Online Arbitrage

The rumours are true: online arbitrage is a relatively easy way to take advantage of the ecommerce boom and make money.

Maybe you’ve heard about how Amazon FBA facilitates online arbitrage and represents an exciting opportunity to secure a new stream of income anywhere and at any time.

It procures many of the benefits of being self-employed without many of the stresses and risks. It puts you in control: you determine the strategy, make the decisions and determine the scale. You don’t have to set up a company, build a brand, create a product or even host a website. What’s more, online arbitrage gives you incredible flexibility: you can carry out as much or as little as you want from anywhere in the world.

But far from being some glib, easy ‘get-rich-quick’ scheme, online arbitrage requires real skill, in-depth knowledge, careful judgement and perhaps most importantly, the right online tools and resources.

Amazon’s FBA and online sourcing platforms have revolutionised online arbitrage, making it much more automated and efficient and so opening it up to a much wider audience.

At its most basic, online arbitrage involves sourcing products at a lower price and re-selling them in a different online marketplace for a higher price. Today, the Amazon marketplace offers a unique and exciting opportunity for profitable online arbitrage.

How it works

Find

Profitable items using SourceMogul’s powerful software.

Send

In to Amazon’s warehouse via your home or premises. Set your pricing that you want to sell the product for .

Sell

Amazon sells the product for you. Amazon ships to the customer and pays you within 14 days.

Profit

Look for new stock and repeat!

The Opportunity

Amazon’s scale and convenience means that many of its customers will use it for nearly all of their online purchases, rather than choosing to look around at other websites first. Often, they’ll get the best price- after all, Amazon’s success rests on its competitiveness. However, sometimes buyers will miss out and end up paying more than they would have done elsewhere.

Where there’s a mismatch of prices between different online marketplaces, there’s a double opportunity: individuals can buy the cheaper products and resell them for profit on Amazon, whilst offering Amazon customers a better deal.

By exploiting the mismatch, online arbitrage ramps up the competition, driving down the overall prices on Amazon whilst offering online sellers an exciting opportunity to make serious profit.

It’s win-win.

The Challenge

Whilst the prospects are great, the challenges are greater.

The task of manually sifting through and comparing literally millions of products to identify potential price discrepancy, analysing the rank, gross profit, the ROI and considering a whole range of factors, and then weighing up all the practical considerations of storing, packing and sending the products is huge.

Which is where FBA and special online sourcing platforms come into play, making arbitrage something that anyone with the skill, patience and determination can take on:

FBA

Amazon recognises that online arbitrage is good for business, and it encourages and facilitates it through something called ‘Fulfilment by Amazon’ or FBA.

As its webpage explains, FBA provides “fast, free delivery options” for sellers’ products, as well as providing, “trusted and acclaimed customer service in the local language.” Amazon sellers order products online and send them directly to an Amazon fulfilment centre where they’re stored, picked, packed and shipped right across the EU when customers order.

FBA products are also eligible for Prime, which gives sellers access to the most loyal and active Amazon customers. FBA is integrated into individual Amazon selling accounts and available on a “flexible, pay-per-use model without minimum inventory requirements”, which makes it ultimately low-risk and convenient.

Online Sourcing platforms

Enabling individual sellers to piggy back onto Amazon’s huge logistical resources saves sellers time, money and energy. However, its value rests on sellers being able to source cheaper products in the first place. Enter online sourcing platforms. These are built using clever software that automatically sifts through thousands of products in different online stores, matching and comparing them with the same products listed on Amazon. By paying a subscription fee, users can access this software in order to source the products they’re looking to sell. Once they decide on products that can be profitably re-sold, users can send their inventory to Amazon through FBA. These products are then stored, marketed, sold and shipped by them.