What Is Amazon FBA Arbitrage?
Arbitrage, in its simplest form, is the act of buying a product at a lower price and reselling it at a higher price to make a profit. Amazon FBA (Fulfillment by Amazon) arbitrage follows that same principle but combines it with Amazon’s powerful logistics system to automate most of the process.
Here’s how it works:
- You buy products from retailers or online stores at discounted or clearance prices.
- You send those products to Amazon’s fulfillment centers.
- Amazon stores, packs, ships, and handles customer service for your items.
You earn the difference between your purchase price and your selling price minus fees. The key advantage? Amazon does nearly all the heavy lifting.
Why Amazon FBA Arbitrage Works
Many beginners assume arbitrage is “too good to be true,” but this model is surprisingly sustainable. Here’s why:
1. Price differences exist everywhere.
Retailers constantly update pricing. What is on clearance at one store may be in high demand elsewhere, including Amazon.
2. Amazon buyers pay for convenience.
Thousands of shoppers prefer fast, reliable Prime delivery and are willing to pay higher prices for it.
3. Not all sellers have access to the same inventory.
Your local store’s clearance aisle might contain items that sell for double or triple the price on Amazon.
4. Brands and stores overproduce inventory.
This creates opportunities for arbitrage sellers to scoop up products at discounted rates, especially after seasonal shifts.
Arbitrage thrives on inefficiencies, and those exist everywhere.
Types of Amazon Arbitrage
Retail Arbitrage (RA)
This involves visiting physical stores, Walmart, Target, Walgreens, TJ Maxx, and scanning items with the Amazon Seller App to find profitable deals.
Online Arbitrage (OA)
You buy clearance, sale, or discounted items online and ship them directly to your home or prep center before sending them to Amazon.
Both strategies work, but beginners often start with retail arbitrage because it’s easier to learn by physically scanning items.
What You Need to Get Started
Getting started with Amazon FBA arbitrage is simple. Here are the essentials:
✔ 1. An Amazon Seller Account
- You can choose Individual or Professional.
- Individual: No monthly fee, but a $0.99 fee per sale
- Professional: $39.99 per month, no per-item fee, and required for certain categories
- Most sellers switch to Professional once they’re serious.
✔ 2. The Amazon Seller App (Free)
- This app lets you:
- Scan barcodes
- Check selling restrictions
- View fees and profit margins
✔ 3. A Few Basic Supplies
- A printer and shipping labels
- Poly bags and packing tape
- A scale for weighing shipments
- That’s it. No fancy equipment required.
- How to Find Profitable Products
Understanding how to identify winning products is the core skill of arbitrage. When scanning items, look for:
1. Profit Margin
Aim for at least 30% ROI (Return on Investment) as a beginner.
2. Sales Rank (BSR)
Lower BSR = faster sales.
Generally, aim for items in the top 100,000 of their category.
3. Keepa Charts (Optional but Recommended)
Keepa is a tool that shows price history and sales trends.
It helps you avoid buying items that only appear profitable because of temporary price spikes.
4. Competition Level
Avoid listings with too many sellers unless the item sells very quickly.
Preparing and Shipping Products to Amazon
After sourcing your inventory, you’ll create a shipment inside your Seller Central account. The steps look like this:
- Add your products to your Amazon inventory.
- Label each item (unless using sticker less commingled inventory).
- Pack your items into boxes.
- Ship your boxes to Amazon using UPS partnered shipping rates.
- Once your products are received, they are available for sale, and your work is done.
How You Get Paid
Amazon pays sellers every two weeks, depositing your profit directly into your bank account. Your earnings reflect:
- Product price
- Minus your cost of goods
- Minus Amazon FBA fees
- Minus referral fees
Your goal is to find items where the remaining profit margin is high enough to grow your business sustainably.
Common Mistakes Beginners Should Avoid
1. Ignoring fees
Profit often disappears when you fail to account for shipping and FBA costs.
2. Buying items that don’t sell quickly
Slow-moving inventory ties up your capital and reduces your ability to scale.
3. Not checking for selling restrictions
Some brands require approval; beginners often overlook this.
4. Overbuying too soon
Start small. Test products before buying large quantities.
Is Amazon FBA Arbitrage Worth It?
For many sellers, yes. It offers:
- Low startup costs
- Fast learning curve
- Immediate cash flow
- Scalability
- High-income potential with consistent work
The biggest advantage is that you don’t need to create products, build a website, or handle shipping. You simply find deals and let Amazon fulfill the orders.
Final Thoughts
Amazon FBA arbitrage is one of the most beginner-friendly business models available today. With a smartphone and a small upfront investment, you can start sourcing profitable products and building a consistent income stream. The more you scan, learn, and test, the better your results become.
Success comes down to three things: consistency, smart sourcing, and patience.
If you master these fundamentals, arbitrage can become a powerful opportunity to earn, grow, and scale.
