Online Arbitrage

So how do you actually make money selling on Amazon? How do you know what to sell?

This guide will break down the process and go over a very specific example with all the numbers!

The basic idea is to find products ( usually at a discount but not always ) and resell them on Amazon for a profit. Or in other words, Online Arbitrage. There are some huge benefits to doing this for a couple reasons :

• Low Start-Up Cost – you can literally start doing this tonight and all for around $50 or less
• Very Low Risk – if everything goes horribly wrong, ( follow this guide and it won’t 😉 ) you can sell your product at the same cost you purchased for and recoup your investment
• No Experience Needed – this is a very simple process once you understand what key factors to look for. After that, it’s just repeating the process and scaling
• Predictable & Transparent – this is the biggest benefit! You can literally run all the numbers, see the sales history, calculate profit, and make a very educated decision before investing any money

So where do you start? Well, you first need a place to purchase or source your product from…

Sourcing Products

You can use any e-commerce website where you can purchase consumer goods. A few example sites:

• Best Buy
• Walmart
• Blains Farm & Fleet
• JC Penny
• Game Nerdz ( I like the name 🤓 )
• REI

That’s just to name a few. There are thousands of potential sites and millions of potential products…

For this specific example, I’m going to use RTIC Coolers

We can head over to their site and check out the potential products. The great thing about this example is that they offer bulk pricing. Now, most sites don’t offer this but some do!

As you can see, we can purchase 16 units of these 64oz stainless steel tumblers for $270

So our cost per unit would be $270 / 16 = $16.88

But how do you know if it’s a good opportunity or not? Remember the crazy thing is that we can take a look behind the scenes and see whats really going on…

Let’s head over to Amazon and run the numbers

Check Data On Amazon

To pick foolproof products, there are a few key factors you want to look at :

Is The Product Currently Selling on Amazon? 

The easiest way to check is to copy & paste the websites product title into the Amazon search bar. If this doesn’t bring back any results, try searching by the UPC code if it’s provided

Can you sell it?

Once you find the product on Amazon, the first thing to do is check your selling eligibility 

Some products, brands, and categories are restricted to sellers. This is important so you don’t purchase products that you can’t actually resell

An easy way to check is by looking for the “Sell on Amazon” button… Click through to see if you can sell the potential product

The button won’t be there if the product is in a restricted category. It will be there even if the brand is restricted so, make sure to actually click and check

This is what the button looks like: 

Now that you know you can sell the potential product, it’s time to check the sales…

Best Sellers Rank (BSR)

This is where the magic of Amazon comes into play! We can use the BSR to see how many units are being sold

So if the product doesn’t sell well, we can avoid it and find products with a faster ROI

You can use the Free Jungle Scout Sales Estimator to give you a rough idea of the sales based on the BSR. Another free tool is the AMZ Scout Profit Calculator Chrome Extension ( more on that later )

To find the BSR, check the “Product Information” section of any products listing. The important number is the BSR of the top-level category and not the sub-category. For example, Kitchen & Dining not To-Go Drinkware

The RTIC 64oz is currently 1,845 in the top-level category of Kitchen & Dining

According to JungleScout, this product is selling 1,445 units per month

That means that at the current selling price of around $34, this one product is generating $49,130 per month ( remember we can purchase it for just $16.88 )

Sales History

BUT WAIT…. that all seems great right?

“uhhhhh yeah it does!”

Before you get too excited, you still need to check the sales history to get a better idea of the whole picture, not just a single days data…

The quickest way is to use the Keepa Chome Extension

This will allow you to see how the bestsellers rank has been increasing or decreasing over time. If you’re using the chrome extension it will automatically load on any listing which makes it simple to break down the numbers

So should you buy 1,445 units to resell? Probably not…

Could you buy a case of 16 and sell them very quickly? DEFINITELY 

Are you starting to see how you can run all the numbers and go into this with huge confidence?

Ok great, we’ve found our product, we can actually sell it, and the product is selling very well! But we still need to check a few more things…

Reviews

You should always take a look at the reviews of any potential product for a couple different reasons:

• If the product has a low review rating it is more likely to be returned
• The product make have sellers that are selling fake products
• The higher the rating the fewer issues you’ll have overall

In my example, this product has OKAY reviews… The overall rating is 4.5 but still has some negative feedback ( not enough to discourage me from selling the product though )

Is it Sold by Amazon? / Number of Sellers

If you click through on the “Used & New from $x.xx” it will take you to a list of all the sellers for that product

This is very important and will let you see the following info:

• Is Amazon selling the product themselves? – not impossible to sell a product that Amazon is already selling but definitely a BONUS if they aren’t
• How many other sellers? – the lower number of other sellers the better but there will always be competition so don’t be afraid to sell a product that has other sellers. You can also check the inventory levels of other sellers… Here’s a more detailed breakdown: Amazon Product Tracking
• The Condition of the Product – this isn’t super important but it will show you if others are selling the potential product in used, new, collectible conditions
• Pricing – you’ll be able to see the pricing of other sellers and determine the potential profit per unit

 

Profitability

This is where things get fun! We get to calculate exactly how much we are going to make…

The first thing you’ll want to take into account is the shipping to YOU from your SOURCE. Unfortunately, you can’t ship the product directly into Amazon when doing this…

The reason being, you will have to label and prep the product to be sent in. Your source of products isn’t going to do this

• Does the source for your products offer free shipping or free shipping over a certain dollar amount? – if they do this will help cut down on your cost and increase your profit per unit

Next, you want to break down the Amazon FBA fees when selling your potential product… To do this take the ASIN of your product and use an FBA Calculator to see the fees

Here is the break down for our example product using the AMZ Scout Profit Calculator

• Cost Per Unit – $16.88
• Free Shipping From RTIC to Us – $0.00
• Shipping From Us to Amazon – around $1.5 to $2
• Amazon FBA Fees 
  • Monthly Storage – $0.12
  • Pick & Pack – $5.09
  • Referral Fee – $5.10

Profit Per Unit – $5.31 or 28.8% return on your investment

Win The Buy Box

Now, are you going to sell every single unit yourself? No…. But you could estimate your potential sales based on your buy box percentage

Let’s say you win the Buy Box 30% of the time. That means you could sell 433 units or $2,301.88 in profit 

And all you had to do was run the numbers, make sure it was a good product, and send yours into Amazon

This is ONLY one product! There are more on RTICs website and millions more on other sites

I went through all the products available on RTICs site and did the above process to determine how much you could make if you were to only resell their products…

• Stainless Steel Tumbler 30z
  • White – $332.04
  • Black – $463.10
  • Red- $199.59
  • Pink – $92.86
• Stainless Steel Tumbler 64oz – $227.52
• RTIC 30z Handle – $1097.59

So if all you were to do was buy and resell off this ONE website you would make $4,714.58 per month in PROFIT

Rinse & Repeat

That’s it… don’t over complicate the process! And definitely don’t be afraid to purchase inventory since you can always sell at cost to recoup your money

Rinse and repeat entire online arbitrage process and find new products to sell

Where else can you calculate your ROI and only pick the best products to sell? I’m not sure but I know that you can consistently do this with Amazon and scale things quickly

It doesn’t matter if you’ve never sold anything or have any experience… You get to leverage the power of Amazon