How to Start Your Own Online Arbitrage Business on Amazon
Are you interested in starting your own online arbitrage business on Amazon? If so, you’re in luck! In this article, we’ll break down everything you need to know to get started, step by step. We’ll cover software, product research, product sourcing, manufacturing margin, ungating, and more. By the end of this article, you’ll have all the tools you need to start implementing your own online arbitrage business on Amazon.
Table of Contents
1. Introduction
2. Software
3. Product Research
4. Product Sourcing
5. Discover and Refine Your Niche
6. Manufacturing Margin
7. Ungating
8. Order Cancels
9. Shipping, Prepping, and Prep Centers
10. Creating Your MO
11. OA Organization
12. Inventory Management and Repricing
13. Conclusion
Software
The first thing you’ll need to do when starting your own online arbitrage business on Amazon is to get the right software. There are three pieces of software you’ll need: Keepa, a profit and loss calculator like Seller Amp, and IP. Keepa will give you all the data you need to make good buying decisions, while Seller Amp will tell you if a product is profitable or not. IP will tell you if a brand is known for filing IP complaints, so you can avoid any issues down the road.
Product Research
Product research is the most important skill you need to develop in this business. You need to be able to evaluate the data behind the inventory to make good buying decisions. This can make or break your business, so take it seriously. One big issue you’ll run into is price tanking, which is more prevalent with online arbitrage. To avoid this, take into account price spikes, rising seller count, and ease of discovery.
Product Sourcing
Product sourcing is the actual finding and purchasing of the inventory. You need to be doing this every single day to develop the skill of finding profitable inventory. You won’t find profitable inventory right away, but with practice, you’ll get better. Storefront stocking is a foundational method that everyone should learn first. You can find inventory quickly and tie it in with any other method you use.
Discover and Refine Your Niche
Refining your niche is important because it leads to faster results. Focus on one to three niches to start, but keep in mind that you can always expand or pivot if necessary. Build expertise and recognize brands, products, and prices that sell well.
Manufacturing Margin
Manufacturing margin is the ability to consistently drop the price of a product more than the average person looking at it. You can use cashback, discount gift cards, and coupon codes to manufacture margin. Stacking them together is where the magic happens.
Ungating
Ungating is crucial when it comes to online arbitrage. It can open up many more opportunities for you to find profitable inventory. You’ll need to provide Amazon with the necessary documentation to get ungated. Use real invoices, even if you’re not working with wholesale distributors.
Order Cancels
Order cancels are annoying, but there are ways around them. Place small orders in the beginning, use PayPal checkout, and email and call support. Don’t let order cancels discourage you.
Shipping, Prepping, and Prep Centers
In the beginning, you should be doing your own shipping and prepping. This will give you hands-on experience and confidence. Eventually, you’ll need to use a prep center in a tax-free state. Keep track of every purchase you make for OA organization.
Creating Your MO
Creating your MO is a mindset that you need to adopt. Protect yourself from listings tanking and price by manufacturing margin, sourcing products with a higher average selling price, and taking advantage of advanced listings.
Inventory Management and Repricing
Use a repricer to automatically reprice your products at all times of day. Use an inventory management tool like Sellerboard to keep track of profitable products and restock them.
Conclusion
Starting your own online arbitrage business on Amazon can be a lucrative opportunity. With the right software, product research, product sourcing, manufacturing margin, ungating, and more, you can be successful. Keep in mind the importance of OA organization, creating your MO, and inventory management and repricing. Don’t let order cancels discourage you. With practice and persistence, you can build a successful online arbitrage business on Amazon.