Amazon to eBay Arbitrage: Everything You Need to Know

You’ve placed an order on eBay but it arrives in an unmistakable Amazon box. This is confusing, what has Amazon got to do with your order when you bought it on eBay?

Are Amazon and eBay now working together? Aren’t they bitter rivals? If you wanted to buy from Amazon then you would have gone there yourself!

Often, this is because you bought from an arbitrage seller, specifically someone doing Amazon to eBay arbitrage. These sellers copy an Amazon listing and post it on eBay at an inflated price.

When you buy the product on eBay, the seller orders it on Amazon at the lower price and arranges for the product to be sent directly to you. They pocket the price difference and in many cases you – the customer – don’t realize what’s going on.

However, there are other reasons why your eBay purchase may have arrived in an Amazon box:

1. The seller re-used Amazon packaging.
2. They ran out of stock and bought from Amazon to avoid bad feedback.
3. The seller stores their stock with Amazon FBA (Fulfillment by Amazon) and used the Multichannel Fulfillment (MCF) service to get the order sent out to you.

All of the possibilities above are completely legitimate and don’t indicate that arbitrage is going on. Most of the time, however, if an eBay purchase arrives in a brand new Amazon box then it has probably been dropshipped (shipped to order directly from the supplier) by an arbitrage seller.

In January 2019, eBay updated their dropshipping policy to specifically mention arbitrage. The US and UK sites have identical wording, saying:

Drop shipping, where you fulfill orders directly from a wholesale supplier, is allowed. However, listing an item on eBay and then purchasing the item from another retailer or marketplace that ships directly to your customer is not permitted.

The change happened just one week after the second edition of this article was published.

While arbitrage has been banned in Australia for some time (see below), eBay has now rolled out this policy to the major markets of the US and UK. Policies still differ in other countries. In Germany, for example, the dropshipping policy is the same as the previous policy in the US – it does not mention arbitrage.

In Australia, eBay has banned both arbitrage and FBA with a restrictive Third-party fulfillment policy. FBA is specifically mentioned, while arbitrage is made impossible by detailed conditions that must be met:

Using a third party to fulfil eBay orders on your behalf [is allowed], provided all of the following conditions are met:

• You are clearly identified as the seller on all packing slips and invoices, and
• Using the third-party fulfilment service doesn’t mislead or confuse the buyer as to the origin of their purchase (for example, due to branded packaging), and
• You ensure the safe fulfilment of the item within the terms stated in your listing, and
• You ensure that your third-party provider is subject to a contractual condition which prevents them from using or sharing any eBay order information (including the names and contact details of buyers) for any purpose other than the fulfilment of the specific eBay order which they are engaged by you to fulfil.

There’s no way you can satisfy those conditions if you buy from an Amazon seller who doesn’t even know they are being used as a dropshipper. You could only make it work if you have a dropshipping contract with the Amazon seller in advance, and they only do their own fulfillment. But that wouldn’t really be arbitrage!

When considering if Amazon allows dropshipping to eBay, it’s important to understand the arbitrage seller’s relationship with Amazon.

As far as Amazon are concerned, arbitrage sellers are not sellers at all, they are ordinary Amazon customers. They are probably very high-volume customers, who select “This order contains a gift” all the time, and enter many different shipping addresses, but customers all the same. Selling policies do not apply to them, because they are not Amazon sellers.

Amazon does, however, have its own set of terms and conditions for customers and also for Prime members. Amazon’s Conditions of Use do not prevent arbitrage, but the terms for Prime members include the following:

Prime members are not permitted to purchase products for the purpose of resale, rental, or to ship to their customers or potential customers using Prime benefits.

This makes it clear that arbitrage sellers aren’t allowed to use Amazon Prime to fulfill eBay orders. Arbitrage is allowed, but only using an ordinary Amazon customer account, not one with Prime membership.

eBay’s ban on arbitrage is quite a new policy so the level of enforcement is not known, but it appears that they are taking it seriously.

The penalties are harsh, and identical in the US, UK and Australia:

We may limit, restrict or suspend you from buying, selling or using site features. All of your listings may be removed, displayed lower or not shown in search results, without refunding any or all applicable fees. You may forfeit special account status and any discounts.

Despite the tough language, there are no signs that eBay is strongly enforcing the policy yet, as large numbers of arbitrage sellers are still active on the marketplace.

Amazon, on the other hand, only prohibits Prime members from buying products for resale, as covered above.

But there are many arbitrage sellers who do use Prime to fulfill their orders. There are even sellers who question whether Amazon to eBay arbitrage is worth doing at all without fast Prime shipping.

Amazon, however, have indeed cancelled Prime accounts that were being used for resale purposes, although it does not appear to be a major initiative for Amazon at the moment. They have many other issues taking priority.

