Amazon FBA for Beginners: Retail Arbitrage VS Online Arbitrage VS Wholesale VS Private Label

amazon fba private label retail arbitrage wholesale Jan 23, 2021

What is Amazon FBA and What Do They Do?

So, you have heard about Amazon fulfilment service, which is Amazon FBA – fulfilment by Amazon.

This is where everyday people, like you and I, are able to ship thousands of products to Amazon fulfilment centres, where they are able to store our products, until you or I make a sale out on Amazon.

Then, Amazon’s logistics will pick that product, get it shipped to your customer, to Amazon’s customer, the very next day, sometimes within the same day.

Amazon’s reach now has turned into a multi-billion dollar/pound company, and that’s why people like you and I, take advantage of an amazing opportunity for us to build a business part-time that can go into full-time.

The different business models on Amazon

You have got different business models out on amazon. These are as follows:

Retail Arbitrage (RA)
Online Arbitrage (OA)
Wholesale
Private Label (PL)

Each one of these mean different things and present different opportunities.

What is Retail Arbitrage on Amazon?

So... let’s start right at the beginning – Retail Arbitrage. Let’s understand the word arbitrage, because that is what this whole business is about. If you think about your local supermarket, we, as consumers, we buy products. But those same products can be also available in another supermarket at a different price.

Arbitrage = Same products sold at different prices where we can take advantage.

The whole concept here is sellers taking advantage of products purchased in retail stores and sold on Amazon which is a different marketplace. So, imagine you buy a product for one price, that exact same product, you can now see it at a different price. The product may be more or it may be less, that’s arbitrage. It’s the same product, but differences in pricing.

For example, when you go and get petrol, you may go to a petrol station in one location where you are paying whatever the price is per litre or gallon. Then, you go to another petrol station, just down the road and you get the same product, which is petrol but it’s a difference in price. Why is that? That’s arbitrage.

It is the same product – it is petrol, but there is a difference in price.

That now means, that there are arbitrage opportunities. This gives us as everyday people, arbitrage opportunities, because this means now that you may have a scenario where you have found a product at one store; let say you are in the clearance section and you have a seen a product which is buy one get one free, or it is a clearance sale, so they are just clearing out the line and now it is 75% off, well... You can now compare that to Amazon’s marketplace, and if there is a difference in price, it could potentially give you an opportunity to make profit.

It is a difference in marketplace and it is a difference in price, from product A, you can purchase it at the store, and then, you can sell it on Amazon. That is what arbitrage means.

Watch The Video On YouTube

Retail arbitrage is when you are going physically into stores, and you have tools, like a phone, which you can use to scan different products and see what that product is selling for at Amazon.

What is Online Arbitrage on Amazon?

Online arbitrage is the same concept of retail arbitrage; however, online arbitrage is actually you online, on a computer, mobile device etc., and you are now going onto different stores, possibly where you already purchase from. It may be stores where they are selling toys, games, health and personal products, beauty products, groceries or kitchen and home – it doesn’t matter. You are looking for products and you are comparing those products exactly to Amazon to see if there is an arbitrage opportunity. That is really the only different between RA and OA.

There are many different things that you need to know, and here is a tutorial series of online arbitrage on Kev Blackburn’s YouTube channel, which you can watch and learn lots that you possibly don’t already know.

You can continue watching all parts of the series here:

What Is Wholesale on Amazon?

Wholesale is the same concept but you are now dealing directly with wholesalers. This is where you are in the supply chain. When you think of the manufacturer to the consumer, it is the chain all the way through. When you think of the different stages of that product’s journey, it goes from the manufacturer to the distributors, to the wholesalers, then to the retailers. Then, when you are talking about wholesale, you are now going a step backwards, you are now going to the suppliers of those retail stores, of those online stores.

You are now going to trade shows and you are having a look for building real relationships, when people are coming to you and you are opening accounts, you are able to potentially find products, arbitrage opportunities out on Amazon. Then, you could potentially purchase pallets of products. You have shipped pallets to Amazon’s fulfilment centre’s, you have now got different brands, then you’ve got different wholesale accounts, where you have got catalogues, emails, or phone calls.

This is more advanced. That is why retail arbitrage and online arbitrage are more beginner-friendly business models, because you can learn a lot - you can fail, you can stumble, you can make bad buys and you can not sell something; whereas, when you go into wholesale and you start now purchasing, like pallets and you are spending thousands of pounds, that could potentially be very costly.

There are many different things that you need to know, and here is a tutorial series of wholesale on Kev Blackburn’s YouTube channel, which you can watch and learn lots that you possibly don’t already know.

You can continue watching all parts of the series here:

What Is Private Label on Amazon?

Private label is when you have your own branded products. You have not gone to a store; you have not gone to a wholesaler - this is your product. You have:

Design the product.
Branded the product.
Created the listing on Amazon.
Created the title.
Created the description and bullet points.

Private label is very advanced. You have got to build a customer base, you have got to build an audience and you have got to already have customers who trust you, like you, that you can market to.

There are lots of videos online upon private label, but you have got to be really careful on what age those are and what training you are going through. This is because strategies that may have worked years ago, may just not work at all anymore. It is very different now, the landscapes changed, so be very careful on who you are listening to and what it actually is.

Further reading:

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