and ROI, while others may only sell once a week with a fatter margin and ROI.
Have a little of both.
It’s nice to have consistent sales rolling in, but also to make a burst of profit every once in a while. It will also bring your average selling price (ASP) and average ROI up. Win-win.
30. Seasonal Products Are Hit or Miss
I remember my first Valentine’s Day as a seller. It was glorious.
I bought chocolate from Sam’s Club for $5 a bag and flipped it on Amazon for $28. I bought a couple dozen and sold out in a few hours.
However, I’ve also heard horror stories from other sellers who had gross amounts of returns on their Halloween costumes or Christmas trees after the season passed.
Unfortunately, customers will take advantage of the situation.
Therefore, my general rule of thumb is to only capitalize on the craze of seasonal items if it’s consumable (and therefore unreturnable).
31. Do You Like Saving Extra Money?
Me too! That’s why I use sites like Topcashback and Rakuten to save a percentage on every purchase I make for online arbitrage.
2% might not sound like a lot, but I promise it becomes substantial over time.
It only takes a few seconds to see if there’s a cashback deal on one of these sites, and the benefits are well worth it.
Don’t get caught up in the ego of being the only one running your successful business. It can be fun to watch the sales roll in, but it’s even more fun to outsource strategically and watch even more sales roll in.
Here’s Where You Learn To Be Effective at Online Arbitrage
32. Use a Prepper
I’m dead serious: Prepping is not fun. If you get enjoyment out of prepping your products and shipping them into Amazon, you might be a psycho (not really).
Luckily, there are entire businesses that want to prep your products for a small fee.
Let the psychos do the time-consuming, boring, and tedious part of being an FBA seller so you can free up more time for the things that make you money.
It’s really simple to never have to touch a physical product: Account for the prep cost in your margins.
The fees range depending on what prepper you go with and how many units you have, but a reasonable cost is around $1 per unit.
Utilizing a prepper is one of the best decisions you can make for your business when you decide you want to scale.
33. Quality Control
I know you’re not going to listen to the valuable advice I just gave you, so for those of you who are stubborn and want to prep products yourself: Perform quality control religiously.
It only takes a few seconds. When you get the item from wherever you bought it from, look it over to make sure it matches on Amazon, that there aren’t any defects with the product, and that there aren’t any signs that it’s been used before.
It’s just good practice with any product, but this rule applies especially to shoes. People can get really weird about their shoes.
If it doesn’t meet your criteria, return it from whence it came and get your refund. No harm done.
34. Ask for Help
Don’t be afraid to enlist the help of your family, friends, and neighbors down the street for product prep.
When I first started, I worked out a deal with my sister where I’d cook her dinner if she helped me prep everything. It worked out well for both of us.
If your helpers want monetary compensation, pay them per unit they prep. 25 – 50 cents per unit should be enough to get you started.
Teach them everything you would do to prep, then source while they package everything up for you.
35. Shipping To Amazon Is Cheap
A lot of people don’t realize how inexpensive shipping to Amazon’s warehouses is. Amazon partnered with UPS and FedEx to get their 3rd party sellers incredible rates.
For example, we just shipped a few hundred units into Amazon the other day and we paid 8 CENTS PER UNIT. That’s just incredible.
Take advantage of these discounts to fatten your margins a bit.
Account for 25 – 75 cents per unit to ship it to Amazon, depending on the size and weight.
36. Be a Good Little Seller
Amazon tracks basically everything you do as a seller—through statistics.
Good metrics means that you have a lot more possibilities in the future to make more money. Of course, the inverse is true as well.
A few key metrics to keep a sharp eye on is your seller feedback (provided by customers), any intellectual property complaints that may come against your account, and your response time to the rare customer message.
These metrics really play a role down the line.
37. Auto-Ungate ASAP
As a new seller, you’re going to be unable to sell in some categories and brands. This temporary restriction is called “gating.”
It’s a precaution Amazon put in place a few years ago when some less-than-reputable sellers were hawking counterfeit goods on the marketplace.
Customers got angry, Amazon got protective, and good sellers suffer.
No worries, though, because it’s possible to become ungated in everything.
One of the best ways to get ungated is through auto-approval.
