Our first article onretail arbitragewas received so well that we decided to call Ryan Grant fromOnline Selling Experimentto give you the exact tools and insanely actionable plan you need to start an Amazon retail arbitrage business in 2019!
Lets get right down to business.
Ryan was recentlyfeatured on CNBC for quitting his job and focusing on retail arbitrage full time, we got a chance to team up with him and he did not disappoint!
In this post youll learn exactly how to get started with retail arbitrage from Ryan to finally start selling on Amazon.
The Amazon Seller App How to Quickly Figure Out Product Selling Price
Popular Stores To Source Products For Retail Arbitrage
Pricing The Items You Bought Via Retail Arbitrage
The first step in starting with retail arbitrage is setting up your Amazon seller account.
You need an account to access a free app that provides you with the information you need to begin researching items on Amazon.
I recommend signing up for an individual seller account to start because it doesnt have any monthly fees.
Click here:Open an Amazon individual seller account: Scroll down and sign up as an individual button as shown in this screenshot:
After clicking that link you will go through the process of setting up your Amazon account. Setting up your accountshould only take a few minutes, and then you will be able to sell products on Amazon.
After youve setup a seller account, the first thing that I would recommend is to download theAmazon Seller App.
Its free and directly available through Amazon.
You get details on the selling price, fees, among a few other details, of any product that is available on their website.
It uses the camera on your cell phone to scan the barcode of any product, and will then show you the pricing and fee information for any item that you are considering selling on Amazon.
If you havent yet setup a seller account, then theres another option that doesnt require a seller account.
Check out theFulfillment by Amazon Revenue Calculatorand get the fee details on any item. Heres a look at an example product:
If you go to the Fulfillment by Amazon Revenue calculator, you will be able to search for any item that you are considering selling on Amazon.
How much it will cost you to ship to Amazon (black arrow),
The calculator displaysexactly how much you pay in fees, and most importantly at the bottom it lists exactly how much profit you can expect to make on that item.
I recommend running every single item you sell on Amazon through this calculator and the Amazon Seller App.
With calculators like this available, you should know exactly how much you can expect to profit on every item that you sell.
Lets do a quick overview of how to start with retail arbitrage:
After you have the app installed, go to a local big box store in your area.
Wal-mart, Target, Home Depot, Toys R Us, Kmart, Walgreens, or any similar store will work. Once you are in a store, look for a clearance section or aisle similar to this:
Open the Amazon Seller App, and use your phones camera to scan the barcode of the products in the clearance aisle.
After scanning a product, you should see a screen like this:
On this screen you want to check for 2 things right away.
The first is to make sure you are eligible to sell the product on Amazon under the selling eligibility section.
The second thing to look at in the left hand corner is the sales rank.
On this particular item we can see that the sales rank is 60 in the toys category, which is an exceptionally good rank.
The sales rank is a piece of information that Amazon provides that gives us an idea of how fast an item is currently selling on Amazon.
A full discussion of sales rank is beyond the scope of this post, but its important to know the lower the number the better.
Handpicked Content for You:Is there Such Thing As a Right Business Model?
For your first few trips, Id recommend looking forsales ranks that are lower than 250,000. As you gain more experience you can definitely tweak this, but ranks under this range are a good starting point.
If the app shows that you are eligible to sell the item, and the rank is less than your threshold, then you want to check and see if the item will provide a desirable return on investment.
To do that, click on the arrow on the far right of the app in the gross proceeds section. Once you do that you will see a screen like this:
You will be able to enter the selling price, your cost per pound to ship to Amazon (I use $0.50/lb), and how much you can purchase the item for.
In this example, Im showing that I can buy this item for $10.
You cant have a business unless youre profitable.
So our goal is to make sure that were selecting products that give us the best chance at a successful business.
At this stage there are 2 quick checks that you want to go through.
The first is to see if the net profit number shown at the bottom is higher than your minimum profit threshold.
If the item meets your minimum profit threshold, then you will want to calculate a return on investment percentage.
First I recommend setting yourminimum profitat around $3 per unit.
This means thatyou wont buy any itemsthat you will make less than $3 in profit on.
Well.having a potential net profit ofless than $3 per unitdoes not allow for very much upside
So, a small drop in pricecan wipe out your profit.
If the item meets your minimum profit threshold
Do this by dividing thenet profitbythe cost of the item.
In this case its $7.13 divided by $10, so the return on investment percentage is 71.3%.
When you start, look for items with a return on investment percentage that is higher than 50%.
This particular item meets all of the criteria for purchasing the item.
