In order to understand what e-commerce arbitrage is, we should first understand what exactly e-commerce is. If we decode the term, it is electronic commerce, simply put, it is buying or selling something on the Internet. The details and branches in the e-commerce segment are quite a lot and we are not going to focus on all of them today. We will try to delve into the sphere of working with marketplaces and answer the main question - how can you make money from this?
Since this is the sphere of buying and selling, there are plenty of options to earn money there, such as dropshipping or buying cheap goods on the Asian market and then reselling them for a good profit. But dropshipping is prohibited by many large Marketplaces, such as Amazon, and buying goods in China, their packaging and shipping takes a huge amount of time and to comfortably earn on this you will need a fairly good starting capital. Therefore, today we are going to talk about one of the best options in this segment - e-commerce arbitrage, which is fully authorized by all major marketplaces and will require you to have a relatively small start-up budget, as you can work with completely different categories of goods. But the best part is that it doesn't require any physical packing or shipping from you, the big services will do it for you, so all you have to do is search daily for different items that can be resold profitably.
Although it sounds simple enough, finding such goods requires some effort, but today we will also present you with tools, sites, and extensions that will significantly speed up your process of searching for goods. We will introduce you to some e-commerce trends, and explain how quickly you can do product research, price comparison, and many other things. First of all, let's deal with what types of e-commerce arbitrage even exist.
If we talk about the general theory, it is relevant for many marketplaces. E-commerce arbitrage on Amazon/eBay/Shopify is similar and differs only perhaps the number of tools provided by the site itself, available extensions, and other details. But in general, the principle is always the same - to find goods that cost relatively inexpensive and sell it more expensive. Most often the search for goods should be carried out at various local regional stores, many do it even physically. After that, you just use those very large marketplaces for the subsequent resale of goods for a profit. The key aspect is that you need to find an actual product that you can not only buy profitably somewhere in the Target online or local store, but you need to find a product that is in demand so that there is enough interest to buy it for that price.
E-commerce arbitrage is divided into two large segments - wholesale arbitrage and retail arbitrage. Let's focus on each one in more detail.
Any major marketplaces fit both one and the second type of arbitrage. But it is recommended to engage in such activities on marketplaces where there is a large buying power and also large services that can do all the work for you. Regarding regions, preferably it should be the U.S. and European Union countries, plus large services are usually represented there. But in general, you are not limited to doing this kind of business in any country, if you see that there is a prospect in it you can try to explore not the most popular markets. Today we will deal with how e-commerce arbitrage works on the example of the US region so that you understand the principle and can apply it in your work.
But before we get to the process of the job itself of sourcing and selling products, we need to deal with what we need to prepare before we start, in order to make the process easier and earn more.
What will we need before we get started? In addition to various e-commerce arbitrage tools and software, you will also need all sorts of consumables as well as extensions and of course proxies. But first things first.
Today for example we will take the service Amazon, as the largest on the market on which you can quite comfortably work and earn real money. The big advantage of this service over various smaller counterparts is that Amazon has a specialized solution for such businesses called Amazon FBA.
First of all - you need to register a seller account on Amazon, preferably choosing the US or European region, say the UK is good. It is recommended to start with the USA, as it is a very large region and at the same time it has a minimum of various additional problems when starting work, so it is the best option. At this point, Amazon will require you to verify by phone number, so you need to use SMS activation services or virtual phone numbers if you don't have a direct option to verify your account with a phone number. But it is also recommended to use your phone number to start, it is also suitable for this purpose.
You will also be required to provide some data such as - Residential address, Country of citizenship, Name, and others. You can choose a phone number from another country, Amazon also does not matter the location of the operator, the main thing is that the service will make sure that a real person registers and can confirm it via SMS.
Next, you need to bind the payment system. Here you can use either a virtual bank card, or you can use a good universal solution that passes Amazon itself, namely Payoneer or Wise.
