Online Arbitrage has become quite popular among sellers. A lot of individuals who wish to enter the world of e-commerce, especially on platforms like Amazon, are finding it the best way to do so. The concept of online arbitrage hasn’t changed; it is still as simple as finding a product being sold at a lower price and reselling it at a higher price on Amazon to make a profit. This business model has attracted a lot of attention, and it is understandable.
However, as the market keeps changing, there’s a question from both newcomers and seasoned sellers: Is online retail arbitrage worth it now? Is it a viable way to generate income, or has the market become too saturated? There are a lot more questions surrounding the sector. This is why, in this blog, we will discuss the current stage of online retail arbitrage and what it takes to succeed.
So, Is Online Retail Arbitrage Still Profitable?
The answer to this question is pretty straightforward: yes, online retail arbitrage is still profitable, there’s no doubt. However, it is important for you to understand that since then till today, the market has shifted, and the strategies that might have worked a few years ago may no longer work the same.
The way people access online selling platforms now has increased the competition, and even Amazon has refined its policies and processes. Despite these changes, the principle still remains the same—you buy at the lowest and sell at a valid higher price so you can make a profit.
There’s a lot more opportunity in the market due to the changes. There are clearance sales, limited-time discounts, and the option to choose unique on-demand products that are not on Amazon. You only have to decide how you can improve your profitability in the current climate.
What are the Pros and Cons of Online Retail Arbitrage?
Just like any other business, there are pros and cons of online retail arbitrage. You need to consider both of them carefully before you decide to take a swim. Here are some of them:
Pros of Online Retail Arbitrage
- Low Startup Costs:
When you compare this to other business models like private labelling or even creating your own product then the initial investment is relatively low. You can start with the smallest amount of capital just to purchase inventory and get some tools to assist you. - Flexible Work Hours:
With online arbitrage you get a lot of flexibility. You can conduct your sourcing and business operations as per your schedule and it is a great option if you are seeking for a part-time income or want greater control over your work life. - Amazon Customer Base:
When you sell on Amazon, you will get immediate access to its customer base and an established infrastructure for fulfillment with FBA. Also, with customer service you are basically reducing the number of challenges that you are going to face while building your own audience base. - Quick Turnaround:
If you decide to pick the products which are in-demand then you can also price them competitively. This way, you can get a quick turnover of your inventory. Also, it will allow you to reinvest your capital to scale your business faster. - No Branding:
Unlike private label sellers, you don’t need to spend that much time and resources to develop your own products. You also don’t need to build your brand from scratch, so you can focus solely on sourcing and sales.
(Also read: How You Can Conduct Free Detailed Product Research for Amazon)
Cons of Online Retail Arbitrage
- Increased Competition: Since online retail arbitrage is quite accessible, the number of sellers has increased significantly. This makes it more challenging to find a truly profitable deal to stay ahead of the competition.
- Constant Sourcing and Research: If you want to succeed in online arbitrage then you have to put continuous effort in finding profitable products. Which is why you have to do extension research, monitor online retailers and identify opportunities before they are gone.
- Price Wars: Since it is easy to check your competitor’s listings and pricing, they can be used against you as well. Price wars can shrink your profit margins if you are not careful and strategic about your pricing.
Bottom Line
Although the market for online retail arbitrage has become more competitive, it is still a viable business model if you approach it strategically. You can use Arbitrage Hero, which is designed to help you with features and insights that you need to identify opportunities and streamline your process. If you wish to learn more or have any queries related to online retail arbitrage, then reach out at [email protected].
