Ultimate Guide For Online Arbitrage in 2021
Online arbitrage is one of the easiest ways to start your own business. The key to being successful is to understand it well and use proper software and tools that cater to this business model.
We will walk you through everything, but before we dive into how to get started with online arbitrage, lets first explain some terminology about this method.
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Disclaimer: This article contains affiliate links that we receive a small commission for at no cost to you. However, these are merely the tools I thoroughly recommend when it comes to repricers software for amazon sellers. You can read our full disclosure here.
What is Online Arbitrage?
The first word of this term is somewhat self-explanatory. Anything qualified by the name “online,” by definition, involves crucial interaction by way of using the internet (virtually). The meaning of arbitrage is not so obvious, and it can have different meanings. Still, under this business method, it means buying products at low prices from one source and selling them higher in another marketplace to make a profit.
So, Online arbitrage is purchase products at a low price from any online retailers and selling them high on other markets such as eBay, Amazon, or apps. It’s a modern twist on one of the oldest pillars of commerce, entrepreneurship, and service. Just remember, OA strategy is buy low sell high.
Products acquired using this strategy are found through discount opportunities, on sale items, liquidation, overstock, and others more.
The use of software helps you to analyze data to buy the right products that can be sold on marketplaces, where the retail price has not been decreasing and is high enough to make a good profit. Popular marketplaces where you can flip them are Amazon, eBay, Offer Up, Craigslist, Facebook, etc.
Amazon.com is one of the most popular places where sellers who do arbitrage sell their products for a good profit, followed by apps like OfferUp or auction markets like eBay.
Is Online Arbitrage Legal?
Yes! Online arbitrage is entirely legal. Reselling products on platforms like eBay and Amazon from items sourced from other retails stores sites such as Target and Walmart is lucrative yet competitive. This is why it is highly recommended to use tools that help you get important data to make better decisions and have a healthy successful online business.
Is Online Arbitrage Dead?
No! There still a lot of great opportunities out there that, if you want to start today, you can do it and be successful. Online sales continue to grow with no evidence of slowing down or stopping. Marketplaces such as Amazon or eBay continue to reshape industries becoming stronger every year, plus many new apps coming up and getting popularity like OfferUp or LetGo. Online commerce never sleeps, ergo any arbitrage activity of this nature has the potential to thrive.
Does Online Arbitrage Work?
Yes, this concept has been in the commerce world for a long time, and it will keep being alive as long as discounts products, coupons, cashback sites, and others are available.
Is Amazon FBA the preferred marketplace to resell products?
Yes, Amazon is one of the most successful marketplaces in the world. You do not only have the chance to sell your product at a higher price there. You can move your inventory quickly since there are software you can use to see the history for how much and how many units products are sold on amazon.com.
Becoming an FBA seller helps you allocate your time for sourcing and finding more profitable products while Amazon store your products, fulfills your orders, and takes care of customer service for you.
If you do not have an amazon seller account and if you are not familiar with how to start selling on amazon, we have a full guide step by step tutorial on how to get started.
The best way to approach the right profit margin and a healthy ROI is to consider all the fees, shipping, packages, and other expenses that can help you make better decisions with profitable products. Amazon offers a free calculator tool where you can add all your costs and see your final profit once you have a seller account with them.
For example, if you buy a product on Walmart for $10, and you are able to resell it on amazon for $30 after all fees you might end with $10 profit which is 100% ROI for your product or if you sell it on OfferUp for $25 since there is no fee involves then you will end up with $15 profit. Finding opportunities like this that can be resell well on other marketplaces is the beauty of using sourcing tools and data analysis software.
Practically, this is how online arbitrage works, and we will be explaining more stuff down the road in this post. Just bear with us, since by the end of this article, you will have a great understanding of how it works and how to find profitable products.
How do you get profitable products?
There are millions of products available for sale online, but going through all of them is impossible, and so much time consuming is you are going to do it manually. Product sourcing software saves you time and lets you narrow down the search automatically. You will be able to filter things by category, rank, profit margin, or any specific criteria that help you within minutes compare prices from thousands of online retail stores to find the gems that you can profit from it
What Tools Do You Need To Run OA Successfully?
