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Pros and Cons of Online Arbitrage

Arbitrage in an online sale, that means searching for goods on the Internet with the specific purpose of using a price mismatch between two trading platforms, so you can resell the goods at a profit. If you are an Amazon reseller, it means that you are trying to find products that are sold in an online store or the marketplace at a lower price than their current price on Amazon.

How does OA work?

  1. Search and purchase. You find the goods in US stores and send them to Amazon warehouses.
  2. Acceptance and packaging. Amazon accepts your products and packs it by country of Amazon
  3. Shipment and delivery. Amazon delivers goods to its warehouses or directly to the customers.
  4. Payment for goods. You receive payment from your customers to your bank account or to Amazon account.

In fact, in life, wholesale buyers are doing the same, buying a lot of products at a lower retail price and then selling these goods to the next level of consumption with their markup. However, everything is easier on the Internet. The whole process takes place at the computer, without traveling and large investments in turnover.

The effectiveness of online arbitrage depends on the number of products at excellent prices. The difference in price is also important. Taking into account the aspiration of trading platforms to maximize buyers and the subsequent striving for market prices, this is not an easy task. However, there are many such sellers. Each has its own work strategy, while many use the same principles and software to find the right products.

Why should you choose OA?

1. Low entry threshold. One of the main advantages of online arbitrage is the low cost of entering this business. The main direction of costs is the investment in the goods. There are additional expense items, such as software, payments on accounts and costs for the presenters. Here, as elsewhere, it all depends on the situation, but most sellers invest 800-1000$. In this case, online arbitrage allows you to work for yourself and steadily make a profit.

2. Using online arbitrage, you just need to find the offer, analyze it, make a purchase and send the goods to the Amazon warehouse. In most cases, you never create your own listings at all, do not bother with advertising, do not buy reviews. You can absolutely painlessly enter different niches, try working with different products, and even if you make a mistake, these mistakes will not bring huge losses.

3. War and aggression! Of course, this is true for any business model. However, if you pay attention to the forums and groups, then it is PLs who constantly fight with someone. In this sector, people most often meet people who are ready to do anything to sink their competitors. In DS and OA, people are more peaceful, they rummage about dumping or Amazon that suddenly decided to sell the same product. And only sometimes people are in confrontation with dropshipping, proving to each other who is cooler, rather out of boredom or for fun.

4. Diversification. In OA, if you suddenly make a mistake with the choice of goods, and this is quite possible, it will affect 1-2% of the business and not 100%.

5. Most people start to engage in e-commerce in order to earn quick money. In the OA store is lined up for exactly 3 months. At the same time it does not mean at all that three months you live without profit. This means that in three months you will be able to manage your working capital, forecast monthly profits, and clearly understand what actions are needed to build up power.

Minuses:

1. Required time for the refund. Collection of goods and delivery to the warehouse takes a long time. You also need to wait for a refund on the card. Money is withdrawn every two weeks. Therefore, realistic terms of refund are 5-6 weeks.

2. Problem with the inventory update. When purchasing goods with discounts, the margin is quite high. But the discounts do not last long, so the purchase of a new group of goods will be at a different price. Accordingly, the income will be less.

3. Competitors. It is necessary to take into account the fact that there are several sellers for each product. And you need not only to find an item and sell it, but also do everything to make it the best in its category.

Also, competitors can buy your product and leave a bad review on it, supposedly the product does not match the description. In this case, you will have to contact Amazon and prove that you are selling good quality products. Such comments can be removed through the support service, indicating the reason for "product feedback, not the seller feedback".

OA is considered to be a model that combines the best aspects of other models - there is no long freeze of money, you can quickly switch to other products. At the same time, it is also possible, as in PL, to import 1,000 units immediately to that listing, from which sales are already coming. You can become the exclusive supplier of a small brand and assume only the sale of goods at the sites. And if you add to this all the simplified delivery around the country and the absence of risks with customs, then this is just the perfect model to start your journey to Amazon.

Internet arbitrage is not a way of earning without risk. It also takes time. Yes, there are two sides of the coin, as in everything, but you will not succeed if you do not even try.