Online shopping is becoming increasingly popular every day, and it seems only logical. Who wouldn't rather stay home in their pyjamas and order everything they need online? We have good news for you if you're one of those people. There are many ways you can earn money from home, but none are as good – and as easy – as online arbitrage. It sounds fancy, but it's pretty straightforward.
Online arbitrage means buying items online (usually at a lower price) and reselling them at a higher price on a marketplace like Amazon. It's a great way to kickstart your online business, and it doesn't need a lot of capital.
In this article, we will discuss online arbitrage in detail and see if it's still profitable in 2023.
What is Online Arbitrage?
Arbitrage is a sales method where you buy products on sale and then sell them at a higher price through online platforms such as Amazon, Facebook, and eBay, among others.
Arbitration is divided into online arbitrage and physical/retail arbitrage.
So, what is online arbitrage? Online arbitrage is when you buy all your products through online stores, while retail arbitrage is when you go to physical stores to look for products. Arbitration allows you to obtain income from the profit margin left by a product on offer.
Here is how online arbitrage works in a nutshell:
- You review retail stores' websites like Walmart, BestBuy, Target, etc.
- You find items on sale, the same product on Amazon, and compare prices. The difference will be the profit.
- You study the competition and look at how many products are in stock and how many vendors offer the product.
- The item will arrive at your door. You remove the offer stickers, check if everything is in perfect condition and then list your product in your Amazon seller account.
The arbitration business model has been around for a while and has taken different forms over time. With the improvements in technology and the increase in online shopping, retail arbitrage has given way to online arbitrage. While online arbitrage is quite popular, some may doubt its profitability. So, let's see if online arbitrage is still profitable in 2023.
Is Online Arbitrage Still Profitable in 2023?
Considering how online businesses flourished after COVID-19, one could say any online business can be profitable in 2023, especially online arbitrage. This business model is not going anywhere anytime soon. Since it allows you to make money by shopping and reselling online, you can do the whole process at home (especially if you're an Amazon FBA seller).
FBA means Fulfillment by Amazon, and it's one of the fulfillment methods offered by Amazon, where they take care of picking, packing, shipping, and customer service regarding your products. This is, of course, done in exchange for a fee, but it's totally worth it if you have a good starting capital.
There are so many stories of people getting immensely successful by doing online arbitrage on Amazon, and you can be the next!
Pros and Cons of Doing Online Arbitrage
As we already know, every business has advantages and disadvantages. Here we will detail the most important pros and cons of online arbitrage:
- Time-saving. You will not go to a physical store to look for products, you will not queue to pay at the cashier, nor will you lose time with traffic and distance from the store.
- The product will arrive at the door of your house or the fulfillment center.
- You can search for products in your free time.
- It is a relatively easy business model to scale. It will depend on what you invest.
- The learning curve will be more significant, as there are countless stores to discover products.
- Prices can change from one day to the next, although this depends on the skill of the seller.
- It is hard to know if the product is precisely the one that is being offered on Amazon, especially if it does not include a UPC. So, it is essential to look closely at the product description.
- If you are a new seller, you will not be able to sell products from recognized brands such as Nike, Adidas, Avent, Phillips, ETC. But, as you sell more and your account grows, you can request approval to sell these products.
Each business model that exists on Amazon has its pros and cons. So, depending on your needs, you will choose the one that suits you best.
Step-by-Step Guide to Start Making Money from Online Arbitrage
Online arbitrage allows you to obtain income from the profit margin left by a product on offer. This is how you can start your own online arbitrage business:
Step 1. Find Online Stores for Sourcing Products
It will usually be where they sell various low-price items or discounted products like Walmart, Target, Ross, etc.
If you choose Amazon as your selling platform, you can also use Amazon.com as a buyer to source your products. Here are some other online stores where you can find lucrative deals:
- T. J. Maxx
- Drug store
- Home Depot
You should also use specific tools to save time and be able to find profitable deals. Although these tools are not mandatory, they will help you exponentially to achieve more income with your sales.
Step 2. Find Products on Sale and Compare Them
You should look for discounted products that leave you a good profit margin. After finding products on sale, compare them to the same products in your chosen marketplace. For example, if you want to sell on Amazon, you must check the prices by searching for the product.
By comparing the price of these products with those of Amazon, you will realize whether you can generate a profit once you have sold them.
Step 3. Check the Stock and Quantity of Vendors
If the product is already sold on your chosen marketplace, it means other sellers are offering the same product. Make sure the product doesn't have too much competition!
Step 4. Create a Seller Account on a Marketplace and Start Selling
This step is self-explanatory. If you choose Amazon, go to https://services.amazon.com/ to create your seller account. Then you can start listing your products and advertising them to generate sales!
As you can see, this business is more than anything about searching for discounted products and selling them at a higher price.
Online Arbitrage vs. Retail Arbitrage: Which One is Better in 2023?
Online and retail arbitrage are different variations of the arbitration business model. They have some similarities, but they also have one big difference that keeps them apart. They are both methods of selling used by third-party sellers to buy discounted products and sell them at a higher price.
You must visit physical stores and shops to source products in retail arbitrage. You can sit at home in your pyjamas and look for products online in online arbitrage. It's not hard to see which one is preferable.
Another advantage of online arbitrage for Amazon FBA sellers is that they don't need to receive the products to ship to Amazon. They can send the products directly to the fulfillment centers without even touching them. So, we can confidently say online arbitrage is better than retail arbitrage.
With the online arbitrage business model, you can buy products on your computer to sell online.
Online arbitrage is more effortless than retail arbitrage because there are tools that automate the searching process and help you find profitable deals.
Online arbitrage is a profitable and utterly legal business model, which can be very powerful when coupled with Amazon FBA. You can use the steps in this article to start your OA business right now!