Simply put: We love online arbitrage. If you’re not sure what we’re talking about, online arbitrage is the practice of searching for inventory from online retail store websites in order to sell on Amazon for a profit.
While Rebecca (my lovely bride) has been solely focused on online arbitrage since around 2015, I (Stephen) usually focus more on retail arbitrage (RA) and wholesale sourcing. But with the current pandemic and health crisis in our world, I have completely shut down my RA activities and stay home as much as possible. While I still source via wholesale, lately I’ve been spending more and more time doing some online arbitrage sourcing… and man, is it exciting!
RA, OA, Wholesale… every Amazon sourcing strategy has its own pros and cons, but in this post we want to cover the basics of why you should consider using OA as a sourcing strategy for your Amazon FBA business. In our own business, we started out slowly adding OA as a strategy years ago, and today we have reached a level now where our online arbitrage sourcing well surpasses our retail arbitrage (RA) sourcing during most of the year (Q4 excepted).
The 9 Benefits of Adding Online Arbitrage as a Sourcing Strategy
1. OA saves time.
When we do online arbitrage as opposed to retail arbitrage, we don’t have to spend time driving from location to location looking for inventory to purchase, nor do we have to spend time standing in line to check out. Plus OA can be done with the help of time-saving Google Chrome extensions that make the process go even more smoothly. Time is the one resource we can never get back once it’s spent, so we do what we can to save it whenever possible.
2. OA saves wear and tear on our vehicles.
I don’t know about you, but we’ve put tens of thousands of miles on our vehicles over the past couple of years from doing RA. Of course, those miles are deductible when it comes to filing our taxes, but I still would rather not have to replace my vehicle so quickly. Once Rebecca started doing mostly OA, the number of miles she was putting on her car for business purposes dwindled down to almost nothing.
3. OA saves wear and tear on your relationships.
Because OA saves so much time compared to RA (see #1), we’re left with more time to spend with our family. When I’m gone from 7 am to 7 pm to pick up a big RA haul, I just don’t have as much time to spend with my wife and kids. Rebecca and I still enjoy an occasional RA adventure, and we plan to do some more baseball traveltage. But on a regular basis, I would much rather be at home to have lunch with my wife and see my kids after school.
4. Online stores are open for business 24/7.
Some brick-and-mortar stores don’t open until 9 or 10 am and then close around 7 pm. Some aren’t open on Sunday mornings. This can be a huge limitation for folks trying to do RA when they’re not at their full-time job. With OA, anytime of the day or night that we feel like shopping, we can work at sourcing for FBA.
5. OA allows you to source at stores not located in your geographic area.
We don’t have a Kmart or a BJ’s Wholesale Club in the Fort Worth area where we live, but I can shop online at Kmart or BJ’s Wholesale Club if I choose. Same goes for many other retail stores across the U.S. With retail arbitrage, I’m limited by the number of stores within a certain radius from my home.
6. OA provides free shipping boxes for our Amazon FBA shipments.
When we receive an OA shipment from a retail store, we’re often able to ship the items out to the Amazon warehouse in the same box. We can save time and money by not having to make trips to Home Depot, Lowe’s, or Walmart to buy shipping boxes.
7. OA provides free dunnage for our Amazon FBA shipments.
Dunnage is the stuff that goes in the empty spaces of a shipping box you’re sending to the FBA warehouse. We can reuse the air pillows, paper, and even small cardboard boxes that come in OA shipments as dunnage in our Amazon shipments, saving time and money from having to get that dunnage elsewhere.
8. OA allows you to save money by shopping through cash back websites.
We typically shop through Rakuten (formerly Ebates) and Swagbucks to get cash back on our online purchases, but there are other sites that have similar programs. Your purchases cost the same amount by going through their link to shop, but you get a percentage back on every purchase. The percentage varies by store and can change from time to time, so do your due diligence to figure out how to get the best percentage. Another bonus with Rakuten and Swagbucks is that they both have a Google Chrome extension you can activate with one click after you’ve already started shopping, rather than having to navigate to the cash back website before you start filling up your online cart.
