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What Is Retail Arbitrage


Sellers have found a way to provide shipping without paying a cent in what might be called arbitrage. Not only that, no stock is carried by the sellers, making their business risk free. Resellers have also discovered utilizing a retail arbitrage software which makes it easier for their business.

Retail Arbitrage

By definition, retail arbitrage is the act of reselling items that are already being sold in the market, however, for a higher price. An example would be taking an item listed on Amazon then listing the item on another platform for a higher price. This concept allows the reseller to gain a profit from the difference in prices.

Vendors have been using Amazon as a drop shipper for many years. Some of these sellers’ business models use an Amazon Prime account, which costs $79 per year to get free 2-day shipping on all orders, allowing them to offer free fast shipping on their eBay and online listings.

Using Amazon Prime provides a huge edge over other eBay vendors that must charge a delivery fee or pay for shipping themselves to these sellers. And since these sellers can offer free delivery, they earn a 5 from 5 DSR rating on transport standards, helping them keep their Top Rated Seller status.

Amazon spokesperson Mary Osako said the company does not allow vendors to use Amazon Prime for orders. While small companies are allowed to buy a Prime membership, Prime members are not allowed to ship to their customers or prospective customers utilizing Prime benefits or to purchase products.

Amazon Drop Shipping, Not To Be Confused With FBA.

With drop shipping, the vendors never have the stock. They place an order when they get a sale, plus they pay no Amazon selling fees. That is different from Amazon's Multi-Channel Fulfillment FBA service, which allows vendors to process orders from sales channels aside from Amazon.com utilizing the seller's own inventory that's stored in Amazon fulfillment centers, and for which they pay Amazon fulfillment fees.

According to Chris Green of FBAPower who assists sellers use FBA on Amazon, many online sellers use Amazon as drop shippers and utilize a software to assist them to manage the process. But Green wasn't sure how many individuals could be using their Amazon Prime accounts to send out orders, and people who do so might not realize it is against Amazon's terms, he said.

Green said bundles from Multi-Channel Fulfillment FBA look different than items which are ordered by the vendor from Amazon, though they both arrive at the buyer's door in an Amazon-branded box. Paychecks sent orders to have Amazon branding to the inside, in addition to promotional material from Amazon partners.

Even when marked as a present, the origin of the product will be evident on the packaging sheet for drop shipped orders. Multi-Channel Fulfillment orders could just have the box logos, and it is possible that the consumer thinks the vendor is only reusing Amazon packaging. But they'd not have Amazon branding to the packing slip, he said.




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