To understand how to make money with Amazon Arbitrage, first you need to understand the Arbitrage Cycle

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The Arbitrage Cycle is the process each arbitrage business follows to produce profit

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This cycle is usually made of the same pieces. Sometimes rearranged but the core components will almost always be the same regardless of the strategies a specific business uses

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For the everyday Online Arbitrage seller, it looks like this:

1. Source - purchasing inventory
2. Sell - selling inventory
3. Ship - fulfilling inventory

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Completing this cycle as many times as possible over a given period is how every arbitrage Amazon seller makes money

Now let’s cover each process in detail

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Sourcing

To successfully source, you need to:

1. Find profitable leads
2. Analyze lead’s risk
3. Purchase inventory

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It’s not enough to just find profitable inventory

It’s not enough to just analyze profitable inventory

The sourcing cycle is not complete until a purchase order successfully goes through and is shipped

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There are many strategies to find profitable leads such as

• Brand Sourcing
• Reverse Sourcing
• Newsletter Sourcing
• Storefront Stalking

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Using tools like Keepa help you analyze a potential lead’s risk by reviewing the:

• Supply
• Demand
• BuyBox consistency
• Current count trends
• BuyBox Ownership Percentages, etc

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Purchasing inventory is the final step but you’re not home free yet

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Making sure orders don’t get canceled by avoiding fraud detection is one the most underrated skills an OA seller needs

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Getting orders to ship is the final battle

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Once an order is shipped, you have completed the Sourcing Process

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Now onto selling

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Selling

To successfully sell, you need to be competitively priced with current market pricing

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This means if an item is selling at $29.37 and you want to certainly earn a sale you need to be priced at $29.37 or below

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If you’re priced higher than $29.37, you’ll likely have to wait for cheaper sellers to sell out before you can start consistently winning sales

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Now notice how I never mentioned profit…

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Profit has nothing to do with your ability to gain a sale

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You as a seller have to make the connection between profit earned and price sold

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What this means is while reviewing your leads for purchase (during the sourcing step), you need to make sure the quality of your leads are high enough so that the price doesn’t eventually fall too low for you to make a profit

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If the competitive market price falls to a price that’s below your profit, it’ll be extremely difficult to make a sale unless you’re willing to sell for a loss

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This dead end situation is why “Tanking” is such a controversial and destructive topic in the Amazon seller community… because people really hate losing money

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If you find yourself stuck with tanking leads too often, then you’re sourcing and analysis process needs a lot of work

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Shipping

Fulfillment is the simplest part of the process. You have 2 options: FBM or FBA

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FBM or fulfillment by merchant is when you ship the product yourself directly to consumers

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In this process you’ll be using postal carriers such as UPS, USPS, and FedEx

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This option requires more heavy lifting on your part since all of the responsibility for FBM orders falls to the seller

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Versus FBA where the responsibility falls on Amazon themselves

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With FBA or fulfillment by Amazon, you send your product to Amazon fulfillment centers to be shipped to customers by Amazon themselves

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Shipping FBA allows your orders to be received insanely fast (around 2 - 3 days) and usually gives you an edge over most FBM sellers in terms of winning sales

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This is the more outsourced, “time freedom” option and is what attracts most people to Amazon in the first place

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Hence the coined term “Amazon FBA”

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Now let’s put it all together

To make money with Amazon Arbitrage you need to complete the arbitrage cycle as many times as possible

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The more cycles you complete, the more money you make

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To complete the Arbitrage Cycle you need to source, sell, and ship successfully

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Each step within the cycle requires individual skills that grow overtime and experience

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The only way to gain experience and get better at completing the cycle is by completing the cycle

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Basically get started as soon as possible and start failing with intention

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I know the word “failing” isn’t attractive but its the most consistent method to successfully figure things out so…

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Start soon

Fail often

And never stop learning

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Thanks for reading

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