Before we dive into what software tools do you need to run your online arbitrage business. Make sure you have a computer, a reliable internet, and some money. You don't need a lot of investment to start. You can literally start with as little as $250, but it is up to you how much money you can put into this and how serious you are moving forward with your own business.
The first software you need if you plan to sell on Amazon is to open the amazon seller account. There are two types of accounts you can open the professional or Individual account. Pick one that best fits your budget and strategy. Then download the amazon seller app and bookmark their free calculator tool.
Please be aware that as a brand new account, some categories are restricted, which means you are not allowed to list any product under those categories. To start just source items under categories that you can list and sell on amazon. There is plenty of products that you can find in profits with open categories. So do not worry for now on what you are not able to sell. If you plan to use other markets such as eBay and apps like OfferUp or Facebook, you can source any category. Just keep in mind the ones that you can't sell on Amazon, buy you are able to sell in others platforms and be very profitable.
The following mentioned tools will save you time, automate the process, get fewer margin errors, and help you make better decisions.
Best Online Arbitrage Product Sourcing Tools
It is one of the software you need that helps you find profitable products with a good profit margin with less manual work and time. These tools help you scan products across many stores, deals available, discounted items, and more.
We have identified the best online arbitrage sourcing software based on essential factors such as:
- How many supported online stores do they have in their system?
- How efficient and accurate are their results?
- What do they take into consideration when they calculate profit?
- How many marketplaces comparisons do they offer?
- And many more as you keep reading.
It is a tool that caters amazon online arbitrage. It holds more than a thousand sites to search and allows you to contribute and customized results, It takes the headache and guesswork out of Amazon fees and calculates ROI accurately. What you have to do is to set criteria and filter products base on your strategy. For example, you can filter by categories, desire ROI, sales rank, etc. When you search, the software will start analyzing and finding products in within minutes you will see the results that you can go through, and if the products fit on what you are looking to buy for reselling, you can go ahead and buy them.
Tactical Arbitrage offers a 7-day free trial, which allows you to try the software before purchasing it. TA plans for this business model start at $89 if it is billed monthly or $70 per month if it is charged annually. Sign up for free
This scouting and sourcing tool is designed to gather tailored data from online retails stores. It supports over 400 popular big box stores. Oaxray operates within Google Chrome as an extension of its search engine. It offers a comparison sourcing that shows you the price of a product from multiple suppliers at one time.
The way the software works is once you install the extension, you go to your favorite retail store let say Walmart, once you are on the homepage, look for a category page you will like to analyze like toys, kitchen, etc., once you are there click the oaxray chrome extension. Within seconds, you will get the results that are color-coded with valuable information that helps you make better buying decisions.
Oaxray offers a 7-day free trial. You can cancel the service before the seven days end if you don't like the software and you don't want to get charge. It has a cost of $99 if it is paid monthly. You can get 18% off if you decided to pay annually. Just give it a try and see what products you can find profitable within minutes.
BuyBotPro fills your arbitrage needs with its Deal Analysis and Buy Decisions feature. This streamlines the supply process of your resale operations. Additionally, the ROI and Profit Checker function displays a projected amount of money to expect after expenses. Moreover, its BSR Checker lets you know how likely and quickly your products should be selling, which goes well with the Competition Analyzer.
What makes BuyBotPro unique is its IP (Intellectual Property), Radar monitors, for possible IP violations, and alerts you to avoid them. Its Hazmat Checker tells you about the Hazmat status of any product and many more features.
This software tool is like a virtual assistant. They have a Suggested Purchase Quantity information, and it lest you custom the criteria based on your desired settings regarding ROI, Bestseller rank, and profit.
Buybotpro comes with a 14-day free trial to check it out. The cost is from $34.95 to $44.95 per month. If you like it and decide to go with the annual plan, you can save $5 per month.
This is another excellent sourcing tool created by an Amazon seller that helps you find products, analyze data, and profit for it by reselling the items on amazon. This software boasts features like new product searches, custom listing from wholesale suppliers, and market analysis. This simplification is due to tools like ROI calculator and Brand Restriction Checker.
