Online Arbitrage: A Complete Guide

What is online arbitrage?

Online arbitrage is the practice of finding low priced items from on online source and reselling that item on a different market. It’s different to retail arbitrage in the sense that it’s done completely with an online store or online marketplace. Common examples of online arbitrage include finding discounted items on a retailer’s site (ex. Walmart) and selling that item in a marketplace like Amazon or eBay. The average Amazon seller salary is anywhere between 24,000 and 81,000 annually. Online arbitrage sellers are some of the highest earners with many doing well over six figures per year.

Many sellers do a variety of online arbitrage practices, but most of them involve selling on online retailers like Amazon or eBay at the end. Online arbitrage sellers use software to help them find good deals on products and they consequently sell them in a marketplace for a profit.

Where can you do online arbitrage?

Online arbitrage is amazing because you are only limited by your creativity and the amount of platforms you can sell on. The most popular places to do online arbitrage is on major ecommerce marketplaces like Amazon, eBay, etc. These are the best places generally because there is a lot of demand from consumers on those marketplaces.

Amazon

Amazon is the best place to do online arbitrage because it has the most demand. When doing online arbitrage on Amazon, your biggest problem will be finding profitable items. Amazon already has hundreds of millions of customers, so if you can find profitable online arbitrage items, you will definitely succeed. Amazon sellers are some of the best when it comes to utilizing online arbitrage sourcing.

Additionally, Amazon allows online arbitrage and retail arbitrage sellers to use their FBA warehouses. When you find an online arbitrage product, all you need to do is ship into Amazon and Amazon will ensure the customer receives the product in 2 days or less. This is huge because online arbitrage sellers get access to Amazon prime members and that can increase sales significantly. This is much easier for most sellers than going to brick and mortar stores and looking for profitable deals for hours at a time. With online arbitrage, you can check the selling price of the product and easily add it to your list.

There are many online arbitrage sellers that have scaled to millions of dollars on Amazon because they are able to focus mainly on finding good products and Amazon’s fulfillment network takes care of everything else like returns, customer service, etc. This business model is great for sellers that are looking to scale their online and retail arbitrage operations.

eBay

eBay is another great place to do online arbitrage. Most people rave about having an Amazon business, but eBay has a lot of opportunities to sell profitable products. With eBay, you can use auctions in addition to the buy now features. Online arbitrage on eBay works well with finding high selling eBay items from other sources. You can source it from online stores and net the price difference.

eBay is a great place to shop for specific items like electronics, shoes and more. If you can find a high selling product on eBay from another source, all you have to do is list it and ship once it’s bought. eBay is great because it allows you to list hundreds or thousands of items. To sell eBay at scale, you’ll need to have a lot of listings and sell whenever an item is sold. Gathering a bunch of online arbitrage products and listing them should be the focus for sellers.

Sellers who do online arbitrage for eBay source products from Amazon, other ecommerce sites and physical retail stores. Sellers can take advantage of seasonal offerings

What are some types/examples of online arbitrage?

There are a ton of creative ways to do online arbitrage. If you do a quick Google search for “sell ___ for cash”, you can find a lot of opportunities to do online arbitrage. A popular one is book buybacks. There are many sites that will buy books back from students year round.

If you are able to find the books those sites want at another website, you can send it in to them for a profit. For example, you can target chemistry textbooks. Many sites will pay close to $100 if not more for newer versions of chemistry textbooks. If you can find someone selling it on eBay, Amazon or any other place, you can purchase it from them and send it to the buyback website and make a profit. There are virtually limitless options to do online arbitrage, but it’s to focus on one avenue and stick to it.

Is online arbitrage scalable?

Yes, online arbitrage is scalable. Depending on where you decide to sell your products, scaling can be easier or more difficult. Scaling an online arbitrage business depends on your ability to source and buy products in addition to shipping it to the customer or ecommerce provider. If you sell on a platform like eBay, you will have to ship every order sold yourself to the customer.

It’s very possible to scale to huge sales numbers on eBay, but that will likely require getting some additional help to fulfill the orders. If you can source, buy and ship efficiently, you will be profitable and scale regardless of the platform, but your overhead won’t be the same.

In contrast, if you use Amazon for online arbitrage, your main focus is to find products, buy products and ship to Amazon. It’s relatively easy to establish a system in which you can do this profitably and repeatedly. With Amazon FBA, scaling will go much quicker than other platforms because there is more demand on Amazon. If you can make a sale quicker, you can get your profits quicker to reinvest in a new product to ship to Amazon.

This makes a cycle that can grow your business dramatically in a short amount of time. Additionally, Amazon will take care of all of the shipping, handling, customer returns, etc., this truly allows you to focus on growing your business. Many online arbitrage sellers that have significant scale have to deal with a lot of customer questions and returns. In contrast, Amazon FBA takes care of all of that and you can just source and ship products.