Is Amazon Retail Arbitrage Worth It? Or is Arbitrage Dead?
- we1677
- Jan 10
- 7 min read
Can You Still Profit from Amazon Retail Arbitrage in 2025? Or Is It a Thing of the Past?
🤔 Quick Take: Is Amazon Retail Arbitrage Still Viable?"While Amazon Retail Arbitrage has become more challenging over the years, it can still be a great starting point for new sellers to learn the ropes of online selling."
In this guide, we’ll explore what retail arbitrage is, why it’s becoming tougher, common mistakes to avoid, strategies for building a successful online business, and the tools that can make your journey easier.
Let’s get started!
What Is Retail Arbitrage? 🤔
Retail arbitrage involves buying products at discounted prices from retail stores—such as clearance or sale sections—and reselling them on platforms like Amazon or eBay for a profit.
Sellers capitalize on price differences between physical stores (like Walmart, Target, or thrift stores) and online marketplaces. For instance, a toy purchased for $10 at a local store might be listed for $30 on Amazon, yielding a profit after deducting fees and shipping costs.
Retail vs. Online Arbitrage: What’s the Difference?
There are two main types of arbitrage sellers use on Amazon:
🏪 Retail Arbitrage (RA): This involves purchasing discounted items from physical stores (e.g., Walmart or Costco) and reselling them online for a profit.
👩💻 Online Arbitrage (OA): Instead of visiting stores, you buy discounted products from online retailers and list them on Amazon for resale.
How Retail Arbitrage Works
Here’s a typical process for retail arbitrage:
Purchase discounted or clearance items from retail or online stores.
Use apps in-store to scan products and check profitability.
For online shopping, utilize tools like Sourcemogul or BuyBotPro to find deals.
List and resell the items on Amazon or eBay at higher prices.
Profit from the price difference after deducting costs.
Pros and Cons of Retail Arbitrage
✔️ Pros:
Requires low upfront investment.
Easy to find products.
Flexible working hours.
Opportunity to sell popular, well-known brands.
❌ Cons:
High competition.
Inconsistent inventory availability.
Time-consuming, especially when visiting stores.
Potential conflicts with brand owners over resale rights.
Retail arbitrage can be a profitable side hustle or even a full-time business if you’re willing to dedicate time and effort to sourcing profitable products. Many sellers also use it as a starting point before transitioning to more scalable models like wholesale or private label.
Why Is Retail Arbitrage Becoming Harder?
In recent years, Amazon has been focusing on fewer but higher-quality sellers to improve the customer experience. This has resulted in stricter rules and increased competition.
Here are three major challenges making retail arbitrage more difficult:
1. Increased Competition
The popularity of Amazon FBA over the past decade has led to a surge in new sellers entering the marketplace. Additionally, a significant influx of Chinese sellers has further intensified competition, as they often have lower costs and can undercut prices, making it harder for other sellers to compete.
2. Amazon Brand Gating & Restrictions
Amazon has been increasing the number of gated brands and restricted categories. Selling these products without authorization can result in account suspension. Additionally, Amazon now often requires written permission from brand owners to sell their items.
📝 Related Resources:
Current list of Amazon Gated and Restricted Brands.
Guide on how to get Ungated in restricted categories.
3. Retail Stores Limiting Bulk Purchases
Retailers are beginning to notice the rise in arbitrage sellers and are implementing policies to restrict bulk purchases of certain items, like toys. This makes it harder to secure enough stock for scaling an Amazon arbitrage business. These restrictions are expected to expand further across more stores in the coming months.
Conclusion
While retail arbitrage remains a viable entry point for learning the ropes of selling on Amazon, it has become more challenging due to increased competition, tighter restrictions, and bulk-buying limitations. Success now requires smart sourcing, staying informed about Amazon policies, and finding ways to adapt to these changes.
How Much Can You Earn with Amazon Retail Arbitrage?
Is retail arbitrage still a viable way to make money on Amazon FBA?
While retail arbitrage can still be profitable, it comes with challenges. Here’s a quick breakdown:
70% of sellers make less than $5,000 per month, with 31% earning under $500 per month.
62% of sellers take over six months to turn a profit.
Despite the increasing competition, there’s still potential to earn a full-time income if you approach it strategically.
To succeed, you’ll need to:
Avoid risky products (check out a complete list here).
Be more strategic about sourcing, such as splitting purchases across multiple stores or limiting stock quantities per week.
Is Amazon Retail Arbitrage Still Worth It?
As Amazon introduces stricter rules and competition intensifies, traditional retail arbitrage may become increasingly difficult. However, both retail and online arbitrage remain excellent entry points for launching your Amazon business.
Retail arbitrage can serve as a stepping stone to more sustainable models like Wholesale or Private Label once you’ve gained experience.
Pro Tip: The Q4 holiday season is a goldmine for retail arbitrage sellers. Many Amazon sellers generate the bulk of their annual profits during this time.
To prepare for Q4:
Get ungated in as many categories as possible.
Secure sufficient funds to stock up for the busy season.
Use tools like BuyBotPro to check product restrictions before buying in bulk.
Building a Sustainable Online Business
The eCommerce industry continues to grow each year, with Amazon leading the charge. While retail arbitrage remains a great starting point, sellers should look beyond it to build a diversified and robust online business.