Arbitrage selling is, by nature, a secretive or even sneaky practice. It doesn’t sit particularly well with the global trend towards more protection of consumers, data, and intellectual property.

Data protection

Data protection is an area that very few arbitrage sellers are likely to take seriously. In the EU, the new GDPR regulations mean that people must be clearly told who their data is given to, what they will do with it, and how they can get it deleted. So, arbitrage sellers on eBay in Europe should disclose that the buyers’ information will be passed to Amazon, possibly including third-party Amazon sellers, and tell them how they can get that data removed in the future!

Amazon to eBay dropshipping largely relies on the buyer not knowing that they could buy the product cheaper on Amazon, so this requirement will be hard to stomach for arbitrage sellers. GDPR fines, however, range up to 4% of annual global turnover or 20 million euros.

Consumer protection

Consumer law doesn’t prevent you from doing Amazon to eBay arbitrage. However, as the seller of the item, it is your responsibility to deal with any problems, including complaints and returns. You can’t simply direct the buyer to the Amazon seller – there is no direct relationship between those two parties.

If you are not willing or able to provide good customer service in line with the applicable consumer protection laws and eBay selling policies, then arbitrage selling isn’t a great idea for you.

Intellectual property rights

A common tactic used by Amazon sellers who do not want arbitrageurs selling their products, is to report them to eBay for intellectual property infringement under the Verified Rights Owners (VeRO) program.

These reports can be well-founded, particularly if you have used text and images straight from an Amazon listing without any modification or permission to use. But even if the report is baseless, it can be an effective way to get your eBay listings (or entire selling account) suspended.

Future policy or enforcement changes

Amazon or eBay could take strong action against arbitrage at any time. Either side could change their policies and enforcement actions to stamp it out completely. eBay could adjust their algorithms to detect arbitrage listings, then delete listings or severely restrict sales.

There are signs that eBay is starting to take some moderate action, pushing arbitrage listings lower in the search results. This was reported by Adi Reiss, CEO of arbitrage software company SaleFreaks, who then took legal action against eBay.

In February 2019, SaleFreaks reported a conversation with eBay Seller Support saying that accounts using dropshipping will not be suspended but will not be able to get Top Rated Seller status or use Promoted Listings.

Amazon to eBay arbitrage really polarizes the opinions of Amazon sellers. There are two main camps:

1. A sale is a sale. Arbitrage sellers bring in more sales, with no extra work required.
2. I’m being exploited. They are ripping people off and ruining my reputation.

Emotions can run high, and there are good arguments for both points of view.

1. A sale is a sale

Those in this camp argue that there are no real losers. Both sellers make a profit. The Amazon seller is making more sales at the price they have set, and their product is getting visibility on another channel without any additional effort required. More sales leads to higher Amazon search rankings as well.

If they really don’t like it, the Amazon sellers could just list their products on eBay themselves. As the source of the product, they can easily undercut the arbitrage seller.

2. I’m being exploited

Those in this camp feel victimized and resentful. They don’t see why arbitrage sellers should profit from their listings. After all, the Amazon seller has done all the hard work of sourcing, purchasing and shipping the products, and the arbitrageur just creams off profit with none of the risks.

A more tangible downside is that some Amazon sellers get more returns as a result of their items being sold through arbitrage on eBay. The eBay listings are often rushed or badly copied and returns come back because the item was not as described. Returns can also occur because the eBay buyer makes a point of avoiding Amazon, or resents paying a higher price unnecessarily. More returns mean more work and additional costs for the seller.

Amazon sellers who have created their own product, and sell under their own brand, can be particularly angry. These sellers have invested a lot into their business, spending many years and thousands of dollars developing a product, registering trademarks, paying for professional photography and so on. To see their “baby” being sold somewhere else for a higher price can feel galling. Ripple Rug is one brand that struggled with exactly this issue.

People often use the terms “Amazon to eBay arbitrage” and “dropshipping from Amazon to eBay” interchangeably. But Amazon to eBay arbitrage is not actually dropshipping.

There are similarities between arbitrage and dropshipping, but the two practices are really quite different.

Dropshipping

• A business contract is agreed upfront between the seller and a supplier.
• The supplier is usually a wholesaler or manufacturer.
• The products are available to businesses only, at a wholesale price.
• When a sale is made, the seller asks their supplier to ship directly to the buyer and the seller is charged the agreed price to their account.
• The seller pays the supplier as agreed in the payment terms.
• It’s a business relationship, and completely transparent to both businesses.

Amazon to eBay arbitrage

• No business relationship exists between the eBay seller and the Amazon seller.
• The Amazon seller does not know their products are being resold.
• The products are available to anyone, at retail prices.
• When a sale is made, the eBay seller orders the product from the Amazon seller, saying it is a gift and giving the eBay buyer’s address.
• The arbitrageur pays the Amazon seller straight away.
• To the Amazon seller, the transaction is exactly the same as any Amazon customer ordering a product as a gift.