9. OA provides you with multiple ways to outsource.
Almost every part of doing online arbitrage can be outsourced. Need a deal list of leads to help you find profitable inventory? Check out FBA Insiders OA Deals. Need a tool that can turn 5 hours of manual product sourcing into 45 minutes? Check out Tactical Arbitrage. Need to outsource your prepping, packing, and shipping so that you never even see or touch your inventory? Outsource that to a prep center (here’s how to find one).
Now that we’ve seen the benefits of doing OA, we want you to know there are some cons to doing OA as well. As with most things in life and business, OA has its pros and cons, and while we want to equip you to enjoy the positives, we also want to show you how to correctly handle with the negatives. Don’t worry, we’ll cover the cons in an upcoming blog post (as well as how to overcome the cons and still find success).
I hope we’ve been able to show you some reasons why OA can be a great strategy to implement in your Amazon FBA business. I know it’s not for everyone — some people much prefer the thrill of the hunt in thrifting or RA, and I get that.
Are they any benefits to OA we left off this list? Let us know your thoughts in the comments!
FINALLY MASTER ONLINE ARBITRAGE
If you want to add or improve your existing online arbitrage (OA) sourcing skills, then check out our course: The Reseller’s Guide to Online Arbitrage: Grow Your Amazon FBA Business With Online Sourcing Profits.
The course is a combination video course (5+ hours of OA training) and a 100+ page ebook. The videos and book both share the exact same content (so you can pick the format you most like to learn from). The course also comes with six time-saving and money-making bonuses all at no additional charge!
Hello Stephen,
Thanks for sharing such a nice article.
I have been doing RA for last 6 months and my overall experience has been good in terms of sales.
However in current situation with Amazon and Brands becoming very aggressive in striking down RA, OA due to fear of counterfeit items on Amazon.
How safe it is to do OA in the current scenario ?
My personal experience has been pretty bad with RA, I got two warnings one for IP and other for Counterfeit item when in both cases the products were not fake.
I had to basically switch to WHOLESALE but now i am not getting the right products to sell.
Sold nothing in the last month, Amazon has kind of become a lottery for a lot of us.
You never know when they are going to shut you down and take all your inventory and money with it.
There is a tool that can help you avoid possible IP claims and it’s called IPalert. If you’re doing OA, it will alert you that a particular brand has, recently or in the past, filed an IPClaim against an Amazon seller. This tool will help you know what brands to avoid. Find out more here: https://www.fulltimefba.com/IPalert
Hello Stephen
Does Tactical arbitrage tells if product has IP claims Or not when we search t any kind of product through the tactical arbitrage or still do we have Get IPalert Tool!
You still need to get IPalert – https://www.fulltimefba.com/IPalert
Hello. What other tools should one use to run a scaleable OA business? Thanks for your time.
100% InventoryLab to organize everything and understand all your numbers (which is HUGE when it comes to succeeding with OA), plus these free & paid tools: https://www.fulltimefba.com/our-favorite-chrome-extensions-for-online-arbitrage/
Hi, Stephen.
It is known that Amazon does not always accept invoices from other sites. How do I avoid the issue of requesting an invoice?
Thanks
Actually, this is a matter that confuses a lot of people. While Amazon does not accept invoices from OA sites when you’re trying to seek approval to be ungated to sell a brand, Amazon DOES accept OA invoices if you’re ever accused of selling an inauthentic item and need to prove authenticity.
Hi Stephen,
Thank You for your great content. I have a few questions if you don’t mind.
I know that Rebecca does a lot of OA in shoes. I was wondering if she uses software like Tactical Arbitrage or uses any “Deal Lists” for her sourcing.
Also, do you or Rebecca OA clothing as well?
Thanks Much
P.S. You guys are great.
She does use the tool Tactical Arbitrage and uses deal lists too. We have only done clothing here and there.