How to Get Started with Online Arbitrage: Definition, Steps and Sourcing List
Creating your first e-commerce business goes way beyond creating a fancy logo, an apt name, writing product listings for online sales. It might sound like a piece of cake, but trust me it’s not.
I bring this to the table not to lower your expectations or crush your dream of creating your first online shop. On the contrary, I will give you a heads up so you can build your online shop from scratch and be successful at it.
That being said, have you ever heard the term “Online Arbitrage?”
Here is a story of a guy that makes $200 daily arbitrating online. Others make even more.
Sounds like fun, huh?
Firstly we have to understand what online arbitrage is?
It might be explained as “the act of buying products from retail websites and then sell these same products on different marketplaces for a higher price”.
So, in a nutshell, Online Arbitrage means buying products on sale from an online retailer and then selling it online for a higher price.
Most products are acquired on sale, having a pretty substantial discount online rather than the retail price.
Image | Pixabay
There are so many marketplaces where you can sell these products; Amazon, eBay, Jet, Facebook Marketplace, Let Go, and many others are just some of the best for Online Arbitrage.
“Online Arbitrage is the act of buying products from retail websites and then sell these same products on different marketplaces for a higher price”
Is Online Arbitrage (OA) really worth it?
I know, buying online products and then reselling it sounds kinda fishy, right?
Yet, if you see the whole picture, wholesale buyers do the same thing (buy products at a low price and then selling it with their markup.), and they seem to be okay with it.
However, everything is way easier on the internet. You can manage your products and every aspect of your business from a laptop with no need to travel to close business deals.
The best part? You don’t need significant investment to get started.
Like any e-commerce, dropshipping store, and so on, the success of OA will depend on an essential aspect, the number of products at an excellent price.
Why you should give a try to Online Arbitrage?
Putting aside the complexity of any other business model, OA has some advantages that make it entirely scalable to hop in.
Low-cost entry: As I mentioned earlier, you don’t need six figures to start with online arbitrage. Your expenses will be mainly in your products, you’ll need software to find the best products and a cost for presenters.
There’s no exact amount to start, it may vary depending on your situation, on average most sellers invest between $800 – $1000 to start.
Trial and Error: With OA, the process is quite simple. You just need to find an excellent offer, analyze it, make the purchase, and send it to the Marketplace warehouse.
You don’t need to worry about online advertising, you can even try different niches and products. There’s plenty of room to make mistakes and not to worry about huge losses.
You can earn profits substantially fast: 99% of folks started an online shop to make big money and in a small period.
With in-depth research for detecting the best offers, an excellent strategy to sell your products on your chosen marketplace, there’s a chance that you can earn profits rapidly.
You need to pay attention to your monthly forecast profits to understand how to improve your strategy to keep those earnings in the sky.
What do you need to get started with OA?
To be perfectly honest, the only thing you just need to start with OA is a seller account (like an Amazon Seller account, for example), internet, and money to spend on your inventory.
Some tools will be pretty handy, especially the ones that will find the best inventory for your OA.
FBA Revenue Calculator: This tool will show you the exact amount you will receive when you sell an item online and allows you to calculate potential profits on different items you purchase.
It’s free and provided directly by Amazon.
A computer and a 2nd monitor: Obviously, you need a machine to get the job done. Still, it is crucial that you also have a 2nd monitor. Why? Let’s say that it will make your life and product research so much easier.
You’ll need to keep Amazon tab open and also considering purchasing in another tab; so you can compare products, make sure items match, and look for special offers.
Trust me, this is a must tool; you’ll be using it daily and definitely will boost up your productivity.
Remember, this is not a must as having different browsers in one computer can do the magic.
Tactical Arbitrage: This tool automates a vast amount of the OA process; It allows you to pick a store, set criteria for the products you want to purchase, and it will do the work for you.
Tactical arbitrage will do the search for you and start looking for products that fit the criteria you set in. It’s definitely a kick-ass tool to have on.
Some tips to take your OA tactic to the next level
You might feel pretty hype up about OA, and just want to start with it right away, and that’s cool. However, it’s not a bad idea to have some tips that will be pretty useful for your OA journey.
Here are some of the most relevant:
Don’t invest vast amounts of money at the start: OA is something that won’t need $250K to launch it; that’s the beauty of it.
Always do research: Like in any business project, with no research, you won’t have any success. The more research you do, the higher are your odds of being successful.
Choose products you can sell quickly: Doing well proper research, will give you enough data to detect which products are selling well. For example, it might be easier to sell sports shoes rather than an automatic 350 lbs smoker.
Also Read: What Market Research Can Do for your Startup
Try to find products at half of their current marketplace price: The secret to having good profits with Online Arbitrage is pricing. You need to pay attention to this aspect, to get the right margin you need to buy products on sales or with an excellent retail discount.
Keep an eye on trending items on marketplaces: With marketplaces, it’s all about what’s trending. These will give you a hint on which products you should focus on.
Respect Marketplaces Policies. Don’t try to get away with it. Keep a fair game; don’t try to be a smart ass and try to cheat marketplaces. They have strict guidelines, and you should respect it.
Don’t stick to just one niche: You may lose excellent opportunities if you are only focused on one niche. In OA, you can try different products and niches and get away with it.
Use social media to drive traffic to your items: Once you have selected your product, you need to get the proper awareness to start selling it. You can use Facebook, Instagram, and Youtube as platforms to deliver quality traffic to your products.
Be patience and persistent: Now that you know how online arbitrage works, you need to understand that like any project that would make you earn money, it takes hard work, effort, and patience to achieve a great outcome.
Great achievements take time, try to be patient. If you stick to these tips and work hard, the pay off will be fantastic, trust me.
Best Websites (Sourcing List) for Online Arbitrage
It’s not a bad idea to have a list of potential retail stores where you can start searching for products. Here are a few ideas so you can get started with it:
- Sam’s Club
- Office Depot
- Home Depot
How much will you earn with Online Arbitrage?
This is a question that depends on how serious you are about OA. It will totally depend on how much time you are willing to spend doing research, comparing prices and products, understanding trends, and so on.
Your total profit may vary. You can make $1M in a year (hold your horses, getting to this number might take a while, but it’s totally reachable) or $1000 in a few months.
The more time you put into this, the more money you can make. Now you get the whole picture, though.
Now that you understand what’s OA and how it works, you need to know that this can be done by everyone. You don’t need to have a degree or be an e-commerce expert to figure it out. Willingness, patience, and effort; that’s all that it takes to bring your OA to the next level.
OA is worth to give it a try. I wouldn’t say that it is a way to make money with no risk at all; however, the chances to have massive losses are significantly low.
Like I said before, the success or failure of your OA experience will depend on how far are you willing to spend time and effort building this process.
I f you have any questions or need more clarification, kindly drop a comment.