SourceMogul provides you with unlimited monthly searches over stores in the US and UK. These searches happen by store or category to efficiently meet your needs. The software operates as a network and service, so the data from sites is not just collected but screened for relevant information. As an added benefit and function, this tool runs automated on settings that implement your decisions regarding search criteria.
The software offers a 7-day free trial and a massive discount for new users. It cost $97 per month or $970 per year. Check it out here.
Those are the 4 top best sourcing tools that you can choose from to find tremendous opportunities and profitable products.
Once you have identified profitable products is time to check if those items are the right ones to buy by checking some essential data and minimizing margin errors before making the final decision. Things that you should consider before trigger the checkout bottom are:
- How quickly is the product sales?
- How many competitors am I competing with?
- Is it a seasonal or evergreen item?
- Am I able to list and sell the product?
- How long has the retail price been that you can list, sell, and make a profit?
- Am I able to make a profit even if I can match the lowest buy box price that the product has been in the past 3 months? if yes, great! if not, the following question should be answered.
- Am I able to cover amazon storage fees for at least six months and still make a profit?
These questions can be addressed by using price and sales rank history tools as well as software for fba fees calculation like revseller and sales estimates chrome extensions like jungle Scout or vital launch. Before we mentioned what tools you need, let explain some terminology.
What is best sales rank in amazon?
In general, A BSR is a number that Amazon assigns to each particular product under a category. The lower the sales rank, the better it sales. The closer it gets to zero, it means that a product sells a lot.
What is a restricted category?
A brand new Amazon seller account is not allowed to sell in specific categories, so you must check under your seller account if you can list the product. How do you do that? Log in under your account, go to add a product and type the ASIN or UPC for the product you are trying to sell, once the product pops up you will see on the right side a click button that it will say “sell yours” or “listing limitations apply”. Sell yours means that you are allowed to list and sell the product, and LLA implies that you need to apply before listing the product.
If you use revseller chrome extension or any other paid tools that we are mentioning in this article, you can save time and get insight information for restrictions and other data since they have features built-in inside their software. I recommend to only start with ungated categories such as toys, kitchen, home improvements, etc.
How to check price and rank history on amazon?
To check out price and sales rank stability, we recommend using keepa. It was a free extension tool until a few months ago, but because of its vast popularity, Keepa is now a paid software with a cost of 15 euros a month that you have to subscribe in order to get premium features and functionalities that before was free.
This software is so helpful that more than 90% of Amazon sellers have it installed on their computer. There is another similar tool, which is camelcamelcamel, that still free. However, it has fewer features and limitations, but you can use it and grab vital information since it won't cost you anything, and it can be helpful to make good decisions.
On the other hand, jungle scout or vital launch are extensions that gives you a lot of data, but one of the most useful information every online seller use them for are for their estimates sales which give you a pretty close accuracy estimation to how many units amazon marketplaces sells a month for each product.
There are other amazing features inside these tools that you will find very helpful, but since this post is focused on the arbitrage method, we are highlighting for what is most used, and you will probably use it in this business model. Take a look at them and see which is easy to use and fit your expertise.
Revseller is an excellent Chrome extension that allows you to see relevant information on page in real-time. It has so many features built-in that you must check out. You can see many variations and quick links that will save you a lot of time with back and forward within pages and sites. It will really help you speed up the analysis process and calculations.
Revseller offers a 30 days free trial, and it cost $99 per year. Try it out and see how valuable and time saver this chrome extension can be.
Now let's dive in with some other tools that are nice to have that will help you make better buying decisions and save you time.
InventoryLab is a software solution where you can list and manage inventory, track and analyze profitability, and add expenses. It has an app called scoutify that gives you powerful features for profitable sourcing products. It's like having two software in one. It is one of the most popular tools for online and retail arbitrage sellers since it is well suited for these methods.
InventoryLab offers a 30 day free trial with no credit card required. We highly recommend to try it out and get the most out of it during the trial period.
How to Increase profit margin?
The key to successful online arbitrage lies in getting good deals for the products you are purchasing. Using cashback sites, Discounted Gift Cards and Coupons will add up into your pocket more money that ends up increasing your profit margins.
