Can you still make money on Amazon in 2023 from Retail Arbitrage or Online Arbitrage? Or is Amazon FBA dead?
Before we answer let’s explain the difference between Retail Arbitrage and Online Arbitrage.
Retail Arbitrage (RA) is when you buy products from physical stores, like Walmart or Costco, and then sell them for a profit on Amazon.
Online Arbitrage (OA) is when you buy products from online retailers to sell on Amazon for a profit.
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We use SourceMogul to help find winning products to sell on Amazon. SourceMogul automates your Amazon sourcing for wholesale, retail and online deals.
Over the last few years, Amazon has moved towards wanting fewer but higher quality sellers on its platform. This ensures Amazon customers are getting the best overall shopping experience.
To achieve this they have introduced more rules and restrictions for new Amazon sellers.
There are also three main trends that are making retail arbitrage more difficult.
The Three Trends Making Amazon Retail Arbitrage Harder
1. Too Many Sellers on Amazon
More and more people are selling on the Amazon marketplace. Amazon FBA started to become very popular about 7 years ago.
People looking to make money online increasingly found ‘Amazon FBA’ at the top of the list when searching for business ideas. As a result, there has been a huge influx of new sellers making the marketplace more competitive. This trend shows no sign of slowing down.
There is also an influx of Chinese sellers and people resident in other countries using FBA to sell in the US, UK or European Amazon markets. Often their cost of living is less than people in the USA or the UK so they can undercut competitors. This makes them hard to compete with.
2. Amazon Brand & Category Gating and Restrictions
More brands and categories are being gated or restricted by Amazon. This means there are fewer products you can safely buy and sell on the Amazon platform without being suspended. This then results in more competition over the products that are safe to sell.
Amazon is also making the application process stricter and will often require written permission from the brand owners for you to sell their products.
We have a full list of brands to avoid here: Current list of Amazon Gated and Restricted Brands
We also have advice on how to get ungated here: How to get Ungated in Amazon restricted categories
3. Retail Stores Refusing to Sell in Bulk
Due to the huge increase in people doing Amazon online and retail arbitrage, the retailers themselves are starting to see this as a problem. Some retail stores are now stopping people buying toys and other products in bulk.
This makes it harder to get enough stock of the best deals. This, in turn, makes it difficult to scale your business and make a full-time income. Over the next 12 months, restrictions are likely to be rolled out to more stores and retailers.
Should I Still Start Retail Arbitrage on Amazon?
So should you still sell on Amazon FBA with Online or Retail Arbitrage? It is getting more competitive but there are still huge opportunities if you do it right. Remember, there are thousands of sellers making a great income from Amazon arbitrage.
You need to be very careful to avoid risky products and we have a full list here. You will also have to be smarter when buying stock, possibly splitting your orders between different stores or buying only a limited quantity per week.
Traditional Amazon arbitrage may gradually become more difficult as Amazon tightens the rules. However, we still recommend either retail or online arbitrage as a great way to get your Amazon business launched and gain experience.
Also, remember the last few months before Christmas can be a bonanza for Amazon Retail Arbitrage. Amazon sellers can make a large proportion of their yearly profits in this Q4 period.
You should plan ahead and ungate as many categories as possible and make sure you have sufficient funds in place ready for Q4. Always check products for restrictions before buying in bulk.
Steps to Building a Healthy Online Business?
Selling online is certainly not dead and is not going to die anytime soon with online retail growing massively each year. Amazon is at the forefront of this growth so Amazon FBA is definitely the best place to start.
There is still a huge amount of potential and many great opportunities for those sellers who learn and adapt.
Take the Opportunity to Diversify Your E-Commerce Business
We recommend diversifying and building other income streams and strategies throughout the year so you can survive even if you do run into problems.
Do not be deterred by brand gating on Amazon as it can be turned into an opportunity. If you make the effort to get the right side of the gate you should be protected from account suspension. There will also be fewer sellers to compete with therefore healthier profits.
If you can also get ungated in new categories then there is an even greater opportunity and you can probably build a solid longer-term business.
Here is a guide to setting up wholesale and distribution accounts to help get you ungated: Finding Wholesale Suppliers and Distributors for Amazon FBA
Online Arbitrage Tools and Sourcing Software
If you decide to try Online Arbitrage it is definitely worth investing in arbitrage tools and software.
It is difficult to source online arbitrage deals manually and can be incredibly time-consuming. Most successful Amazon sellers will use sourcing software to automatically find online arbitrage deals.
We use Tactical Arbitrage which will scan the best websites to highlight deals that will make you a profit. Over 1000 online stores can be scanned in 7 different countries – take a look at the full list of stores here – Tactical Arbitrage Stores.
The Best Free Retail Arbitrage Apps and Tools
Keepa – Amazon Price Tracker
Keepa is an essential app for Amazon sellers doing Retail or Online arbitrage. Keepa is a powerful and free Amazon product research tool which will give you all the data you need to make good buying decisions.
The Amazon Seller app is free to download and made by Amazon themselves. You can analyze sales, fulfill orders, find products to sell, manage offers, inventory and returns, and deal with customer queries. You will need an Amazon business account to use it.
The Best Amazon Retail Arbitrage Course
If you want to get started with retail arbitrage but it all seems overwhelming you can save time and invest in a course. We recommend Proven Amazon Course.
Proven Amazon Courses was created by Jim Cockrum and has been established for over 10 years. They teach you all about arbitrage, private label, and dropshipping strategies.
So Is Retail Arbitrage Worth It?
10 years ago we made most of our profits from selling on eBay with four eBay shops running at the same time. Then the larger companies started selling on eBay too and it became too competitive.
We then concentrated on Amazon and other platforms and quickly replaced that income stream. We adapted to survive and have had to do this many times over the last 12 years.
If you are serious about making a living selling online you will quickly realise that things are constantly changing in 12 to 18-month cycles and you have to remain flexible and positive.
If you have the core skills and are willing to take risks and be open-minded you will always find a way to make money online.
We recommend new sellers join our friendly and supportive Facebook Group Amazon Selling for Beginners & Pros. Experts and other newbies can help you get started successfully and make sure you avoid any pitfalls.
Let me know whether you think Amazon FBA is still a good option in the comments below.
Good Luck & Happy Selling
List of gated and restricted brands to avoid: Current list of Amazon Gated and Restricted Brands.
A guide on getting set up with wholesalers: Online sourcing: Buying from wholesalers and distributors.
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