Amazon Basics
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Retail and Online Arbitrage

Lesson 14 Chapter 2 Module 2

"Arbitrage" is an economic and financial term adopted by the eCommerce world. Basically, it involves buying something at a low price and selling it at a higher price to make profit from it. With Amazon, you can choose between retail arbitrage and online arbitrage.

The concept of the models are identical. The only difference is with retail arbitrage you physically go to retail stores to buy bargains whereas with online arbitrage you use the internet to find bargains.

At this point I'd like to point out something crucial: 'bargains' do not refer to 'cheap goods'. It means quality goods at low prices. There is a huge difference. Don't ever, ever think you can become successful by taking shortcuts and selling nonsense, low-quality goods. If that's what you want to do, you don't belong in the ecomMEMBER tribe.

Since retail and online arbitrage are basically the same, I will only discuss online arbitrage as that's one of the business models we teach in our Advanced Training Programme.

HOW ONLINE ARBITRAGE WORKS

Before you decide on a product to sell, you need to have an idea of what people want. There's no use in trying to convince people to buy something they don't want. Makes sense, right?

But how do you know what people want?

You go to Amazon and see what people are buying. Once you know what people want, you can start searching for good deals on the internet. There are hundreds of websites available to source high-quality products from.

Once you find a product, head over to Amazon again to see what price it sells for on Amazon to determine whether it will be a profitable product for you to sell. If it is profitable, you can go ahead and resell it on Amazon.

There are software programmes available to help you make informed decisions when sourcing for products. The biggest benefit of using software programmes is that they're accurate and save you a lot of time. When starting, it's easy to make bad (costly) decisions about which products to buy. With software programmes and expert guidance you can avoid bad decisions.

PROS AND CONS OF ONLINE ARBITRAGE


Pros

  • Easiest and most cost-effective way to start with your online business on Amazon.
  • Endless product sourcing opportunities.
  • It doesn't take too long to see positive results.
  • Perfect way to learn about Amazon while earning money,

Cons

  • Stiff competition. You need to know what you're doing to be competitive - that's where ecomMEMBER comes in!
  • Short- to medium-term solution. Online arbitrage is great to get started with, but it's very difficult to grow your business over the long-term with it.
  • The search for new products to sell never ends and it's difficult to build meaningful business relationships with the online stores you buy from.

We teach you everything you need to know about online arbitrage in the Advanced Training Programme.

Head over to the next lesson to learn about the Private Label business model.

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