If you’re looking to break into the Amazon FBA world without the complexities of private labeling, product design, or bulk overseas orders, retail arbitrage might be your golden ticket. This method, which involves buying discounted items in local retail stores and reselling them for profit on Amazon, has become a popular and profitable entry point for thousands of sellers.

In this comprehensive 2000-word guide, we’ll walk you through everything you need to know about Amazon retail arbitrage—from setting up your account to sourcing products and scaling up. Ready to flip products for profit? Let’s dive in.

What Is Retail Arbitrage?

Retail arbitrage is the practice of buying products at a low price from physical retail stores and reselling them on marketplaces like Amazon for a profit. It’s about identifying pricing inefficiencies—where something is underpriced locally but can command a higher price on Amazon.

For example, if you find a toy on clearance at Walmart for $10 that sells for $30 on Amazon, you’ve got a potential $20 margin. After deducting Amazon fees and shipping, you might walk away with $7–10 profit per unit.

Why does this work? Amazon shoppers value convenience, selection, and speedy shipping. Many are willing to pay more for the same item if it means they don’t have to go to a store or wait for a sale.

Why Choose Retail Arbitrage?

• Low startup costs – No need to buy in bulk or manufacture anything.
• Low risk – You’re buying discounted products with existing demand.
• Quick setup – You can start buying and listing products within a day.
• Proven product demand – Since the listings already exist, you know what’s selling.

Step-by-Step Guide to Starting Retail Arbitrage on Amazon

1. Set Up Your Amazon Seller Account

Before you can resell anything, you need an Amazon Seller Central account.

Types of Accounts:

• Individual Seller – No monthly fee, but $0.99 per item sold.
• Professional Seller – $39.99/month. No per-item fee, plus access to reports, ads, and more.

Most retail arbitrage sellers opt for the Professional plan—it pays off once you’re selling more than 40 items a month.

Have your business details ready (bank account, tax ID, identity verification) to complete your setup quickly.

2. Source Products from Retail Stores

This is the heart of retail arbitrage. Your job is to find products in local stores priced significantly lower than their Amazon selling price.

Tools to Help:

• Amazon Seller App – Scan barcodes, estimate fees, check profitability.
• Keepa – Check historical price and sales rank trends.
• BrickSeek – See what’s on clearance at stores nearby.

Key Metrics to Consider:

• ROI of at least 20–30% after Amazon fees
• Low competition or low seller count
• Sales rank that indicates steady movement

Pro Tip: Always scan items before buying. Just because it looks profitable doesn’t mean it sells fast.

3. List Your Products on Amazon

If the product already exists on Amazon (which it will), you’ll add your offer to that existing listing.

Steps:

• Go to Seller Central → Inventory → Add a Product
• Search using UPC or ASIN
• Choose your condition (usually “New”)
• Set your price
• Choose quantity
• Select fulfillment method (FBA or FBM)

4. Choose Fulfillment: FBA vs. FBM

Fulfilled by Amazon (FBA):

• Amazon handles storage, shipping, returns, and customer service
• Eligible for Prime shipping
• Requires prep and shipping to Amazon warehouses

Fulfilled by Merchant (FBM):

• You pack and ship items yourself
• More control over customer interactions
• Lower fees but more work

Most serious sellers use FBA due to scalability and Prime eligibility.

5. Ship Your Products (for FBA Sellers)

How to Ship to Amazon:

• Create shipment plan in Seller Central
• Label items (unless using Amazon’s labeling service)
• Pack and box items securely
• Print shipping labels
• Drop off at UPS (Amazon partnered carrier)

Tip: Use tools like InventoryLab to streamline shipment creation and cost tracking.

6. Manage and Optimize Listings

Although you can’t change the core content of existing listings (title, bullets, etc.), you can:

• Offer competitive pricing
• Keep stock available
• Monitor customer reviews
• Use repricing tools like BQool or RepricerExpress

Winning the Buy Box is key to getting the sale.

How to Find Winning Products

Top Product Categories for Arbitrage:

Avoid products with expiration dates, fragile packaging, or high return rates (like electronics) until you gain more experience.

Is Retail Arbitrage Legal?

Yes completely.

Thanks to the First Sale Doctrine, once you buy a product, you’re legally allowed to resell it. That said, you must:

• Only sell authentic, unopened items
• Avoid restricted or gated brands (use tools to check this)
• Stay clear of counterfeit or imitation products

Amazon allows arbitrage as long as you follow their terms of service.

How Much Does It Cost to Start?

Retail arbitrage is one of the lowest-cost Amazon FBA models to start. Most sellers begin with $200–$1000.

Common Expenses:

• Inventory: $100–$500
• Amazon Pro Plan: $39.99/month
• Shipping to FBA: $20–$100
• Tools/apps: Free to $50/month

No factories, branding, or huge startup costs.

Can You Make a Living With Retail Arbitrage?

Yes, but it depends on consistency, sourcing skills, and how much time you’re willing to invest.

Full-time sellers often:

• Source inventory 4–5 days per week
• Use teams or VAs to scale sourcing
• Reinvest profits to grow monthly sales

Some sellers report earning $2,000–$10,000+/month in net profit. Many start part-time, then scale up once they learn the ropes.

Pros and Cons of Retail Arbitrage

Pros:

• Low startup cost
• Minimal risk
• No product development
• Proven demand
• Quick to start

Cons:

• Inventory may not be replenishable
• Time-consuming sourcing
• Pricing can be competitive
• Brand restrictions
• Limited scalability compared to private label

Pro Tips to Succeed in Retail Arbitrage

1. Use Technology to Your Advantage

• Use Amazon Seller App to scan barcodes
• Use Keepa for price/sales history
• Repricing tools to stay competitive
• Inventory trackers for restocking

2. Timing Is Key

• Take advantage of seasonal clearance
• Post-holiday and back-to-school sales are goldmines
• Build sourcing calendars around retail cycles

3. Maximize Profit

• Use cashback apps and credit card rewards
• Buy in bulk once you validate a winning product
• Negotiate with local store managers on bulk clearance

4. Know the Rules

• Learn about Amazon’s restricted categories
• Avoid products that require ungating unless you’re experienced

5. Track Everything

• Track your ROI, expenses, profits, and sales
• Use apps like InventoryLab or spreadsheets
• Plan for taxes and bookkeeping early

Final Thoughts

Amazon retail arbitrage is one of the easiest ways to start selling online, even with minimal experience or budget. With consistent effort, smart sourcing, and a data-driven mindset, you can build a steady income stream—or even grow a full-time business.

Whether you’re a college student looking to make extra income or an aspiring entrepreneur hoping to leave your 9-5, arbitrage offers a scalable path with low barriers.

Start small. Stay consistent. Use the tools. Reinvest profits.

And most importantly—treat it like a business, not a hobby.