This will be an overview of a process known as eBay-Amazon arbitrage, where eBay sellers source and ship products using Amazon as their “supplier”. This is basically retail arbitrage where you take items you either buy from a retail store or a website and sell it on another. For Amazon retail arbitrage, you would ship items from your Amazon account directly to your eBay buyer using the gift option. Sellers are able to make a profit by carefully choosing the items they sell, taking advantage of the fact that Amazon can generally beat eBay on new product prices. It can be profitable, but you will have to add your own unique angle to the general idea laid out here. And although the information in this guide is geared towards people in the U.S., you can be anywhere and use this strategy (either as a foreign-located US seller or using your local Amazon as well as any other merchants to send to customers in your home country).
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What to Sell on eBay
In general, you’ll be surprised at what sells on eBay. The very first thing to do is to make sure an item is selling, either by looking for completed listings or noting the same item sold multiple times by those who list in more than a single quantity. You can also check currently listed items and see if it has watchers. One thing you can do once your various listings have watchers is to use the markdown manager (for example, make your listings 5% off) and all your watchers will be messaged.
When you search for items on eBay, leave it on best match search. It will list the sellers who are selling the most first, and once you get past the first listings, those people won’t be selling as much. Once you have found some promising products, click on over to the seller’s other items. In general, be on the lookout for stock amazon photos (w/ white backgrounds), not sellers with self-taken photos.
And a caution to not sell electronics (phones /TVs / computers) on eBay. You won’t be able to compete on price with the Asian wholesalers, and this demographic tends to be more likely to return an item if they know you arbitraged it from Amazon.
You will be selling on eBay through arbitrage, but you can also try your hand at sourcing items through eBay as well. On eBay, drill down by category (or visit their “Wholesale Lots” section) and start searching using typical large lot keywords:
You might even have better success selling things that are not usually associated with being sold on the internet. This is where it pays to think outside the box as the popular items are already crowded with sellers. http://www.mysimon.com/compare-top-searches is a good site for seeing what products people are searching for.
Tips on Price Comparing Amazon & Ebay
I’d advise not listing an item on eBay with quantity available > 1. Not only do you lose scarcity and any hope of inspiring urgency in your buyer, but you also risk being liable for having to either ship at a loss or cancelling multiple orders when Amazon’s price moves against you. For example, many popular items are being watched on both eBay and Amazon by price conscious buyers and they may choose to buy your eBay listing when they see that Amazon’s price has gone up sharply. By limiting the item quantity to just one, you limit the chance of having to fulfill multiple orders at a loss. Once you hit on a listing that sells well and you’re fairly certain that the price and Amazon supply is stable, go ahead and start listing multiple quantities available for the item.
To prevent Amazon price movements from wiping you out, you’ll need a tool like CamelCamelCamel to stay on top of Amazon price movements.
http://www.fbatoolkit.com/ is great for tracking a few ASINs for stock, price, and rank.
The two banes of sourcing items from Amazon:
• Re-pricing (Amazon’s prices are dynamic and fluctuate throughout the day).
• Items run out of stock.
You can use Priceyak to help boost your inventory and source from other stores when Amazon runs out.
Here’s a trick for gauging Amazon stock on an item: You can add an item to your Amazon cart and change the quantity to 999. Since Amazon usually doesn’t stock that much of an item, they will give you the actual amount that they have in stock if it’s less than 999. And ay items that you keep in your cart will give you notifications of changes in price and decreases in stock.
What if amazon runs out?
– Just tell your customer “Hi, these products ran out ..”
– Buy it on ebay and ship it to them.
Listing Items on Ebay
You’ll want to keep 3 tabs open in your browser – 1. Ebay to list items 2. Ebay to search sellers 3. Amazon to source items. Don’t get caught up in research mode – you have to list items to make money, and you won’t know what sells until you get them listed. If you find an item on eBay that you know is cheap enough to source on Amazon, a quick way to get a listing up is to click the “Sell Now” button underneath the item’s photo:
A great way to source is to find sellers with awful titles – you can always out-title them. You’ll always have one advantage versus the big stores who throw up their listings in an automated manner: you’ll be able to out title them using search friendly keywords.
– Don’t put SKUs in your titles. Don’t put model numbers either else – you don’t want to make it easy for people to search for it on Amazon. Use up all your alloted space with keywords, and capitalize all the words.