Amazon takes a look at your metrics (remember when I talked about that) and uses an automatic process to determine if you’re eligible to be ungated.
If you are, you can sell the product immediately. It’s great to sell in categories that are gated to the vast majority of other sellers because it’s substantially less competitive.
If you’re not ungated in anything yet, we offer an online arbitrage product list called Atlas Leads that has totally ungated products.
New sellers can jump right in with a brand new selling account and no experience sourcing themselves.Why yes, I do recommend it (I’m a little biased, but I believe it’s the best on the market).
38. The Cost of Doing Business
If you don’t have the patience to build up the metrics required for auto-ungating, it’s going to cost you.
You can submit invoices (not receipts, invoices) to get ungated in brands and categories.
You’re going to need to get a wholesale account and purchase the right products to get ungated in Amazon’s eyes.
The catch is that opening a wholesale account usually entails having an LLC.
The fees associated with running a legal business vary depending on the state you’re in, but look into what it would cost for your state and figure out if being ungated quickly is worth it to you.
39. Let Everyone Else Burn Out
Piggybacking off the last one: If you’re spectating a raging price war, let the newbies sell out.
Lie in wait for your time to strike at an actually-profitable price after they’ve run out of stock.
You’re going to be in a much better situation if all your hard work didn’t just go to waste because you were impatient and wanted to sell out in a day.
If you’ve been waiting for a few months and the long-term storage fees are about to hit, you can reconsider if you want to get down and dirty in the mud. However, if the end is in sight, wait it out.
40. Stay In the Buy Box
When a product listing has the “Buy Box”—which is this little thing:
…there’s a good chance that the vast majority of sales are going to whoever owns it.
If you want to stay in the Buy Box, there are a few factors that go into it. The most important is your price.
Amazon is customer-centric, and want to offer the best price to its audience.
Like I mentioned above, matching the Buy Box price is the way to go. You should be good if you follow this rule.
41. But What If There’s No Buy Box?
If there’s not a Buy Box on the listing, it means that Amazon doesn’t think any of the offers deserve it. Interpret this as Amazon thinks the price is too high.
Don’t worry: The product could still sell. You’ll need to double-check on Keepa, but if it has a history of selling without a Buy Box, fire away.
In this particular case, you’ll need to make your price so competitive that you’ll be the first Prime offer customers see.
As long as people see the Prime badge, which you’ll have, they don’t care who it comes from.
The only thing they care about is the best price, so give it to them.
42. Don’t Race To the Bottom
Listen up: Match the Buy Box price. There’s only a handful of reasons why you should ever ignore that rule.
Too many newbies get on a listing and immediately tank the price of a product.
The other newbie on the listing starts freaking out and tries to undercut the first one. A few back-and-forths later, and nobody is making any profit.
Don’t be a newbie.
Match the Buy Box and everyone will be happy.
43. Don’t Make Things Difficult
I hope you’re not thinking that you have to sit there all day and watch all of your products like a hawk.
No, no, no. There’s a better way, and best of all, it’s free.
Amazon has a built-in re-pricer on the Seller dashboard you can use to your advantage. It’s a little on the simple side, but it’s the best way to get started.
Simply set the re-pricer to match the Buy Box, input a few other details, and you’re off to the races.
Now you can sit back and source more while it handles your pricing.
44. Replenishable Products Are Your Bread and Butter
A replenishable product, or “replen”, is any product that people consume and re-order on a regular basis.
This could be food, makeup, toiletries, or something like trash bags.
Consumers are largely brand-loyal, and if they’ve ordered their snacks from Amazon once, they likely will again.
Here’s your opportunity Just stay in stock with what people want and re-order, and you have a consistent and easy cash flow.
45. Don’t Sell Yourself Short
Returns happen; they’re unavoidable. Most of the time, Amazon will deem the product “unfulfillable.”
Now you’ll need to choose to either have them destroy it at the warehouse or ship it back to you.
I recommend the latter—to claw back much money as you can.
If you recall it, inspect it, and verify that it’s been damaged by a customer, you can attempt to have Amazon reimburse you.
It’s not 100% effective, but definitely worth a shot, particularly for the more expensive items.