But to make it easier for you to navigate and you have some instruction, let's deal with what documents you will need for registration:
Now that we've prepared everything we need, let's break down the registration process step by step:
The first thing we will be asked to do is to select our country of residence. Choose the country of your actual location if you are working as an individual. If your company or account is opened in the USA, choose the USA.
In case you are an individual, choose the type of business Individual, and then enter your first and last name.
The next step is more important because here you need to choose your proof of identity - choose your passport, and next to the country of issue of your passport. Enter the number of the passport (foreign, not domestic), and its expiration date.
Next, specify the address of registration, and in order not to make a mistake you can copy this address from the bank statement, if you requested a statement from the bank application, or you can enter this data manually.
After that, specify the phone number, preferably for the first account specify your real number, but in the future, if you create other accounts, you can use a virtual number or one-time SMS.
After you have double-checked all the data and made sure that everything is correct, you can click “Next” and proceed to the next step.
After all the data has been filled in, click “Next”.
In two points choose option “No”, as in fact it does not affect anything in your store and you can not waste your time on it, and click “Next”.
Now the verification stage is waiting for you. After you have successfully completed the registration stages, the most important stage of verification is coming.
In 1-2 days after registration you will first of all have your documents verified, namely your passport and bank statement. In case the answer from Amazon is negative for some reason, you can re-upload scans of your documents. If you uploaded a photo, try uploading a scan for better quality.
After successful verification of your documents, you may have one or more additional verification steps - Utility Bill, a video call or a mail to the Address you provided during registration. All you need to do in this situation is to follow all the instructions provided by Amazon and after successful completion you will be able to get an Amazon seller account. Although this verification seems to be a problematic moment, but perhaps really problematic is only the Utility Bill, where you will need to translate into English your utility bills and provide them to Amazon, which is not always easy to do, but now there are many companies that help with this issue. The other two are basically quite simple and probably the fastest and least resource and time consuming. Even if you don't know English, on an Amazon video call it's fine if you have an intermediary with you to help with translation, but basically all you need to do is show your face on camera, your passport and sometimes a bank statement. The letter from Amazon is also a fairly easy way to verify, but perhaps the longest, as the letter will have to wait for some time, and to speed up the process is impossible. So follow all the instructions from Amazon, and the process will be successful.
Where does the arbitration process begin? If you decide to resort to the services of TacticalArbitrage or any other service with similar functionality, you can start your product search with these tools:
In TacticalArbitrage you go to the "Product Search" section. You choose the country you are going to work for, in this case we take the USA as a basis.
After that, we choose a store from a huge list of proposed options, where we will look for products to resell them on Amazon.
Since the directions of different stores and categories of goods are many and very many, try to start with something in which you at least superficially understand to look for profitable products there. In the future, as you study the market, you will begin to see interesting options even in those areas in which you do not understand much, but the key here is that you will learn to see obviously profitable goods in the most niche areas and can expand the list of potential products for purchase.
In the “Category Select” section, we select the product category we are interested in (you can select several at once) and click on the “Search” button. Then the service scans all the information from the selected site and when it is finished, it will give us the result, where we will immediately see the key indicators for us - the difference in price in this store and on Amazon. Accordingly, we can quickly find cheap local products that we can sell more expensively. And you will see just a huge number of such goods.
It is recommended at the initial stage not to choose goods with a large mass or large volume, because it can complicate logistics for Amazon, and accordingly drag on additional costs, which at the start you do not really need. But even without such goods you will have a more than impressive choice, because you can simultaneously scan several stores at once. It is also not recommended to choose too expensive goods at the initial stage, because you can invest quite a lot of money in a product that may have problems when selling and you will lose a large part of your budget. Always allocate funds between different categories of goods, because a lot of things in the field of arbitrage becomes clear only with experience, and you can easily both get a solid profit on a certain group of goods, and lose a lot of money.
