Arbitrage, also known as product flipping among seasoned Amazon sellers, is a great business model for new Amazon sellers. How does it work? — You buy products for a lower price and sell them for a higher price on Amazon. Not only does it ensure profit, but it also eliminates the need for manufacturing and storage.
But where do you buy these products? And how do you buy them for cheap?
Most Amazon sellers that do arbitrage purchase their products from eBay, Alibaba, Etsy, and other marketplaces. This method is called ONLINE ARBITRAGE. Many products on these platforms sell at higher prices on Amazon, and the consumers buy them because Amazon FBA offers better security and faster shipping.
You can do the same but must factor shipping costs into your budget. Also, Each order may take several days to reach you and could be delayed based on your location.
If you want to avoid that hassle, you can explore another type of arbitrage: RETAIL ARBITRAGE. Instead of sourcing products online, you buy them from a retail store. Which retail store is the best source of products for this business model? — WALMART.
Why Walmart?
Two reasons—
- Walmart is the biggest retailer in the world. It leverages its size to gain significant bargaining power with manufacturers, allowing them to bring prices down to what most consumers can afford. You can find many cheap items in Walmart that could sell for two to three times their original prices on Amazon.
- They have more than 5,200 stores across the U.S., so there's probably a Walmart near you. You can shop for your products anytime you want. Unlike flipping from eBay, Etsy, or Alibaba, you don't have to pay for shipping or wait days for your package. You can also list your products right after purchase.
What is clearance, and how does it differ from a typical sale?
During sales events like Black Friday, Christmas, Memorial Day, and Labor Day, stores reduce prices by a percentage, typically between 5% and 50%, to boost sales. Buyers qualify for this discount by meeting specific conditions, like making a minimum purchase or subscribing to another offer.
Clearance works the same way, but it has a different purpose. Items on clearance are typically ones that didn't sell quickly, are close to expiring, don't fit in storage, or will be removed from sale. Their markdowns are usually bigger than those on sale, starting from 30%, and increase over time.
I mentioned this because these sales promos are what you should look for when shopping at Walmart. Although Walmart items are usually cheaper than online, maximizing every opportunity to save money is smart. Items on clearance are your top priority. Then, you can include those on sale that can be flipped for your target listing price on Amazon.
How to Flip Walmart Products on Amazon FBA
Now that you've set your eyes on sale or clearance items, it's time to turn on your computer and log in to your Amazon seller account. If you don't have an account, you can create one here. Then, follow this simple guide.
Step 1: Search for products Amazon and Walmart share.
Not all Walmart products on sale or clearance are profitable when sold on Amazon. To choose what to buy, search for the most popular categories on Amazon and select items you think are also available at Walmart. Kitchenware and toys are your best options because they aren't seasonal, and they sell online pretty fast.
Having a list of products to buy makes shopping easier and keeps your expenses in check. You don't want to purchase products that will end up being liquidated at cost. However, it's best to have extra cash should you find items worth adding to your inventory.
Step 2: Here are a few tips to keep in mind.
Product size
You've probably considered this in your purchase plan, but let me put this here so you won't forget. Only choose products that are easy to ship. Products that are too long or too big will cost more to ship. In some cases, Amazon might even reject your shipment, particularly if they don't fit in any of their boxes.
Compare products
When considering a new product for your inventory, compare its price to similar products on Amazon. One indicator that a product is worth flipping is if it's sold for at least twice its original price on Amazon.
This isn't to say you can buy anything as long as you can sell it for at least 100 percent of its original price. Having a cap on your pricing is wise because it ensures faster sales. For instance, pick only products under $20. These items sell faster than products that initially cost $50 or more.
But, of course, this will depend on the brand you are trying to establish on Amazon. For instance, flipping products under $20 can be difficult if you're an appliance seller. Not only will it limit your choices, but potential buyers may feel cheated when they can't find the products they want because all they see are small appliances they most likely already have.
Scan bar codes
You can also install Keepa on your phone and scan the product's barcode to check whether it's worth buying. Keepa compares prices and analyzes real-time data on Amazon to give insights into a product's profitability, including how much it sells monthly and its historical price highs or lows since listing.
It's also essential that you have Scan and Go on your phone. It's a Walmart app that allows you to scan products as you shop to ensure their prices are within your budget. In addition, some products have inaccurate price tags. Scan and Go can show you the actual price tag.
Don't invest in Mainstays
Walmart has its own brand of home furnishings and décor called Mainstays. Its products are sold exclusively at Walmart stores. Imagine browsing through Amazon and stumbling upon a chopping board with Mainstays' logo on the label. Would you want to buy it or not? Of course, you wouldn't.
Why would you want to buy a product you know costs much less in Walmart stores? You might as well buy it at Walmart. In other words, only sell items you're confident most buyers don't know are available at Walmart or will not hesitate to buy them there.
Here's a tip: Check out the back of the aisles where the end caps are. This is where Walmart displays an assortment of the best products within each area, particularly those on clearance.
Skip if the photo is missing
If you scan a product with Keepa and no image appears on Amazon, chances are it's not a similar product, or the seller decided to discontinue selling it but forgot to update their inventory. Don't risk it, and move on to the next product.
Step 3: Add to Inventory
Log in to your Amazon Seller account again. Click the hamburger icon on the top left corner of the page to reveal the Menu. Hover above "Category" and click "Add Products." Since you're listing products that already exist on Amazon, you don't have to list them individually. You just have to search for the existing products by entering their name, ASIN, EAN, or UPC.
Once you find the products, add them to your inventory. The next step is to fill in the product information, all eight tabs, including product identity, vital info, offer, product details, variations, images, and keywords. Then, click "Save and complete."
Selling before Buying – Why It's a Bad Idea
Some sellers, particularly those with limited funds, prefer buying products from Walmart only when they receive orders on Amazon. It works similarly to dropshipping, except Walmart isn't involved in the fulfillment. This could work but comes with risks you might not want to deal with.
- The products may no longer be available when you receive orders.
- Prices may change, making the product no longer profitable, especially when you receive orders before updating the prices on your listings.
- The products may no longer be in excellent condition when you receive orders.