– Not only will you copy the description from Amazon, scan for keywords in the copy to use for the eBay title. Use your description to fully tell your customer what it is that they’re getting and try to answer any questions they might have inside your listing description.
– Terapeak is good for research and useful for finding trafficked keywords for use as titles, though its data is more useful for the more popular items selling on eBay. It’s a $25/month service.
– To find potential keywords to use, start typing your item in eBay’s search box and you’ll see eBay suggestions underneath the search box:
Some keywords will be more competitive than others. Although you will have less competition for certain keywords, the drawback is that these keywords tend to have a smaller number of searches.
– Sell related items – people will click through to them if you have some type of carousel.
– Always list for fixed price / 30 days. If it doesn’t sell over the course of 60 days (2 listing cycles), then delete it and move on to a different product.
– Tell buyers that shipping / handling will take 3-5 days, and 2-3 days handling time. Amazon will take 24-48 hours to ship it unless you use Prime (covered below).
– Also as a side note, female names tend to sell better on eBay.
Get an eBay store to get around listing fees. For $200/mo and you get 2500 free listings every month and the rest of your listings are at .05 each.
Ebay also has many promotions to list for free, up to 500 items. But a $50 store gets you .05 listings, so that might pay for yourself at 100 items listed in a month. The storefront also gives you email marketing for your buyers as well as better eBay search visibility.
Keep in mind that not every category in eBay has a listing fee, so it will save you money to take up residence and sell from these categories.
Auto-relist your selling items. The more frequent your sales, the better your position in the search listing. Also, free shipping will give you better positioning in search results.
Use Pictures in Your eBay Listings
The more pictures you can add, the better your listing will stand out. You can rely on Amazon for stock photos (the typical product photos with white backgrounds) as well as poaching them from other eBay sellers or sourcing them from the product manufacturer’s website. Note that you can’t use borders on your eBay pictures.
A note about product images and copyright: The VERO program empowers the brand to cancel listings of their brands on eBay. eBay is going so far as to encourage brands to list their inventory directly on eBay, which is why Guess / Tommy Hilfigger / Gap have large stores on eBay through the encouragement of ChannelAdvisor. Another aspect of this has to do with how brands enforce copyrights on their images. Most brands don’t have any problems with you posting their images on eBay as part of your new item listing, but some will contact you via their legal department to get you to take the listing down if you’re not an authorized reseller.
Watch Your Profit Margins
Selling on eBay isn’t cheap, and you’ll find that 14%-15% is what eBay and Paypal fees add up to on each of your transactions. (eBay fees are 10% of the sales prices while Paypal fees are around 4%).
eBay Fee calculators:
You will need to factor these fees in when setting your price. A good rule of thumb is to try to earn at least $5 for each “flip” after taking ~15% off for ebay fees. Ex: You see a seller listing an item for $25 w/ s/h, and you know you can source product for $13. If you sell for $24, then $18 is your after fee take home leaving you with $5 profit. Once you get to the $100 to $150 range, the fees drop to around 10%.
Don’t worry about people selling it cheaper. Just notice if it’s selling and get your price in the ballpark, probably not even the cheapest. Many people will buy from you even though you’re not the cheapest simply because people are too lazy to check other websites. Don’t be tempted to set a lower price and compete with lowball sellers – they’ll usually sell out quickly and make less in profits than a seller who sets a higher price and knows exactly how much of a profit margin they want to make on every transaction. So for example, if you set $5 as your desired profit margin, never list an item that will fall below this profit threshold. That’s just simply being a disciplined seller.
Where to Sell
The best place to start selling for most people will be eBay, but once you start having success there you can copy your same listings on two different marketplaces. Bonanza is a site that has fairly good amount of traffic and has no limits on the number of products you can list, so although it has far fewer shoppers it might be worth some test listings.
eBay Bookeeping / Logistics
Multiple Accounts: You can have 9 ebay accounts (attach them to separate email addresses) for one PayPal account. But they must list in different categories. You could use the same PayPal email, but create aliases instead with a domain email. You could attach each account to a domain name, which is a great strategy for niche marketers. You could potentially flip these sites or develop a persona around the most successful sites.
eBay and Taxes
You will need to collect tax for purchases made in your home state for your eBay sales if you sell over $20k in a year, at which time you will receive a 1099 tax form from PayPal. In addition to this, once you gross about $80k-$100k, eBay will recognize you as a medium size seller and start asking questions about your inventory sources. Never let on that you are dropshipping as part of your supply change, as they don’t like that type of distribution channel and will seek to limit your account and cripple your ability to sell on eBay.
