Chapter 1: Is FBA arbitrage right for you?
What you'll learn: what arbitrage is, the four main ways to do it, how an item gets from a store shelf to an Amazon customer, what it costs to get going and how much time it takes. By the end you can decide, with your eyes open, whether it's for you.
What "arbitrage" means
Arbitrage is buying a product where it's cheaper and selling it where it's worth more. US retailers run sales, clear seasonal stock, mark down discontinued lines and price-match each other constantly. At the same time, the very same product may be selling steadily on Amazon.com for more. An arbitrage seller spots that gap, buys the product and resells it on Amazon at the going price.
It's a legitimate, long-established business model, and Amazon allows it. Products bought from genuine retailers are genuine products, and your receipts prove where they came from. Sellers of every size work this way on Amazon.com, from people fitting it around a full-time job to established businesses with staff and warehouses.
The four models
| Model | Where you buy | What it's like | In ArbiSource |
|---|---|---|---|
| Online arbitrage (OA) | Retailers' websites | Source from home whenever suits you; stock is shipped to you or to a prep center | Vault, Price Drops, Store and Category Scans, Custom Scans |
| Retail arbitrage (RA) | Physical stores | You see the product in person and can find in-store clearance that never appears online | ArbiSource shows you which products and brands are worth looking out for |
| Amazon-to-Amazon (A2A) | Amazon itself, when a listing dips well below its usual price | Buy on Amazon, then resell once the price recovers | A2A flips and Business A2A (Premium) |
| Wholesale | Brands and distributors, in bulk | Bigger orders, supplier invoices and products you can reorder | Wholesale Scans (Pro and Premium) |
Most beginners start with online arbitrage. It fits around other commitments and it's the easiest model to learn with a tool. It's also where ArbiSource is strongest: it covers 660+ UK and US retailers, with more added regularly, plus a library of ready-made results to learn from.
How Fulfillment by Amazon (FBA) works
With FBA, Amazon stores your stock in its warehouses (fulfillment centers), picks and packs each order, ships it to the customer and handles customer service and returns. You pay fees for this. In return your listings become eligible for Prime shipping, which matters a lot to Amazon.com shoppers.
Here's the journey of a single item:
- Find a product that sells on Amazon for more than it costs at a retailer, after all fees.
- Check it carefully: is it the identical product, is the profit real, does it sell steadily, and are you allowed to sell it? (That's the Lead Check in Part 5.)
- Buy it, saving the proof of purchase (receipt or emailed confirmation) for your records.
- Prep and label it. Every unit needs its own Amazon barcode label (an FNSKU) covering the manufacturer's barcode, plus any packaging Amazon requires, such as a poly bag. Prep is the seller's job. Do it at home or pay a prep center.
- Ship it to an Amazon fulfillment center with a shipment you create in Seller Central.
- Amazon sells it, delivers it and deducts its fees.
- You get paid. Amazon pays out on a regular cycle, and each sale's funds become available 7 days after the customer receives it. Amazon's payout policy
What it costs to get started
There's no single right budget. People start with anything from a few hundred dollars to a few thousand. What matters more is knowing where the money goes and how long it's tied up.
Fixed monthly costs
| Cost | Notes |
|---|---|
| Amazon Professional selling plan | $39.99 a month (Amazon US pricing) |
| ArbiSource | From $54.99 a month (Essentials). See Choosing your ArbiSource plan |
| Optional tools | For example, a Keepa subscription for detailed price history |
Costs per item sold
- Referral fee: a percentage of the selling price, which varies by category.
- FBA fulfillment fee: based on the item's size, weight and price.
- Storage: a monthly charge for the space your stock takes up, higher in the October–December period.
- Getting stock to Amazon: shipping, plus any inbound placement fee for the shipment option you choose.
- Prep: your own supplies, or a prep center's per-unit charge.
- Sales tax you pay on stock, unless you buy tax-exempt for resale (see Chapter 2.2).
Part 2 explains each of these, with links to Amazon's current figures. ArbiSource works out Amazon's fees for you on every product.
One-time setup costs
- A thermal label printer and labels for FNSKUs and box labels
- Poly bags, boxes, tape and a shipping scale
- Stock: start small and spread it across several different products
The cash cycle: money out, money back
Your money is tied up for longer than most people expect. You pay for stock today. It then has to reach you, be prepped, travel to Amazon, be received, sell and be paid out. A month or more between buying and getting paid is common, and slower sellers take longer.
So:
- Hold some money back. Don't put your whole budget into your first order.
- Favor products that sell steadily over ones that might sell for a lot "eventually".
- Reinvest gradually as payouts start coming in.
Chapter 7 (Profit, ROI and cash flow) covers this in detail.
How much time it takes
Sourcing is slow at first and gets quicker with practice. While you're learning, aim for at least an hour or two a day browsing and checking leads, plus a longer weekly session to prep and ship. Checking a lead properly takes a while at first; with practice you'll speed up, and many sellers then fit sourcing around a job. ArbiSource does the scanning and the math so your time goes on decisions, not spreadsheets.
Is it right for you? A quick self-check
You'll probably enjoy this if you:
- like hunting for bargains and spotting patterns
- are comfortable checking details carefully (the right pack size, the right color)
- can set aside a modest amount of money and leave it working for a month or two
- have some space at home for stock and packing, or are happy to use a prep center
- are happy to learn as you go and treat early purchases as part of learning
It may not suit you if you need guaranteed income quickly, or if you can't afford for some of your first purchases to sell more slowly than you hoped.
You'll see plenty of big numbers online. We don't make income promises, because results depend entirely on your decisions, your effort, your budget and the market. What we can give you is a careful, repeatable method and a tool that makes it faster.
Checklist
- I understand the difference between OA, RA, A2A and wholesale
- I know the seven steps from finding a product to getting paid
- I've set a starting budget, with some held back
- I've blocked out an hour or two a day for sourcing while I learn, plus a weekly prep and ship session