A cashback website helps you get back part of the money spent on your purchases. These websites tie-up with different online stores to offer exclusive cashback. When you visit a cashback site, you will be asked to shop using a particular link to get the cashback.
The link identifies you are a visitor from the cashback site so you can buy your goods and make your payment. Then the cashback site will provide you with the promised percentage of cash back from the total bill. For example, if you spend $100 and the cashback site promised 5%, then you will get $5 back in your account.
So, the cashback money you earn comes without much effort and requires no additional work after the purchase is completed. This is a bonus which will quickly build up your profits over time.
Look for renowned cashback websites that will deliver what they say. Ebates is one such popular website for earning that. Others include Cashbackmonitor and Cashbackholic.
Check user reviews for the cashback website you plan to use. It will help you make the right choice.
Discounted Gift Cards
You will be familiar with gift cards, which allow you to use the card value for your purchases at the store. But gift cards are usually available from the store at its full value. Basically, you pay $100 to get a $100 gift card from the store.
Discounted gift cards, on the other hand, are available for an amount slightly lower than the card value. The discount gift cards website will offer a $100 gift card at $95. As a result, you save $5 on every $100 gift card you buy. Usually, the discounts may vary between 1% and 30%.
I will advise you to purchase gift cards from websites that have a good history and positive user reviews. Since you will be paying a considerable sum of money to secure the gift cards, it is crucial to look for legitimate websites that safeguard their user’s interests if the gift card does not work.
Lastly, you have coupons to bring down your purchases and increase your potential profits. Couponing can be addictive and requires some time if you are manually researching coupons for a website. But to conduct online arbitrage, you must spend a lot of time securing the right products and completing your customer requests.
There are a few solutions that can help you get access to the best coupons without doing too much research.
- Sign up for the email lists on stores – Once you are on a store’s email list, you will get lots of information regularly on promotions and special offers. Additionally, you will receive coupons from the store, which can be used if you make a purchase for a certain amount.
- Install Google Chrome extensions for finding coupons – Two popular extensions on Google Chrome for coupons are Price Blink and Honey. Price Blink will bring up details about the coupons and discounts available on the website you are shopping. On the other hand, Honey goes a step further and automatically applies the best coupon it can find to your bills.
- Use coupon websites – There are websites dedicated to providing coupons. Look up these websites to find suitable offers if the Google Chrome extensions do not show any results.
- Search on Google for coupons – If you have had no luck in finding good coupons, simply search on Google for one. Your search should be like this, “Retailer name + Coupon.” It will help you find websites that are offering the relevant coupons.
These are three effective ways of increasing your profit margins through online arbitrage. In most cases, you will be able to club a gift card with a cashback or a coupon. Sometimes, the cashback may apply even along with an ongoing in-store discount.
In addition to these three ways of getting a lower price for your bill, you can also sign up for store rewards. The reward points will keep building with every purchase, and you will eventually be able to exchange them for a discount on your bill.
Best Sites for Online arbitrage
If you need a guide to get started, please refer to the following list. Most of those stores are supported by the software we talked about above.
- Best Buy
- Home Depot
- Bed Bath and Beyond
- Big Lots
- Dick's Sporting Goods
- Dollar Tree
- JC Penney
- Office Depot
Online arbitrage still alive and available for you if you plan to start your own business. Even though this post talks a lot about how to flip the products on Amazon, we highly recommend keeping a close eye in other marketplaces such as eBay and Etsy or apps like OfferUp and Facebook Marketplace. There is a lot of opportunities you can get if you combine your amazon strategy with other markets.
The tools we mentioned in this article are to help you save time and find hundreds of products that end up with a profit. Everything can be done manually, but it will take you a lot of time.
If you are serious and motivated about this, but you have a tied budget, you can just grab what you need for now, and as you build up and grow your business ad other online arbitrage tools in order to automate the process and make more profit. Remember, most of the software offers a free trial, so make the most out of it.
Leave your comments below, and we hope this article has been useful for you. We wish you excellent and successful entrepreneurship.