But do not hurry to celebrate ahead of time, because this is not all the work we need to do to resell the goods profitably. The reason for this is simple - not all products are in demand in the market. At first glance, there may be thousands and tens of thousands of profitable goods on your list, but there are only a few goods that are in demand and are almost guaranteed to be bought by the client. And your task is to find among this list of such goods. Do not worry, you can do it, it will only require diligence and a certain amount of time. There are quite a few tools that help to separate the goods that are in demand from the goods that are not sold on the market. This is what we are going to talk about.
Here we will need to enlist the help of an extension called SellerAssistantApp, which will show us the rating of the product. If you have this extension enabled, you will see a few new fields on the Amazon product page that will help you navigate how potentially profitable the product is and whether it's selling at all. First of all, we are interested in the BSR indicator, which is the sellability rating of the product. The lower the number - the more popular the product is in its segment.
But at the same time, we should also take into account the fact that for each category of goods this position can mean different values. For example, clothing, books, and kitchen products are some of the most popular items on Amazon, respectively, for clothing BSR rating below 1 million is usually the top 1% in this category and this indicates that such a product you are likely to successfully resell. At the same time, a BSR rating of 1 million for a more narrow product category, say Musical Instruments or Grocery & Gourmet Food, will be far outside of even the top 50% of sales on Amazon, which automatically means that you are almost guaranteed not to sell such an item.
So your job is to look for items that are ideally in the top 3% and below percent of sales on Amazon, so that you can sell those items quickly enough to make a profit.
To find out the Sales Rank of the product category you need, you can monitor various current tables on the Internet on this topic, on the request: "amazon sales rank chart" in a Google search with the prefix of the current year, most often you will be able to find the current information quickly enough. Also the extension shows this ranking on the product page, so you can also take it as a basis.
Under the product rating below we can see another useful price comparison tool. On the left you will see the price of the product on Amazon, and on the right in the COG (Cost of Goods) field you can write the price of the product that is listed in the store you found. This aggregator will immediately recalculate the price of the item taking into account Amazon FBA, additional costs and other things and will show your net profit. Therefore, it is also an indispensable thing, because even if you found an obviously profitable product with a good sales ranking but after recalculating all the costs you do not earn anything, then you do not need such a product and need to look further.
This is roughly how the process of retail ecommerce arbitrage on Amazon works. You can perform all the same actions on your own without the use of supporting utilities, but it will take you much more time and as a result you will make less income. But it is still possible, if you study the market and a certain group of goods well, you can make sales yourself, and there are people who manage to make a profit even selling goods from the mall on the next street, buying them physically and reselling them on Amazon. So the basis of this model is to understand the market, and once you are well enough immersed in the market you are almost guaranteed to make a good profit.
Next, after you have found a profitable item and have already made the decision to purchase it, you need to send the item to the Prep Center. This also needs to be done because the item needs to be pre-processed before it can be sent to Amazon warehouses. Almost all major Marketplaces have quite strict conditions on packaging, labeling, product integrity and other things. In addition, you will be located remotely, so you can not directly deal with the packaging of the product. Therefore, before the goods arrive at the warehouse of Amazon or any other major marketplace, they must be barcoded, packaged, and if possible, branded. Prep centers are essentially large warehouses where your product is stored for a while before it is sent to Amazon warehouses, packed and branded. These days there are a lot of private companies that help do this part of the work for you, a Google search will show you many different options and help you choose the best one for you.
Also when looking for a product always take into account that some part of the profit will be given to the prep center, usually this amount is up to 1 dollar, depending on the category of goods and the conditions of the prep center.
It's worth mentioning the wholesale sales model separately, because in order to scale your business at some point you will inevitably start to consider this option, as buying directly from a supplier is always beneficial. If we look at the financial side of such cooperation, the profit will indeed be much higher. But one of the problems is that you will need a rather large start-up budget, because you need to buy products in such a case in large quantities. But an even more significant problem can be a lack of knowledge of the market, you can buy products directly in large quantities and it turns out that with the sale of this product there are some problems, so you can get quite a lot of trouble and even financial losses. Therefore, consider this model only if you have a large budget and your business is going to a large scale, as well as a good enough understanding of the market, at least in some of its specific segments or categories of goods.
