Amazon FBA is a brilliant opportunity to create a new stream of income and to create a business which gives you extra financial flexibility. So you are interested in starting your own FBA business but which is best for you? The different types of arbitrage for Amazon FBA differ slightly however can easily be broken down and understood.
So before we begin, what is arbitrage?
Arbitrage is the process of taking advantage of a different price between two or more markets. Within the case of Amazon this second market is Amazon. Using Amazon FBA, sellers find items which are selling at a retailer and sell that item for a higher price on Amazon.
Arbitrage can be divided into the following types:
- Online Arbitrage: this is pretty self-explanatory, online arbitrage is completed online without the need to physically go into shops to source deals. The perk with online arbitrage is that you therefore have added flexibility as you can do it from the comfort from your own or anywhere with an internet connection.
- Retail Arbitrage: with retail arbitrage you physically go into shops and stores to look for deals. This can be beneficial as there is likely to be less competition as deals are often only available in store or are specific to certain stores.
Would you like to learn to see the process of completing retail arbitrage? Check out our Youtube video
What are the benefits of the different types of arbitrage?
A quick turn around. Arbitrage is a great opportunity to quickly grow your own business as you do not need to wait to create a design, manufacture it or ship it.
Low start up costs. With arbitrage you can start your business with the funds you have at your disposal. Of course, it is important to recognise that arbitrage is an investment and you should not invest money which you depend upon to live. With the profits you make you can then reinvest the money you make.
The marketing has been done for you. By selling well known products and brands there is already a well consolidated customer trust.
How do the different types of arbitrage differ?
All types of arbitrages can be incredibly beneficial and accessible to you. However it is important to recognise that you get out what you put in. Both options can present you with challenges:
- The internet is an incredibly busy place; with online arbitrage being so accessible it can be highly competitive. But, the internet is also an incredibly large place. Once you have found the websites which are like hidden gems you will be able to source great deals.
- Due to the number of products available to you with retail arbitrage can mean scanning and checking a large number of items to find a deal. However, you will also have access to many deals which may not be accessible online. This is especially true when it comes to store sales and reduced items.
So you are aware of the different types of arbitrage but which is the better option for you? This is largely based on your own personal preferences, and we have found each type of arbitrage to be profitable.
As you grow your Amazon FBA business it is a great idea to diversify streams of income. You can do this by trying different types of arbitrage. If you are thinking of starting your Amazon FBA journey or have just started you can always expand your business in the future. This way you will be able to learn what business models best suit you and your business.
Would you like to learn more about Amazon FBA? You can check out our previous blogs here. You can also find more information in relation to Amazon FBA on our Youtube channel here. Or you can check out our homepage here to learn more about Profitl.