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If you type in the search bar the phrase “Online arbitrage on Amazon”, then
get dozens of articles on how to "make money" without much investment and effort using a "proven scheme". Doesn't sound too plausible, does it?
Let's figure out what the "online arbitrage" sales model actually is, how on page seo service realistic it is to make money with it, and how soon Amazon will ban you.
What is Amazon Online Arbitrage
In the classic version, this model means a banal resale.
For example: you found a portable speaker that sells well on Amazon and costs $39.99. Then your task is to use price aggregators (or other methods) to find this product cheaper.
Let's say some store has a sale and you managed to buy 30-50 units of this equipment for $19.99. You place your speakers in a ready-made listing (join the ad that you initially found), that is, you don't even spend money on advertising. Profit!
This is roughly how various articles on the Internet describe arbitrage on Amazon. The profit in this case will be 50 x ($39.99 – $19.99) = $1,000 in 5-7 days! Of course, it is worth considering various overhead costs and system commissions... but no one forbids you from selling a couple more products at the same time with a markup of up to 200%.
And here we come across the first pitfall: Amazon officially prohibits reselling products from other marketplaces.
How will the system know about this? Sooner or later, you, as a seller, will be asked for documents for the products - invoices (which you, naturally, will not be able to provide). This can happen in a day, or in a year, but it will definitely happen. And your account will be banned (often without the possibility of restoring it and returning the funds).
Important clarification. This scheme assumes that you buy and sell goods in the USA. If you make purchases from suppliers from China, send them to the warehouses of the trading platform and have all the documentation on hand, then this is no longer online arbitrage, but an absolutely legal business under the Fulfillment by Amazon model.
Is it worth using the "online arbitrage" sales model on Amazon
In our opinion, this is more of a way to make some quick money with huge risks than doing business. Like everything that is called a "make-money scheme", this method has short-term prospects and not the most pleasant consequences.
For example, you can get into trouble with a bank, which will probably pay attention to dozens of suspicious transactions.
Nevertheless, the Internet notes a lot of advantages of doing this way of earning money on online marketplaces:
quick and easy start (can be up and running in a few weeks);
minimal investment (from $500 per product);
flexible product sourcing options (you are not creating a brand, so you are not limited by the concept and can sell frying pans/rattles/hair ties at the same time).
Sometimes online arbitrage fans warn that you will have to have quite a few accounts to stay afloat when they start blocking them. And they also “honestly admit” other disadvantages:
due to high competition it is quite difficult to sell TOP products;
this is not a predictable scheme, since prices on markets and marketplaces are constantly dynamic;
We need to constantly increase turnover and look for new product positions.
What are the alternatives?
We have already written a lot about popular business models on Amazon and our opinion remains unchanged: the best option for building a successful and stable project is working on Private Label.
However, we understand that this is also the most expensive model. Therefore, beginners could be advised to start with wholesale (i.e. purchasing from product manufacturers). In this case, your activities will not violate the rules of the marketplace.
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