This article will consider how much you should aim to earn back in profit when selling using retail arbitrage. A popular way of selling online is to aim to sell products at triple their initial value. Thus, if you were to buy a product at £4, you should aim to sell it for £12. This will earn you back 100% of your expenses and accounts for product fees as well as shipping & storage fees paid to Amazon. £4 is paid for the product, £4 is paid to Amazon and £12 is earned back for each product sold. Therefore, for each product sold you’ll make 100% return and suffer no losses.
To begin with, aiming for 100% return on investment (ROI) is a great way of getting started. It provides plenty of room for error and will minimise your losses when selling through Amazon. Overtime, though, you may want to consider selling products for a lower return value as products with 100% return may be harder to come by.
Getting Started
Before you even begin looking for products to sell you’ll need to set up an account with Amazon. You need to have everything lined up and in place before you dive in at the deep end.
You’ll have two options when setting up an Amazon FBA account:
- Personal account: this is a free-to-join Amazon account that’ll allow you to sell up to 40 items a month. You will need to pay for all standard Amazon fees though, such as postage and packaging.
- Professional account: this account will require a $39.99 monthly fee as well as shipping fees, however you’ll be able to sell more than 40 items a month.
To begin with, you’re much better off going with a personal account as you likely won’t be exceeding 40 items in your first month anyway. Sign up through Amazon Seller Central to start. Then, add your credit/debit card to your account to control where your money will go.
Sourcing Products
The most simple & effective way to source is online. That way, you won’t need to travel anywhere to search for products and you can operate even when stores are closed.
The first step is to find a product on Amazon and search around for similar products at lower prices. You can also look at big-name stores and check out their clearance sales to find out products that are being sold-off for lower prices.
Once you’ve found a product, order it to your address and inspect it for damage. This step is key as sending off damaged products will generate poor reviews that’ll affect your sales.
When it’s been checked, label it up using Amazon’s online barcodes and ensure that the old barcode has been replaced with your FBA one.