These are the 12 States that you ship to will require you to pay tax when you pay for it on Amazon:
• New Jersey
• New York
• North Dakota
Also keep in mind that although you are being paid in PayPal funds, Amazon doesn’t accept PayPal, so you’ll have to float a balance on your credit card. It’s not a big deal since you can pay off your credit card balance at any time and not just at the end of the credit card cycle.
Keep Up Your eBay Rating
A traditional dropshipping arrangement can really be bad for your seller rating because of the lag that often occurs between forwarding your order to your supplier and when they actually ship it out. Whether you choose to use Amazon’s free ground shipping or take advantage of 2-day shipping with Prime, you want to keep on top of your shipping times as well as your overall eBay feedback. If you have at least 10 DSRs in the past 12 months, you’ll be able to track them at ebay.com/Sellerdashboard.
eBay Shipping Tips
There are a couple ways you can handle how to deal with shipment tracking numbers:
- Only provide a tracking # if requested, just to save on your work time.
- You also forward them the tracking information from Amazon.
I would advise taking the extra effort to forward them the tracking information for their peace of mind.
Amazon Prime: the only way to fulfill item orders quickly using Amazon retail arbitrage is to ship them as gifts, preferably using Amazon Prime. This is technically against their terms of service and you will likely get your account closed by using your Prime account in such a manner. Although you should never use your personal Amazon Prime account, people have had success opening 30 day trial accounts since they don’t track you based on name, address or credit card (just use a different email address). Some people have also had success using Amazon Prime for Students, which offers trials of up to 6 months. You can cancel these Amazon Prime trials and sign up again indefinitely. The idea of using Prime is that eBay customers love it: not only the free shipping, but they love getting their packages within 2 business days.
Some people doing eBay <-> Amazon retail arbitrage worry that buyers will get suspicious once they receive a box with Amazon logos on it. Now your name and address won’t be on the packaging invoice (it sometimes is included if you order from a Fulfilled by Amazon seller, so use the gift option in that case to 100% mask your address), but there are two ways you can respond should someone ask you about the Amazon packaging:
- Tell them you are environmentally conscious and like to recycle packaging, so they may get a re-used box. You might want to be proactive and tell them this up front when sending them their tracking information so they aren’t surprised when they get the box.
- Tell them that you use Amazon’s Fulfilled by Amazon service … which is technically true, but not really the way you’re portraying it, but most buyers will be satisfied with that response.
Dealing with eBay Returns
Ask them to message you when they ship it back (screenshot the UPS return item slip you get from Amazon, have them put it on the box and leave it on the porch). Send this directly to the buyer’s PayPal email since the attachment will get resized if you send it through eBay’s messaging system. If the item is not broken (meaning that the buyer simply had a change of mind), then you can have them ship it back to you and you can just resell it.
It’s advisable to limit listing items selling between $35-$60. If a customer has a problem with a higher priced item sometime in the future, they are more likely to do a chargeback to recoup their money than with a lower priced item.
There’s More Suppliers Than Amazon
Walmart and Overstock are also used by eBay sellers doing retail arbitrage. Really any ecommerce website could take the place of Amazon as your supplier if they have relatively stable stock and good prices.
Once you become proficient with retail arbitrage, you might want to branch out into stocking your own supply from wholesalers.
• dx.com, aka DealExtreme, is well known for their 99¢ sections.
• dhgate.com has better quality products compared to DealExtreme.
• aliexpress.com is another good wholesaling option. All of these suppliers will generally be from China.
So, How Do You Make Money on eBay Arbitrage?
eBay to Amazon arbitrage is a great way to start making at least $5 per eBay listing while learning the ropes of how to sell on eBay without any physical inventory. Once you start seeing what items are selling, the next step is to start sourcing the items yourself via the manufacturers and setting up a Shopify store to start selling the items from your own storefront. Not only will this save you money on Amazon’s price, but you avoid the 15% cut that eBay / PayPal take. There’s no real risk with keeping inventory since you’ve already done your homework and know that it sells. Sure, you still have to pay merchant fees of around 3% and you’ll be responsible for shipping, but you also have the customer’s undivided attention as their point of contact for the item you’re selling, something you’d never get by selling strictly on eBay.