46. Shoes Are the Bomb
The main exception to the return rule stated above is shoes.
Shoes can be great because, Amazon will attempt to restock returned shoes (for a small fee, of course).
Even with the fee, it’s worth it. A lot of shoe flips are so profitable that you’ll still be making money. Worst-case scenario is you recall the shoes and flip them as used on eBay. Not so bad!
47. Stay Steady, Stay Consistent
If your cashflow allows, I recommend sending shipments into Amazon regularly. Consistent shipments with good products = reliable profits.
It depends on how aggressive you’d like to be, but a good sweet spot to be in is sending shipments into Amazon about once a week.
If your monthly revenue dips below normal, evaluate if you’ve given yourself a chance to even sell like you need to. If not, it’s time to send in another shipment.
48. Outsource Everything
What I’m talking about is outsourcing the daily tasks that are taking up your time so that you can focus on more important things. It’s actually a ton easier than you might think.
I’ve already mentioned outsourcing prep labor. Do that first. After that, there are some more options.
Virtual Assistants (VAs) are incredibly inexpensive. A lot of times, you can even find someone who has previous experience sourcing OA products. Who knows, they might be better at it than you.
For a few hundred dollars a month, you can essentially create a copy of yourself to double your sourcing output.
We’ve used OnlineJobs.ph to help build our team, and have nothing but good things to say about their service.
49. Stay Organized
If you keep at online arbitrage long enough, you’ll get to the point where it’s time to replace yourself.
When you get to the point I mentioned above, and start hiring VAs, you’re going to need to standardize your processes to stay effective.
You’ll want to write Standard Operating Procedures (SOPs), checklists, and guides to help your employees fit in like you want them to.
It’s not as hard as it sounds. Just think about what you do for a task, from beginning to end, and write it down.
It doesn’t have to be some super complicated flow chart; it can just be a Goodle doc with numbered steps. Don’t overthink it.
I know this post is long, but I wanted you to have all the information you need about the basics of online arbitrage in one place.
So in case you just scrolled to the bottom of the page to get the gist (I’d do the same thing), here you go:
Online arbitrage is a great business model that allows even someone with no experience to jump in and see results quickly. It’s a data-driven process that you can automate, scale, and outsource so that you have more time to do the things you love.
I hope you feel a little more confident now—confident about whether online arbitrage is the passive income machine for you, and if so, confident that you could be successful at it.
I want to hear your thoughts and what stage of the OA process you’re in…
Comment below if you’re brand new to OA and feel like you have a better grasp on it now, if you’ve already started and made a few sales already, or if you’re a seasoned veteran and have tips for some of the newer sellers.
I’ll be right in the comments with you!
Thank you I like the way you explain things. Great blog
Hey Nicholas, thanks for the kind words!
Great article, seems very doable. I have just one question regarding prepping. Is it necessary to prep all of your products on your end? Can you ship anything straight to Amazon from the original vendor?
Hey Johnny, glad you liked the post. You’ll definitely want to ship the products from the retailer to you or a prepper before shipping into Amazon. It will give you a chance to quality control and label your products before it reaches the customer. If you don’t label your products, Amazon will co-mingle your inventory with other seller’s – and they might not be up to the same standards 🙂
You have no idea how much you helped me!
Hey David, that made my day! Thanks for letting me know.
Leonard Gunn, Jr.
Hey, Jacob, this is one of the most succinct articles I’ve read on OA. You really put it all together with knowledge and tools. But under “6. What Can I Expect as an End Goal?” I couldn’t “Click on this link if you want to learn all of the ways to make money on Amazon.” Is it there & I’, missing it? Thanks
Hey Leonard, glad you liked it! Thank you for catching that, I just updated it with a thorough post from Ways to Wealth.
Hello! I just would like to give a huge thumbs up for the great info you have here on this post. I will be coming back to your blog for more soon.
Thanks, Sebastian! Glad you found it helpful.
