Amazon Online Arbitrage: A Comprehensive Guide

Amazon has revolutionized e-commerce, opening doors for entrepreneurs and individuals to build thriving businesses. Among the various methods of making money on Amazon, online arbitrage (OA) stands out for its accessibility, low overhead, and scalability. Whether you’re a stay-at-home parent looking for a side hustle or an e-commerce veteran seeking to diversify your revenue streams, Amazon online arbitrage offers a compelling opportunity.

In this guide, we’ll walk you through everything you need to know about online arbitrage—from what it is and how it works to tools, profitability, and key strategies to succeed.

What is Amazon Online Arbitrage?

Online arbitrage is the practice of buying products at a lower price from one online retailer or marketplace and reselling them at a higher price on another platform—Amazon, in this case.

The term “arbitrage” comes from finance and economics, where traders exploit price differences between markets. In e-commerce, that means finding a product on sites like Walmart, Target, or eBay and selling it on Amazon for a profit.

Why Choose Online Arbitrage?

There are several reasons online arbitrage is a popular method of selling on Amazon:

1. Low Startup Costs

You don’t need to manufacture products or invest in inventory upfront. You can start small, buying just a few units at a time.

2. Location Independence

All you need is a computer, internet access, and access to marketplaces. You can run your business from anywhere.

3. No Need to Create Listings

With OA, you typically sell products that already exist on Amazon, so you don’t need to create new product listings.

4. Scalability

Once you develop a system for finding and purchasing profitable products, you can scale up by increasing your investment or outsourcing product sourcing.

How Does Online Arbitrage Work on Amazon?

The process generally involves these steps:

1. Product Research

You start by identifying products on retail websites that are significantly cheaper than they are on Amazon.

2. Analyze Profitability

Using tools (more on that below), you determine whether a product is profitable after Amazon fees, shipping, and taxes.

3. Purchase and Prep

Buy the products from the retail site. Depending on your fulfillment method, you might send the items to Amazon FBA (Fulfilled by Amazon) or fulfill orders yourself.

4. Listing on Amazon

List the items under the existing product listings. You don’t need to create a new listing unless you’re selling a unique product.

5. Fulfillment

If you’re using Amazon FBA, Amazon handles packing, shipping, and customer service. If you’re using FBM (Fulfilled by Merchant), you handle shipping.

Tools of the Trade

Online arbitrage is data-driven. The more accurate your information, the better decisions you can make. Here are essential tools:

1. Keepa

Tracks historical price data and sales rank trends for Amazon products. It helps you determine whether a product sells consistently.

2. SellerAmp (SAS)

This all-in-one tool analyzes products for ROI, profit margins, and sales velocity. It also shows competition and restrictions.

3. Tactical Arbitrage

A powerful software that automates the product research process by scanning dozens of online retailers to find profitable deals.

4. RevSeller

A Chrome extension that shows profitability, ROI, and restriction information right on Amazon product pages.

5. Jungle Scout / Helium 10

These are more popular with private label sellers, but they can also be helpful in identifying market trends and product demand.

Understanding Amazon Fees

To determine whether a product is worth reselling, you must understand Amazon’s fees:

  • Referral Fee: A percentage of the selling price (typically 8–15%).

  • FBA Fee: Charged for fulfillment, storage, and customer service if you use Amazon FBA.

  • Closing Fee: Applies to certain categories like media.

  • Storage Fees: Monthly fees for inventory stored at Amazon’s fulfillment centers.

Always calculate these fees before making a purchase.

Profitability Metrics

Here are key metrics to consider when analyzing a potential online arbitrage deal:

  • ROI (Return on Investment): A good rule of thumb is aiming for 30%+ ROI, though some sellers accept lower for higher volume.

  • Net Profit: Your absolute earnings after all costs.

  • Sales Rank (BSR): A lower number means the item sells faster. Use Keepa to analyze how often an item sells.

  • Competition: Too many sellers drive the price down. Check how many sellers are on the listing and if Amazon is one of them.

 

sourcing Strategies

1. Manual Sourcing

Visit retail websites, sort by clearance or sale items, and compare prices with Amazon.

2. Reverse Sourcing

Find profitable products on Amazon first, then track them back to where they were originally purchased.

3. Using Lists

You can buy or subscribe to leads lists where others do the sourcing for you. This is helpful for beginners.

4. Automated Tools

Use Tactical Arbitrage or other software to scan sites automatically and identify opportunities.

Managing Inventory

Inventory management is key to maintaining cash flow and avoiding overstocking. Tools like Inventory Lab and Sellerboard can help you track:

  • Profits

  • Inventory levels

  • Restocking alerts

  • Sales performance

Risks and Challenges

1. IP Complaints & Brand Restrictions

Some brands don’t allow resellers. Getting an IP complaint can jeopardize your account. Use tools that alert you to restricted brands.

2. Price Tanking

More sellers can lead to lower prices. Use Keepa to avoid items that spike in price only temporarily.

3. Returns & Defects

Expect a small percentage of returns, especially in categories like electronics or apparel.

4. Account Suspension

Violating Amazon’s policies can result in suspension. Be meticulous about following Amazon’s guidelines.

How to Scale Your Amazon OA Business

Once you’ve mastered the basics, consider these steps to scale:

  • Outsource Sourcing: Hire virtual assistants or use paid lead lists.

  • Use a Prep Center: If you’re buying in bulk, a prep center can handle packaging and shipping to Amazon.

  • Reinvest Profits: Reinvest earnings to expand inventory and reach.

  • Track KPIs: Use software like Sellerboard or QuickBooks to analyze profitability and spending.

Is Amazon Online Arbitrage Still Worth It in 2025?

Absolutely—if done strategically. The competition is fierce, but sellers who research well, use the right tools, and follow Amazon’s rules can build consistent income streams. New brands, seasonal opportunities, and even inflation create ongoing pricing gaps that can be exploited.

Final Thoughts

Amazon online arbitrage is not a get-rich-quick scheme, but it is a real business model with significant potential. It allows individuals to start with minimal investment, scale intelligently, and generate income by leveraging retail market inefficiencies. With dedication, data-driven strategies, and proper risk management, online arbitrage can serve as a foundation for long-term success in the e-commerce world.

Amazon Seller Pricing Strategies

Successful Amazon sellers use strategic pricing to stay competitive, maximize profits, and maintain consistent sales. The most common strategy is competitive pricing, where sellers match or slightly undercut the Buy Box price. Winning the Buy Box—Amazon’s default seller for a product—can significantly boost sales.

Another approach is value-based pricing, where sellers price higher based on perceived value, brand strength, or superior customer service. This is common with private label or exclusive products.

Dynamic pricing is also widely used, with tools that automatically adjust prices based on competitor activity, stock levels, and demand. This helps sellers react quickly to market changes without manual input.

Some sellers use penetration pricing, setting low prices initially to build sales history and reviews, then increasing prices gradually. Conversely, premium pricing positions products as high-quality or luxury, often with enhanced packaging or branding.

Lastly, loss leader pricing involves selling some items at break-even or a loss to attract customers who may buy higher-margin products in the same store.

Choosing the right pricing strategy depends on your business goals, competition, and product type. Regular monitoring and testing are essential to find the most profitable and sustainable approach.