Online Arbitrage: Source Anywhere, Sell Anywhere, Live Anywhere
All Online Arbitrage is buying products from online retailers and selling it for a profit on Amazon.
Honestly, all the business aspects of Online Arbitrage (OA) are pretty much the same as Retail Arbitrage (RA). You buy products, ship them to Amazon FBA, they sell and you make a profit.
And that's where the similarities end.
What appealed to us about Online Arbitrage, is the fact that we could continue to buy profitable products to sell on Amazon while having the freedom to live anywhere we want in the world.
Although we started doing Online Arbitrage in the United States, and had the products shipped directly to us, we quickly automated and scaled up our business.
Now, we've sourced products from all over the United States, Quebec, Canada and Costa Rica, without touching a single product!
You'll find out how we continue to make Online Arbitrage an integral part of our Amazon sourcing model, even while we move all around the world!
Our Start With Online Arbitrage
After quitting my job in July of 2015, Nessa kicked off our first go at Online Arbitrage (OA).
See, at that point, we had only sourced via Retail Arbitrage (RA), but we knew that our goal was to have a location independent business. And one of the beauties of Online Arbitrage is that you can do it from anywhere in the world, if you have the right tools and resources.
Like I said, there are similarities between RA and OA, but no doubt the way you source products is completely different.
The hardest part of Online Arbitrage is finding profitable products, and that's why so many people give up so soon.
To make things easier, Nessa began with buying a list from Duncan Macpherson, founder of Smart FBA Income.
We started getting a list of 10 viable products per day, 5 days a week. This list really helped us to identify what does and does not make a good Online Arbitrage product.
And honestly, we got our hands on some profitable products that sold well.
What's more, is we discovered a lot of niche websites that we had never heard of or would never had thought to look at.
How We Transitioned
After about two months using the list, we started to find our own sources of profitable products and decided to move away from the list and focus on products that more specifically met our criteria.
This meant, lower competition, and higher ROI.
While that sounds great, these products had unproven sales history (i.e. - poor to no Best Seller Rank) and we took risks either updating the product pages or creating new listings for products that weren't yet offered on Amazon.
By taking this approach, we were able to find 4 products that were replenish-able and highly profitable within 3 months of doing Online Arbitrage. (That in addition to all the quick hit deals that would come and go.)
Now, we have amassed well over 10 products that comprise more than 50% of our sales and can be purchased whenever we are in need of more stock.
We've continued to take this approach of bringing new products to market and searching for LOW COMPETITION products, avoiding the cat fight that can happen with the typical slew of already highly in-demand products.
While you'll end up figuring out a rhythm eventually, Online Arbitrage success does not happen over night and is not your "get rich quick scheme."
If you think you can just hop on a few websites here and there for a few hours and hit the jackpot, you best stop now and save the complaining!
It's tough, but if you have perseverance you'll come out the other side of the initial rough patches with a killer biz on your hands.
Sorry, rabbit holes isn't a website. At least not one that I know of.
This refers to getting the juices flowing with these kinds of websites and finding trends. You might find that a certain coffee brand or baby toy is selling on Amazon for what seems to be WAY over the retail price.
Track these trends and look for sites that are selling these products, hopefully for much less than they are selling for on Amazon.
By looking on the first two sites I mentioned, you'll get exposure to new sites you never heard of, and it will make you more creative.
After all, creativity is one of the biggest factors in being successful with OA.
Tools To Identify Viable Products
Now that you've found some products worth consideration, you'll want some tools to help in your decision making process.
And there is without a doubt WAY more tools for vetting Online Arbitrage products than Retail Arbitrage products.
I've already gone ahead and written in depth on the top tools that we use in our business.
While you can see for yourself, there are lots of Online Arbitrage tools. But, if I had to use 3 they would be:
Tells you how much profit you'll make after Amazon takes their cut.
Provides detailed graphs on sales, pricing and competition history - all shown directly on the Amazon Product Page.
Type in the Online Retailer you're shopping at and it will kick back the best cash back, miles rewards and coupons. OK. This typically doesn't save us money, but it earns us a TON OF MILES. We are constant travelers, without a "real" home, so knowing where the most miles can be earned is essential to our Lifestyle Business.
Preventing Canceled Orders
Yes, I said that the beauty of OA is the fact that you can do it anywhere in the world. That said, online retailers are becoming increasingly more difficult to work with, as they are trying to cut us Amazon Sellers out from buying all the sexy deals.
Not to mention, to prevent fraudulent transactions, the security software on these sites will automatically cancel your orders if you are using a billing address in California but your IP address shows that you are in Thailand.
Don't fret, because there are workarounds for these issues.
Use A VPN!
A VPN is a Virtual Private Network. Basically, it is a network that you log into which not only gives you an added level of security when working online but it can give you an IP address anywhere in the world. That means if you are in fact in Thailand and are buying a product in the United States, you can log into the VPN on a server in the USA and trick those systems so your orders don't get blocked. Now, this isn't a fool-proof method, but it's the best one we've got.
Here are the 3 VPNs we've used and would recommend:
It's free and is a Google Chrome add on that you can activate to get you a USA IP address.
Free up to a certain amount of data. This is more secure than Hola and is pretty easy to use.
This is a paid VPN but it's the most secure VPN we've found and you can actually chose specific areas, like Los Angeles or New York, instead of just being put in some random place in the country. That said, it takes some more tech savvy than the previously mentioned VPNs.
Using FBA Fulfillment Companies
Now that you've been able to buy products, vet them, and work around one of the biggest issues, it's time for the grunt work.
Since we don't have the means to prep and ship our products to Amazon FBA, we have outsourced this process by sending our products to Amazon FBA Fulfillment Companies.
This is an absolute game changer for our business!
For a small fee, typically $1.50/unit, we ship all of our Online Arbitrage products to an FBA Fulfillment Company and they inspect the product, label it and ship it to Amazon FBA.
We have a few that we use, but our favorite for Online Arbitrage is FBA Prep and Ship.
They are really good people, easy to work with and they are in Oregon - a Sales Tax Free State! That means when we use their shipping address, we don't pay sales tax!
Here's the full list of FBA Fulfillment Companies that we've identified.
I'd suggest you get set up with one ASAP. It's freed up SOOO much time, allowing us to spend more time buying profitable products and giving us the freedom to live anywhere in the world!