Amazon Arbitrage: The most important tips to source products

Amazon Arbitrage: The Most Important Tips to source products

Amazon arbitrage can be a lucrative business model if approached with the right strategies and insights. This blog article will walk you through the essential tips to ensure profitability in your Amazon arbitrage endeavors.

1. Ensure Good Product Ratings

One of the most critical factors in Amazon arbitrage is the product's ratings. Products with poor reviews often lead to high return rates, which can eat into your profit margins. Aim for products with a rating of at least 4 stars and a significant number of reviews. This not only ensures customer satisfaction but also boosts the likelihood of repeat purchases and positive feedback.

2. Buy Branded Goods Over Private Labels

When sourcing products, prioritize branded goods over private label products. Branded goods are generally more recognized and trusted by consumers. Moreover, private label products can sometimes come with hidden intellectual property (IP) complaints, which can jeopardize your Amazon account.

(IP Complaints on Brand checks via ProfitPath, always make sure to check that info)

Use tools like ProfitPath to analyze historical data and seller information to ensure that the brand is reputable and free from IP issues.

3. Maintain a Profit Margin of 8%+

Profitability is the name of the game in Amazon arbitrage. Ensure that the products you choose have a profit margin of at least 8%. You can use tools like the Amazon FBA Revenue Calculator or ProfitPath to estimate net profits and margins accurately.

This helps in making informed decisions and avoiding products that might not be financially viable.

4. Only Buy New and Original Goods

Always purchase new and original goods from legitimate suppliers. Selling counterfeit or used products can lead to account suspension and legal issues. Verify the authenticity of your suppliers and ensure they are 100% legitimate to avoid any complications.

5. Compare Product Features Thoroughly

Before purchasing, compare the product features meticulously. Look for any deviations such as differences in size, volume (e.g., milliliters in perfumes), or compatibility with other devices. Ensuring that the product matches the listing exactly can prevent returns and negative reviews.

6. Simplify the Listing Process

Choose products that do not require a complicated activation process on Amazon. Sometimes, listing a product can be cumbersome, requiring supplier invoices, WEEE numbers, or other documentation.

Opt for products that can be listed easily to save time and avoid delays in getting your products to market.

7. Ensure Sufficient Sales Volume

Select products that have a sales volume of around 20-30+ sales per month. Products with low sales volumes can be challenging to move, leading to stagnant inventory and tied-up capital.

Use sales data and tools like Keepa or Amazon on the product page to gauge the sales velocity of potential products.

8. Monitor the Amazon Buy Box

The Amazon Buy Box is a critical component of making sales on the platform.

(Insights of ProfitPath, you can check how the buybox is shared across sellers on the listing, Seller: Amazon will pop up if they have majority of the Buybox, most likely a singla to not buy any products if they own 99% of the buybox)

Ensure that Amazon is not dominating the Buy Box 100% of the time. Ideally, Amazon should not be on the listing at all. Use ProfitPath to check the Buy Box ownership and ensure that third-party sellers have a fair share of it.

9. Check Price Stability

Price fluctuations can significantly impact your profit margins.

Use Keepa to check the price stability of a product over the past 60 days. Avoid products whose prices have recently jumped by 20% or more, as they are likely to drop soon, eroding your profits.

(Here you can see how the price performs via Keepa Chart, make sure to check the average prices)

Analyzing the lowest and highest prices over this period can provide a more secure average price to base your decisions on.

Conclusion

Amazon arbitrage requires careful planning, thorough research, and strategic decision-making.

By following these tips, you can enhance your chances of profitability and build a sustainable business.

Remember to always prioritize product quality, maintain healthy profit margins, and leverage tools like ProfitPath, Keepa and Amazon calculators to make informed choices. Happy selling!