We would like to devote a separate topic to Stealth Accounts, as this topic raises quite a few questions for people who are just starting to get involved in e-commerce arbitrage. Usually the question of Stealth Accounts arises when people start to study the issue of scaling sales, specifically managing multiple ecommerce accounts. If we take Amazon as a basis, it is quite logical that in order to artificially create competition for some product or just to sell it from several accounts to increase the number of sold copies of the product, you need multiple Amazon accounts. It does look like a good plan, and almost certainly many of your e-commerce competitors are doing the same, but it's not that simple here. The problem is that almost any major marketplace requires quite a few different verification steps, and so you won't be able to create a new account so easily. This is why such a request as Stealth accounts appeared. But what exactly it means and how people still manage to get around these restrictions, we will help you understand.
Stealth accounts themselves involve using an account registered to another user. In this matter, it is most often impossible to do without a profile created by someone else in advance, or without your personal request to someone else to create such an account and give it to you for use. And this is not necessarily some action that requires searching for accounts that have actually been stolen. You can ask a family member or friend to create an account for you and give it to you. Or there are sellers who have been using accounts to sell on Amazon for a long time and now want to sell them for one reason or another. And in this configuration everything is quite transparent, the marketplaces themselves will still not be delighted that you will try to bypass their restrictions and will prevent them in every possible way, but at least you can be sure of the purity of the account itself.
So you can certainly make several accounts, but you will have to make some effort and find people who will be able to verify it for you and you will already work on this profile. But this will also not be enough, as large marketplaces almost always prevent such actions, despite the fact that the registration may in fact be for a completely different person. But even this problem can be solved, and we will help you to understand what factors large trading platforms take into account first. You will need to take all the measures that will protect you from being detected using multiple accounts on the platform, and you can start scaling your product.
So why do marketplaces do this? Almost any such platform struggles with the issue of multi-accounting on their platform so that there is still competition between sellers in the marketplace. And marketplaces can detect the use of multiple accounts by one person not only by personal data such as documents or emails, but also by criteria such as IP address or device fingerprint. So, if you do not pass the test, you will not be able to create a new account, and if you do manage to do so, you will also risk your main account. Therefore, changing the IP address and device fingerprint will help to solve this problem. But let's understand point by point what it takes to create or operate such Stealth accounts:
For what tasks do you need proxies in e-commerce arbitrage? When it comes to proxies, the range of tasks can be quite extensive - from simple multi-accounting to using proxies for price comparison or market analysis using proxies. To avoid getting an IP ban on Amazon, you will need to swap your IP for another one to keep yourself safe. Also, there are quite a few targeted resources that require careful selection of proxies and not all of the options on the market can work well for your chosen task.
The point is that it is often not enough to buy just any proxy, for each purpose you need to make an individual selection and choose the appropriate option for your target resource and specifically for your task.
But there are also quite a few resources under which regular static Datacenter IPv4 or even IPv6 proxies will work well, and it makes no sense for you to buy a more expensive proxy. That's why you should choose proxies exclusively for your task, and not only for the target resource. For this purpose we recommend you to contact us in online chat before buying a proxy, where our consultants work round the clock for this purpose to help you find the most suitable option for your task.
Overall, this is exactly how e-commerce arbitrage works using Amazon as an example. But these principles apply to any other major marketplaces, and often even tools like TacticalArbitrage work for several major platforms at once. The most important thing is that with an understanding of how e-commerce arbitrage works you can safely start working in this field, as it is completely legal and from the first account you create you can start earning here and now. But when scaling up, always remember your safety and that by saving on things like proxies you risk losing more in the future. So invest wisely not only in the products you sell, but also in any auxiliary tools for work.
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