Online Arbitrage Product Sourcing Checklist

ROI and Profit Margin Thresholds

Begin every sourcing decision by defining your profitability benchmarks. For most successful online arbitrage sellers, a target ROI of 30-50% is the baseline, though some categories, such as electronics or seasonal items, may justify a lower margin in exchange for faster turnover.

Use sourcing software Source Mogul to analyze:

• Purchase price vs. projected sale price on Amazon
• Amazon referral fees, FBA fulfillment costs, and storage fees
• Estimated net profit per unit after all expenses
• Historical price data and sales velocity to confirm consistent demand

Always double-check calculations and consider both best-case and worst-case scenarios. Factor in taxes, cashback offers, shipping costs, and prep fees to get a true picture of your potential profit.

Brand Restrictions & IP Complaints

Navigating Amazon’s policies around brand protection is crucial for staying compliant and avoiding account issues. Some brands prohibit resale altogether or actively file IP complaints against third-party sellers.

Before purchasing, check for:

• Brand gating and category restrictions in your Amazon Seller Central dashboard
• IP Alert databases or SellerAmp alerts for known violators
• Recent seller warnings or suspensions in forums like Reddit or Facebook groups

Products flagged for intellectual property issues, copyright claims, or safety violations can trigger account suspensions, deactivations, or costly inventory removals. It’s best to avoid any product associated with these risks unless you have explicit brand authorization.

Buy Box Rotation and Competition Level

Profit projections mean little if you can’t win the Buy Box. Amazon’s algorithm determines which seller appears in the prime selling spot—and only sellers in the Buy Box typically generate consistent sales.

Evaluate:

• Number of FBA and FBM sellers on the listing
• Buy Box rotation history using tools like Keepa
• Amazon’s presence (they often dominate the Buy Box)
• Sales rank and product demand trends
• Seller feedback and ratings—higher-rated sellers may win the box more frequently

Target listings with few sellers, no Amazon presence, and a strong history of rotation to increase your odds of converting sales.

Sourcing Website’s Return Policy

Not every buy will be profitable, so having an exit strategy is vital. Choose sourcing websites with lenient, transparent return policies that let you recover losses when things don’t go as planned.

Confirm:

• Return window duration—ideally 30 days or more
• Restocking fees or return shipping costs—which can eat into your profit
• Product condition requirements for eligible returns (e.g., original packaging, unused status)
• Whether returns are accepted on clearance or discounted items

Return-friendly retailers help cushion sourcing mistakes and improve your business’s financial agility.

Shipping Time and Prep Requirements

Efficient shipping and product prep play a direct role in how quickly your items get listed and start selling on Amazon. Delays in processing, damage in transit, or prep non-compliance can hurt your metrics.

Key considerations:

• Estimated delivery time from the source to your address or prep center
• Seller packaging practices—some websites ship poorly packaged items prone to damage
• Product prep requirements for Amazon FBA (e.g., poly bagging, bubble wrap, expiration dates, hazmat labeling)
• Lead time at your prep center, especially during Q4 or peak seasons
• Whether the product is meltable, fragile, oversized, or subject to hazmat classification

Having a streamlined shipping and prep process ensures your inventory flows smoothly and meets Amazon’s standards for FBA intake.

Sales Velocity and Seasonality

Understanding how fast a product sells is just as important as profit potential. You don’t want your capital tied up in inventory that takes months to move.

Use tools to check:

• Keepa charts to monitor how often an item sells each month
• Source Mogul sales rank history to track stability and demand
• Seasonal fluctuations—determine if the product has year-round appeal or is limited to holidays or school cycles
• Current inventory levels across competing sellers, which can influence how soon you might make sales

A product with great margins but low sales velocity can stall your cash flow and impact your ability to reinvest.

Final Thoughts

A thorough sourcing checklist helps eliminate guesswork and boosts confidence in your buying decisions. By carefully reviewing ROI, brand restrictions, competition, return policies, shipping timelines, and sales velocity, you’ll build a more resilient online arbitrage operation.

Consistency, discipline, and data-driven analysis are key to standing out in the competitive world of e-commerce. With this checklist as your guide, you can confidently navigate product sourcing and maximize your returns on Amazon and beyond.