Toys R Us, Walmat, Target, Big Lots and Goodwill seem to get most of the attention when Amazon Sellers talk about where they find their inventory. Frankly, I’ve had very little success at any of those places and since retail arbitrage doesn’t easily fit into my lifestyle, I’ve turned to online arbitrage. Since November 15, 83% of my “shopping trips” have been online and out of that, 80% of my online purchases have been from Amazon. Yes, Amazon. Believe it or not, it is possible to find products on Amazon that you can turn around and resell at a higher price. In this post, I’ll share with you how to get started.
Use Your Existing Amazon Account or Open a 2nd Account?
To get started, obviously you need to have a Buyer’s account with Amazon. I’m assuming that most of you already have one and then the question is do you use your personal account for inventory purchases or open up a new account? I chose to open a second Buyer’s account so that I can keep my personal and business purchases completely separate.
Don’t Use Your Amazon Prime Benefits
If you are an Amazon Prime member, do not and I repeat, do not use your free two-day shipping benefit. That is against Amazon’s rules and it’s not worth the risk of losing your Buyer’s and/or Seller’s account. Here is the exact wording from the Amazon Prime Terms and Conditions page:
Prime members are not permitted to purchase products for the purpose of resale, rental, or to ship to their customers or potential customers using Prime benefits.
Even though you can’t use the free two-day shipping, you can still use the free shipping option offered when you have $35 or more of eligible products.
Sign Up for Amazon’s Tax Exemption Program
The Amazon Tax Exemption Program allows you to make sales tax exempt purchases. Here’s how to enroll in the program:
- Log into your account
- Navigate to “Your Account”
- Navigate to “Settings -> Account Settings -> Amazon Tax Exemption Program”
- Click on the “Get Started” button to start the enrollment process
Also, make sure that you have a copy of your Reseller’s Permit saved on your computer as you’ll need to upload it. Once you’re approved in the program, Amazon will send you an email. I received my approval email within a few hours after applying.
The next steps are to go shopping and checkout. At the checkout screen, you’ll see that you aren’t being charged sales tax. There is an option to change that if you are purchasing products that are not for resale.
Finding Products to Purchase for Resale
Now that you have your account setup, it’s time to find products on Amazon that are currently selling at a lower price. There are two scenarios that I know of that will cause this:
- Amazon drops their regular price. They may do this to match the price of a 3rd party seller that dropped their price. In this case, you’ll purchase yours at the lower price and then resell it at the regular price once Amazon’s price returns back to normal.
- The product sells for an inflated price when Amazon is out of stock. In this case, you’ll need to buy the product when Amazon has it in stock. Then when Amazon goes out of stock again, you’ll sell yours at the higher price.
Here is a screenshot of the Keepa page:
Here is a screenshot of the camelcamelcamel page:
But before you start buying every product listed, you’ll still need to decide if they make sense to buy. For example, look at all of the products on the top row of the camelcamelcamel screenshot. All of the prices are low and you’re not going to make a large profit on any of those items after Amazon takes their fees.
For each product that I’m interested in, I always go to the Amazon page and look at it further to make sure that it meets my price and ranking criteria. Also, I try to figure out why it dropped in price. If it dropped in price because Amazon was recently out of stock, it’s good to check the price history to see if Amazon frequently goes out of stock. The product probably won’t be a good buy if Amazon doesn’t go out of stock very often.
I’m still learning the more advanced methods of shopping on Amazon and it’s beyond the scope of this blog post and my knowledge to go more into depth on how to find the profitable online products. I learned everything that I know from Chris Green’s book, Online Arbitrage: Sourcing Secrets for Buying Products Online to Resell for BIG PROFITS. He goes into much more detail on how to source on Amazon by using Keepa and camelcamelcamel. He also shows you how to setup price drop alerts and shares other places to start your search such as Twitter and Amazon itself to find those products that’ll make you money.
I just checked the price on the book and as of the date of this blog post, it’s selling for $295.95 new. That’s great for Chris Green, but not good for you. I paid $146 for my copy as I bought mine during a promotional period and then received a price adjustment. However, there’s a lot of information packed in it and I made my money back on it already. It you are interested in purchasing it, you should check out the used copies and also if you are an Amazon seller, you can always resell the book later. Another option is to purchase Online Arbitrage Preview – The First Three Chapters: Sourcing Secrets for Buying Products Online to Resell for BIG PROFITS. This is a much more affordable option which gives you the first three chapters so that you can decide if the full version is good for you.
When shopping in person, you’re able to visually look at the product to see how large it is. I tend to shy away from the larger sized items as I just don’t want to deal with the extra hassle of finding larger sized boxes and paying extra shipping fees. But when you are shopping online, you can’t always tell how large a product is based on the picture.
I leaned a lesson when I bought this Bear Archery Titan Bow Set when it dropped in price. When it arrived, I was surprised to see that the box was taller than me. I figured that a nice chunk of my $20.00 profit would fly out the window with the shipping fees. I ended up selling it to a co-worker at cost so I wasn’t out any money or hassle. But now I always check the item size before purchasing it.
Issue with Item Limits, Low Cost Products and Getting Free Shipping
Let me explain what I’m talking about – once I found a Hello Kitty toy that dropped in price from $34 to $8. I quickly did my research and planned on buying five of them so I could qualify for the free Super Saver shipping for eligible purchases over $35. Well, Amazon only had four remaining in stock which left me a few dollars short of reaching $35. So, I added those four products to my shopping cart and spent about ten minutes searching for something else to buy. During that ten minutes, Amazon sold one of the Hello Kitty toys even though I had them all in my shopping cart. So now I could only buy three of them and I was back to square one on having a total purchase amount of less than $35.
I haven’t found them yet, but I’m looking for a few products that I can have on “stand-by” in case I need to add something quickly to my order to get me over the $35 mark.
8/11/16 Update: To qualify for free shipping, you now have to spend at least $49.00 in eligible purchases!
Moving Beyond Amazon
Over the past two weeks, I’ve made online purchases from Walgreens and Office Depot. I’m also experimenting with a new method (to me) on finding online products. I’ll let you know how that goes. As always, feel free to leave me a comment below or on my Facebook page. I enjoy your comments/questions.
Featured Image: © Gajus – Fotolia.com
Keepa and camelcamelcamel screenshots: Diana Poisson