Online arbitrage sounds like the perfect work-from-home business: If you have a computer, an internet connection, and a few hours to spare each week then you’re all set.
So what do you have to do to? It’s pretty simple: you buy products from ordinary online stores, then sell them for a profit on the Amazon marketplace.
But making money as an online arbitrage seller is not as easy as it sounds.
It’s not easy to find products to buy for less than the price on Amazon – much less, if you want to make a respectable profit. The price difference has to cover all of Amazon’s fees and any other expenses you have.
It’s also not easy getting a grip on Amazon’s constant and unpredictable price changes. A deal might look great at the moment you find it, only for Amazon’s price to fall off a cliff a few hours later and force you into a loss.
Then there’s the fees. Sure, Amazon tells you how their fees work upfront, but they’re detailed and complex. It’s easy to make a mistake and calculate your profit wrongly.
So in this post I’ll explain what online arbitrage is really like, and how you can use online tools to help with all of the main challenges: sourcing, price research, and fee calculation.
When people think about selling internationally they often imagine sales being one-way traffic to happy customers. Few think up front about the challenges of international returns.
A proportion of your orders will always be rejected, for a variety of reasons. Customers have high expectations the world over, and just because you may be thousands of miles away from the consumer, they won’t forgive you for poor service.
If you sell on your own web store, maintaining customer satisfaction when handling international returns can be a logistical headache. If you sell through online marketplaces like Amazon or eBay, it’s even more serious. Just a few poorly managed returns could result in bad feedback and complaints, and have serious consequences for the future of your business.
But what brought international returns into sharp focus for a lot of sellers were Amazon’s new rules covering international returns that came into effect in March 2015. The key point is that Amazon sellers now need to provide international customers with a local returns address, or provide free return shipping.
Driven partly by Amazon’s policy change, a number of new and innovative options for international returns have sprung up this year. In this article I’ll outline what your options are, the pros and cons, and what they’ll cost you.
This post is by James Thomson, Partner of Buybox Experts, a consultancy supporting brands selling on Amazon and other marketplaces. James is also president of PROSPER Show, a continuing education conference focused on developing training and best-practice materials for early-stage online sellers.
With Amazon’s recent announcement that it is recruiting sellers into the Seller Fulfilled Prime program, much of the discussion has been around how much simpler this may make the lives of Amazon sellers.
Yet, the key implications are likely far more extensive than that. I’d like to take a few moments and outline those issues here so as to spark discussion among sellers, investors and solution providers.
Many of the multi-channel sellers I talk to are focused on the operations of their business.
They spend most of their time working on the processes that enable their business to run effectively: managing inventory, shipping orders, and handling customer service.
But when I spoke to Kyle Goguen, the founder of natural dog treats company Pawstruck, a different theme kept repeating itself. Kyle understands the importance of efficiency, but his enthusiasm really shines through when the conversation moves to another topic: marketing. I believe it’s Kyle’s enthusiasm for marketing that explains how this young business – less than two years old – has become successful so quickly.
Whether the topic is branding, email marketing, product reviews, social media or even packaging, Kyle has something to say. We also talk about Amazon Lightning Deals: Kyle reveals how his deals performed over Thanksgiving, and gives advice for other sellers on making the most of Lightning Deals.
Almost every experienced online marketplace seller will have a story of how some smart – or not so smart – bad buyers have attempted to trick money or goods out of them.
These customers might claim that their goods didn’t arrive on time, or wear clothes to a party before returning them as ‘not as described’. At the other end of the spectrum, buyers have returned parcels packed with garbage instead of the item originally sent, or submitted completely false ‘item not received’ claims.
Some of the reasons for returning an item can be downright funny. In a Web Retailer forum thread about outlandish reasons given for returns, member Easiliving said, “We once had a customer return an eye patch because their kids thought they were being invaded by pirates!”
But bad buyers are not often a source of amusement. A significant number of buyers are tempted into scamming the system, often believing it to be a ‘victimless crime’. But it isn’t victimless if you’re losing money and having your reputation damaged in the eyes of the marketplace.
In this post, I’ll look at some common examples of buyer fraud, talk about steps you can to take to help prevent it, and explain how you can increase the likelihood of cases being resolved in your favour by eBay or Amazon.