Key Steps to Success:
Diversify Your Income Streams: Don’t rely solely on retail arbitrage; consider wholesale or private label to create additional revenue channels.
Leverage Brand Gating: Although restrictions can be a hurdle, getting ungated in gated categories reduces competition and can lead to higher profits.
Expand Into New Categories: Gaining approval to sell in more categories opens up additional opportunities.
📝 Resource: Check out our guide to setting up wholesale and distribution accounts to help with ungating: Finding Wholesale Suppliers and Distributors for Amazon FBA.
Top Tools for Amazon Arbitrage
To maximize success with online arbitrage, investing in reliable tools is essential. Manually searching for deals can be time-consuming and inefficient, but sourcing software can streamline the process.
Recommended Tool: Sourcemogul
Scans over 80 million products across major online retailers to identify profitable opportunities.
Includes a Chrome Extension for live site searches.
Saves you hours of manual research.
👉 Explore what Sourcemogul can do for your arbitrage business here: Sourcemogul Arbitrage Sourcing Tool ◥
Retail arbitrage remains a feasible way to enter the Amazon FBA world and gain valuable experience. However, to ensure long-term success, it’s wise to diversify and use tools that streamline your operations.
Best Free Apps & Tools for Retail Arbitrage
Keepa - Amazon Price Tracker
Keepa is an indispensable tool for retail and online arbitrage sellers. This free app provides detailed price history and valuable data to help you make informed purchasing decisions.
👉🏻 Download the Free Keepa Extension ◥
Amazon Seller App
The Amazon Seller app, created by Amazon, is available for free and offers a wide range of features, including:
Tracking sales performance.
Managing inventory, offers, and returns.
Handling customer inquiries.
Scanning products to analyze profitability.
Note: You’ll need an Amazon business account to access this app.
Recommended Retail Arbitrage Course
If retail arbitrage feels overwhelming, investing in a good course can save you time and effort. We recommend the Proven Amazon Course, created by Jim Cockrum. This course, with over a decade of proven success, covers arbitrage, private label, and dropshipping strategies.
👉🏻 Learn More About Proven Amazon Course ◥
Is Amazon Retail Arbitrage Still Profitable?
Retail arbitrage remains a viable option, especially for beginners looking for a low-risk way to enter e-commerce. While competition and brand restrictions pose challenges, it can still be profitable when approached strategically.
A recent study revealed that 25% of Amazon sellers use retail arbitrage, and 30% report profits exceeding $50,000 annually. 🚀
Insights From Experience
14 years ago, we started with eBay, running four stores simultaneously. When larger companies entered the platform, competition became fierce, so we shifted to Amazon FBA and successfully replaced our income.
Over the years, we’ve adapted to changes in the online marketplace. Whether you start with retail arbitrage or transition to wholesale or private label, flexibility and creativity are essential.
Q4 Opportunity
The months leading up to Christmas (Q4) are especially lucrative for retail arbitrage sellers. Preparing in advance by ungating categories and securing sufficient funds can maximize your profits.
Building a Long-Term Online Business
Retail arbitrage can be a stepping stone to more sustainable business models like wholesale or private label. To succeed long-term, focus on:
Diversifying Your Income Streams: Don’t rely solely on arbitrage.
Using Tools: Leverage tools like BuyBotPro to streamline sourcing and avoid restricted products.
Adapting to Change: The eCommerce landscape evolves every 12–18 months; staying informed and adaptable is key.
Essential Arbitrage Tools
Sourcemogul
A must-have for online arbitrage, Sourcemogul scans over 80 million products across major online retailers, helping you find profitable deals quickly and efficiently.
👉 Explore Sourcemogul Here ◥
FAQs About Retail Arbitrage
Q: Is retail arbitrage allowed on Amazon?A: Yes, Amazon permits retail arbitrage under its Marketplace policies as long as the products are authentic and not restricted by brand owners.
Q: Is retail arbitrage legal?A: Absolutely. In most regions, including the U.S. and Europe, the First Sale Doctrine allows reselling legitimate, authentic goods. Ensure compliance with brand policies and marketplace terms.
Q: Is retail arbitrage ethical?A: Yes, when done legally and ethically. Selling authentic, high-quality products with good customer service ensures a fair business practice.
Q: What’s the difference between retail and online arbitrage?A:
Retail Arbitrage: Buying products from physical stores.
Online Arbitrage: Sourcing products from online retailers.
Q: Can you make money on Amazon FBA?A: Yes, Amazon offers direct access to millions of customers globally. With the right pricing and sourcing strategies, it’s possible to generate significant sales volume.
Q: What’s a typical income from Amazon arbitrage?A: Part-time sellers earn $500–$2,000/month, while experienced full-time sellers can make $50,000 or more annually.
Q: Is Amazon FBA competitive?A: Yes, it’s a competitive marketplace. Success requires effort, market knowledge, and strategic planning.
Q: What is online arbitrage?A: Buying discounted products from online retailers and reselling them on platforms like Amazon or eBay for a profit.
Q: Can I buy a product in-store and sell it on Amazon?A: Yes, this is called retail arbitrage. Use the Amazon Seller App to scan and verify product profitability before listing.
Retail arbitrage is an excellent starting point for aspiring online sellers, offering a low-risk way to gain experience. As you grow, consider expanding into wholesale or private label to build a more scalable and diversified business.
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