Business

WHAT IS ONLINE ARBITRAGE? All You Need to Know

Introduction 

 

What is online arbitrage?

 

To understand what online arbitrage is, you must first know “Arbitrage.” It is a sort of trading strategy where an individual takes advantage of the price difference for the same goods at the market. In this case, you purchase items for a lower cost at a market and sell the same thing at another market. You can generate a risk-free profit by taking advantage of the market inefficiencies. Read more.

How Does It Works?

All you need to do is quite simple if you follow the detailed steps given below:

  • Research – This is where you are to identify a product niche you would be focusing on. Look out for retail stores that would offer you some discount on your purchase of some certain product.
  • Sourcing – Make use of available tools online using platforms like Walmart, and Amazon to find such products.
  • Price comparison – Make a strict comparison on price and also takeinto account the shipping fees. This is to ensure you get a marginal profit after the necessary deductions are made.
  • Listing – Purchase the selected product from the source platform and await the delivery.
  • Selling – When it gets to this step, you move to Amazon FBA to process the sale.

For initiatives such as online arbitrage that are quite beneficial. There are strengths and weaknesses which we would consider here.

Advantages of Online Arbitrage

  1. Flexibility – it allows you to manage your online arbitrage businesses whenever you may be around the world as long as you have a reliable internet connection to serve you.
  2. Access to several products – As much as you can handle, it allows you to source products from various platforms online to suit the request or needs of your customers.
  3. Low-cost investment – If you are hoping to start with low capital, it permits you pending the time you can scale up
  4. Scalability – As your business advances and continues to grow, you can scale up to profitable products you’ve come to understand.

Disadvantages of Online Arbitrage

 

  1. Unstable prices – There is the possibility of the product cost to unpredictably fluctuate over a short period. The instability can be triggered by the supply or demand dynamics or another extrinsic event.
  2. Stressful and time-consuming – To get the best offer, most of the time it takes time. You have to analyze and take a careful look at the market prices. Check out several stores and compare them one another before making your choice.
  3. Competition – This can affect many things one of which is your profit. Since numerous individuals looking for opportunity by shopping from the same place as you are.
  4. Fees – If all of your expenses or transaction isn’t properly accounted for, your profit can be greatly affected by the outcome.

Tools Needed to Get Started

  • Amazon FBA revenue calculator is needed which Is provided by the FBA service to enable you to estimate the potential profitability. Other functions it covers is selling price calculation, competitive analysis of their products, etc.
  • Jungle Scout sales estimator researches product and pricing strategies which evaluate the demand before a decision is arrived at to source and then sell.
  • BrickSeek gives detailed information about inventory tracking, reselling opportunities, deal hunting to get discounts, planning shopping trips and more to know whether a store has a needed product.

Here Are Some Products You Can Resell on Amazon

Amazon is often used as a primary platform if you have to resell your products because of its familiarity, vast customer base, prime membership, rating and reviews. Hence, some of the products you can resell include: electronics, sports and outdoors, office supplies, beauty and personal care, toys and games, home and kitchen, clothing, shoes and jewellery, etc.

Sources of Products to Resell

You can purchase your product from any of the following retail stores:

Walmart

ebay

Best buy

Home Depot

Walgreens,

Disney Store

Ulta

DSW

Big lots

Rite Aid

Target

CVS

Dick’s Sporting Goods, etc.

Conclusion

Online Arbitrage has to do with getting products at retail stores for a lower price with the mind to resell on Amazon at an amount that sprang higher you purchased it in a bid to earn profit from it. In addition to that, while considering the benefits you get when you venture into Online Arbitrage, you must also note the disadvantages that are attached to it.

Nevertheless, you must bear in mind that the success of Online Arbitrage simply depends on factors such as the pricing of such product, the availability in the marketplace, the shipping cost and demand. To embark on this journey, this means that you must make yourself available for research and evaluate the potential opportunity thoroughly.

 

 

 

 

 

About the author

Zainab Olatunji

Leave a Comment