I’m just starting out with OA. Thanks for this helpful information
Hi Raukura, glad I could help.
i AM 49 YEARS OLD AND TIRED OF BEING A SIMPLE ONLINE ENGLISH TEACHER, SO I CAME ACROSS ONLINE BOOK ARBITRAGE AND IT JUST SEEMS LIKE A MATCH MADE IN HEAVEN. WITH YOUR ARTICLE SO PRECISE WITH INFO AND SO ROBUST, I ACTUALLY HAD TO HAVE A CUP OF BULLETPROOF COFFE WTH IT. I AM DECIDED ON GOING ALL IN WITH A COMPLETE SOFTWARE PACKAGE AND START WATCHING THE VIDEOS AND JUST START. WITH MISTAKES AND ALL IT JUST FEELS LIKE i COULD BE MAKING MY FIRT $100 IN PROFIT IN LESS THAN A MONTH. Thank you so much Jacob, i will be following your site and work,
Hey Alex, I love the mentality! Glad you liked it.
I need find product other sites so that I want an arbitrage program. can you help me about that how can I find an arbitrage program
Hey Osman, it sounds like our arbitrage leads could be a good fit. Check ’em out here
I’m impressed, I have to admit. Seldom do I encounter a blog that’s equally educative and amusing,
and let me tell you, you have hit the nail on the head.
The problem is something too few people are speaking intelligently about.
Now i’m very happy I stumbled across this in my search for something concerning this.
Thank you for the kind words! Happy to help
Love Diagrams and all about them !
Glad you liked them
Very interesting and informative post. Do you have a certain selling price range you follow?
I’ve seen some people stick with low cost products with small margin, but with products people ordering again and again. Then someone selling products priced around $250.
About your leads, do the product prices vary a lot, from $X to $Y?
Hey Hannu, great question! It’s best to diversify the kinds of products in your inventory so you can balance out the strengths and weaknesses of each type. Fast-moving, lower-margin products pair well with slow-moving, highly profitable products. Products priced around $250 can be good but bring additional problems that less expensive products don’t have. On our lists, the product prices range from $15 – $80 for the most part, with some outliers here and there.
Thanks for the reply, Jacob. I think I will try your leads, then can see how they’ll fit to my thoughts. Could you specify what problems those more expensive products can bring?
Hey Hannu, sounds great! Sure thing, expensive products carry some inherent risks as far as returns go. If a customer opens, uses, and returns your product, Amazon might deem your product as “unfulfillable” and it will be a headache to sort out.
Brittney Lee Heer
Hi Jacob, great article! I’m starting my own business on the side as a SAHM, but am looking into this more also. What prepping centers would you recommend? And when signing up for a FBA account, are we signing up as an individual, private or publicly owned company? How does that all work?
Thanks Brittney! As far as prep centers go, a lot of it comes down to personal preference. Many sellers like using preppers that are in tax-free states, but they often charge a higher prep-per-unit fee. A good price is ~$1/unit. We’ve negotiated 25% prep costs with a few prep centers to help our members save some money. For the legal stuff (and this isn’t legal advice), you don’t need to have an LLC to sell on Amazon to start. An individual (sole proprietor) is totally fine, but you’ll probably want to register for an LLC eventually for that added layer of security. Hope this helps!
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I cannot thank you enough for the blog.Really looking forward to read more. Really Cool.
Hey Jacob, great article! I’m new to selling on Amazon and instinctively I put a bunch of old texbooks on there to see how fast they’d sell. I did what you said not to and put the lowest price of anyone but none sold. I found out later that they had been suppressed or were labeled in the wrong category. Any suggestions on how to not run into this in the future? They all said active yet amazon did not notify me they were suppressed. I’d like to start getting more in debth with this as I’m paying $40 per month and not selling anything
HI Jacob ,
This is the best article i found so far about OA, great details and good tips. However, I didn’t see you mention brand restriction.What are your thoughts on that? Is it as bad as i see mentionned in forums and other articles?
Hey I really enjoyed this and I am literally about to dive head first in this
I have been reading up on this all day and you just hit the nail on the head!
I was wondering, when you were talking about labeling, what exactly do you mean by that ?
how to sell stuff online
Simply want to say your article is as astonishing.
The clarity in your post is just cool and i could assume you are an expert on this
subject. Well with your permission allow me to grab your feed to keep updated with forthcoming post.
Thanks a million and please continue the rewarding work.
Your article is really helpful. thnks…