For any item that fits all of the purchasing guidelines, I recommend purchasing up to 6 of the item. In this example, if there were 6 copies of this game on the shelf for $10 each, then I would buy all 6 of them.
Handpicked Content for You:[Case Study] How I Turned $2,200 of Rice Cakes Into a $1-Million E-Commerce Business.
Its time to repeat this process on the next item, and the remainder of the items in clearance section.
When starting, I recommendscanning as many items as possible.
As you gain more experience you will likely will be able to avoid scanning certain items that dont appear viable for resale.
Go through the process of determining an item is viable for resale.
You can quickly move to the next item for any items that dont fit your buying criteria.
As soon as an item doesnt fit one of your criteria, move on to the next item.
How to price items they purchased. Should they price low or high?
Now, that we have some items that we want to sell, we need to list them for sale and price them.
When selling on Amazon using the Fulfillment by Amazon program, I recommend pricing at a similar level to the other Fulfillment by Amazon sellers on the listing.
To get to this screen, view all of the available offers for the product.
This can be done by clicking the link that says used & new () from that will display on just about every product for sale on Amazon. The field fills with the number of sellers on that particular listing.
Now for the screenshot above, you can see that I filtered the view for only prime eligible items, and items in new condition.
I recommend filtering the view to match the condition and fulfillment method of the item you are pricing.
For the item in the screenshot above, I recommend pricing between $41 and $41.41 if you are looking for a quick sale.
When pricing your items, I dont recommend pricing below the offers you are competing with.
Pricing below your competition can often start a chain reaction of lowering prices, and can quickly erode margins.
On the more aggressive side, I recommendmatching the lowest price of the same fulfillment method. On the more conservative side, Id price between $0.01 and 1% higher than the lowest price of the same fulfillment method.
As a bit of a side note, if you are willing to wait awhile for the item to sell, I would price the item between $46.52 and $49.95 in this example.
The reason for this is there are a few different gaps in the prices these items are selling for.
Whenever Im pricing an item I will look for significant gaps in price between the offers, and if theres a decent gap, then many times I will price at the higher end of the spectrum to see if I can make some additional margin on the product I am selling.
Pricing is something that you will definitely get a better feel for as you gain more experience selling on Amazon, but these general guidelines should be a good starting point.
Handpicked Content for You:5 Dirty Hacks for Amazon Sellers to Dominate the Marketplace.
I have a full blog post that discusses, step-by-step, how tocreate your first Amazon FBA shipment. I definitely recommend reading this article if you need help with shipping your items to Amazon.
You can also check out theStartupbros Amazon FBA Guideto teach you the exact steps necessary to prepare, pack and ship your products directly into Amazon FBA.
We have a huge blog post: TheStartupBros Amazon Business Guidethat helps you start an Amazon business! 7,000 words that guides you through all the steps involved fromoptimizing a product listingto figuring outAmazon sales taxes.
Ryan offers astep-by-step courseto help youlearn how to sell on Amazon with retail arbitrage.
The course is designed tohelp you build your businessfrom scratch to making $1,000+ in profit per month. It walks you through everything you need to do to become profitable in step by step detail. You can learn more and checkout the course by clicking right below!
Make Your First $1000 per Month Selling on Amazon
Throughout this post weve covered what it takes to get started with retail arbitrage. Id like to close with a few tips and thoughts from someone who has gone through the process before.
The first thing that I would say is that if trying retail arbitrage sounds good to you, give it a shot! Dont spend a ton of money on the front end andtake your own product photos.
You can test the retail arbitrage strategies that are laid out in this post in just a few hours, and going through that process should be eye opening.
Some people love it, and others cant stand it. If you dedicate a few hours to it, youll know how you personally respond.
The other main thing that I would say is to set realistic expectations. Selling on Amazon, particularly via retail arbitrage, takes some work on the front end.
If you are going to go for it, be willing to put in the necessary work on the front end. The effort can definitely pay off.
So go out there and give it a shot! Ill be in the comment section waiting to answer every single question you have!
Im 28 years old and from a small town in southeastern Minnesota. I went to college at Winona State University where I graduated in December 2011 with a double major in Accounting and Business Administration and a minor in Management. I got a job in the accounting field right out of college.
I worked at this position for a little over a year and a half before I decided that it was time to create my own future and decided to step away from my job.
Should one be listing the RA items (from lets say Walmart) as used like new instead of new, in order to avoid the IP/authenticity claims from trademark owners that will suspend your account forever (because not being an authorized reseller and as regular retail receipts will be dismissed by Amazon)?
Hey Virginia, yes, once a month you get paid out via Paypal 🙂
Please log in again.The login page will open in a new tab. After logging in you can close it and return to this page.