How I Make $200/Day With Online Arbitrage

Through my office window, I watch the mailman walk up to my door. In his hands are four bubble-wrapped packages. He sets them on our porch chair, rings the doorbell, and leaves. I grab the packages, whip out the trusty box cutter, and dive in. I already know what’s inside, of course.

Yep. It’s books.

They’re dusty, old, and sometimes sun-stained. But I make sure that they at least meet the following standards:

• They don’t have writing or highlighting inside.
• The dust jackets are mostly intact.
• They’re the exact edition and/or printing I was looking for.

If they pass the test, I start grabbing photos of the books covering every angle. Once the photo session is over, I list the books on Amazon. Then, I place them neatly into a banker’s box off to the side.

If I did my homework, the books will be gone in less than 30 days.

And if I really did my homework, each one will make back 5 times what I paid for them.

This practice is called online arbitrage. On average, I make $200/day doing this with used books.

Arbitrage is the simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms in order to take advantage of differing prices for the same asset.

Online arbitrage (OA) uses the aforementioned tactics with different ecommerce platforms. I do most of my OA buying on eBay and reselling on Amazon.

How I Started with Online Arbitrage

A few years ago, I started my Amazon business selling used books. Back then, I was a wholesaler. I’d purchase entire lots of books from yard/estate sales, closed bookstores, or anywhere else I could spend a few hundred bucks to buy books in bulk. Then, I’d sort through the pile looking for profitable titles to list on Amazon. The remainders were donated to the Salvation Army.

After a while, I got tired of book wholesaling. Not only was the process incredibly tedious — I’d sometimes spend hours digging through moldy books without finding anything worth selling — but the law of diminishing returns soon took over. Books are heavy, so it’s easiest to source books locally and there were limited bulk lots I could find in the Oklahoma City area.

Wanting to keep things going with my Amazon business, I turned to online arbitrage. I’d heard about retail arbitrage (RA) through friends, but the idea of combing Wal-marts with a phone scanner to purchase up dozens sticks of deoderant to make $1-$2 in profit each seemed like a lot of boring work.

Fortunately, I discovered online arbitrage.

Online arbitrage appealed to me for a number of reasons:

• I didn’t have to leave my house. That’s an entrepreneurial win right away.
• The products I was looking for were a lot higher priced, therefore, offered much better returns.
• Once I discovered one profitable item, I could add it to my “Search List.” If the item was a fast enough seller (usually an Amazon best-seller ranking of 500,000 or less), I could find 2–3 per month and expect those items to sell.
• A lot of online sellers — especially on Ebay — have no idea how to list profitable products.

There’s tons of ways to do Online Arbitrage, too. I like buying under priced books on Ebay to resell on Amazon, but you can also buy items on Craigslist or Facebook Markets to do the same. In the past, I’ve even purchased products on Amazon that are merchant fulfilled (when the sale is made the seller packs and ships the product themselves) to resell as a FBA product (when the sale is made Amazon packs and ships the product on the seller’s behalf).

In fact, the first thing I ever flipped on Amazon was a Macroeconomics textbook that I purchased for $15 from a merchant seller and resold for $56 FBA. It sold in less than 10 days. After subtracting Amazon’s fees and the cost of the book, I made $28 in gross profit. Not bad for 45 minutes of discovery time.

Here’s a short and sweet guide to online arbitrage:

• Pick a niche category to specialize in. I personally like used books, but you could also do this with comic books, board games, or action figures.
• The top-end price ranges should be between $20–200. Any less than that and it’s hard to get around platform fees. Any more than that, and buyers scrutinize condition/quality a whole lot more.
• The item should have decent demand. The easiest way to check this is using an extension like Keepa that goes directly into the Amazon page, or by checking the “Sold Listings” option on Ebay. I try to find items that sell at least 5+ units per month.
• Make sure you understand condition guidelines on the platforms. For example, any book that has writing or highlighting on its pages is considered “good” or “acceptable” on Amazon. Also, the difference between “like new” and “new” is marginal on many platforms. Sometimes, you can sell a product that’s “like new” as “new.”
• Know your fees. Amazon takes 15% off the top on nearly all of their categories, and another $3 (or more depending on weight) for FBA. I rarely sell on Ebay, but I believe their fees are marginally less.
• Don’t forget about shipping costs. If you’re doing the fulfilling yourself, make sure you know what it will cost to ship stuff. Books are easy because you can ship them media mail and media mail is cheap. Larger items, however, have higher costs. And even if you’re sending stuff to an Amazon fulfillment center to offer it FBA, there’s the cost to ship the goods to Amazon (although this tends to be pretty low thanks to Amazon’s amazing UPS discounts).
• Create a Search List. Once you find a profitable product, mark it on a spreadsheet and track how fast it sold and how much profit you’ve made selling it. While apps like Keepa and CamelCamelCamel can help you determine demand, it’s a lot better to have your own details, especially if you’re selling based on condition alone.

If you’re interested in learning more about online arbitrage (especially if you plan on selling on Amazon but don’t have enough cash to do private label), there’s a pretty comprehensive book on the subject by Chris Green appropriately titled Online Arbitrage. It’s free with a Kindle Unlimited membership. It offers a number of wonderful applications to help you get started.

For more information on Amazon selling, you can learn about it in the first guide in my online guide series The 26 Ways to Make Money Online that introduces a couple different ways to make money with Amazon including FBA Private Label and Online Arbitrage.