Similarities

In both cases, the eBay seller doesn’t buy any stock upfront and they only place an order once they receive an order themselves. Those benefits are the same in both models, but the relationship with their “supplier” is completely different.

Amazon to eBay arbitrage is very different to Amazon FBA.

Amazon FBA (Fulfillment by Amazon) is Amazon’s fulfillment service. Businesses who use FBA buy products then send them to an Amazon warehouse to be stored until sold. When a sale is made, the product is picked, packaged and shipped to the customer directly from the FBA warehouse. Amazon charges fees for the service depending on size, weight, storage time etc.

Sellers can use FBA to ship products that are sold through any platform – not just Amazon. Someone who sells on both Amazon and eBay may choose to use FBA to fulfill their eBay orders, for example. This is called Multichannel Fulfillment (MCF) and has higher prices than using FBA to fulfill Amazon orders. Orders shipped through MCF arrive in an Amazon box, so they look like arbitrage, but they are not. (As a side note, up until 2016 Amazon gave the option for MCF orders to be shipped in plain packaging).

With Amazon to eBay arbitrage, the seller does not purchase any inventory and only buys after the eBay sale is made. Confusingly, the order can often be shipped from Amazon FBA, but that is because the Amazon seller uses FBA. It has nothing to do with the arbitrage seller on eBay.

Software can make all the difference to the success of an arbitrage seller. Prices on Amazon fluctuate continuously, and if an arbitrageur does not track them, they may sell products on eBay at a loss. When that happens, the options are either to take a hit and place the order anyway, or cancel the order and damage their eBay performance metrics. Not a great choice.

Profit margins using Amazon to eBay arbitrage can be paper thin, so bulk listings are where the real money is often made. Manually checking prices and adjusting listings for more than a few products is not practical, let alone for the number of listings required to make it worthwhile – which can be up to hundreds of thousands.

Automation software can:

• Compare prices for the same product on Amazon and eBay
• Copy Amazon listings to create eBay listings in bulk
• Reprice eBay listings when Amazon prices change
• Take down eBay listings when stock runs out on Amazon
• Automatically order sold items from Amazon
• Post tracking information back to eBay when the order is dispatched by Amazon

Also see our post on online arbitrage tools and a shortlist of Amazon to eBay arbitrage tools in our directory. (Online arbitrage is a wider practice covering other marketplaces and online retailers).

The following tools support Amazon to eBay arbitrage with varying degrees of the automated features described above:

• PriceYak
• Arbiship
• ATEP Online
• Cleer Platinum
• LootLister
• Profit Spy
• SaleFreaks
• Segemai Retail
• Sku Grid
• Trackerbot
• Web Seller Guru

Arbitrage sellers typically set prices on eBay between 5% and 15% above the Amazon price. Out of this comes eBay and PayPal fees, and any other costs such as returns have to be factored in as well.

The sellers who seem to get the best results have made arbitrage their full-time business, and they’re often top-rated sellers on eBay. They tend to list as much as possible, sometimes thousands of items at a time. But eBay’s selling limits can be a real barrier, as they restrict the number of active items for sale, and can only be increased once a month.

Sellers following this strategy will use an automation tool to compile a list of popular products and create eBay listings in bulk. A lot of sales can result, but profit margins are low and there can be a high demand for customer support. Some sellers only just break even, but make a profit from credit card cashback due to their high spending.

Many sellers who’ve tried Amazon to eBay arbitrage on a smaller scale have become disillusioned by the small profits they’re making, especially as eBay fees increase and Amazon prices fluctuate.

Yes, sometimes, but it doesn’t happen all that often. Some arbitrage sellers refund the price difference if a buyer complains about being overcharged, which normally prevents negative feedback and can be built into the cost of doing business.

Buyers who are making a point of avoiding Amazon might feel tricked and go on to leave negative feedback. For the big arbitrage sellers, with very high volumes, this is usually a very low percentage of their total feedback.

Although consumers are pretty savvy when it comes to price comparison, sometimes they just don’t look. There are many different buying habits, and checking prices on both eBay and Amazon isn’t all that common. Some will go direct to eBay, believing it will always have the best price.

Others might compare prices, but a comparison between a brick-and-mortar store and eBay, for example, may favor eBay even if the product is actually sourced from Amazon and marked up.

Another possibility is that eBay’s Global Shipping Program makes a product available to an international buyer who can’t buy from Amazon directly due to their location, or who finds Amazon’s own international shipping to be prohibitively expensive. In that case, the buyer may know that the item is cheaper on Amazon but still choose to buy on eBay. The seller then arranges for shipping from Amazon to eBay’s domestic warehouse, and leaves it for eBay to arrange shipping to the buyer abroad. That’s how the Global Shipping Program works.

And finally, a buyer with a balance in their PayPal account (from the auction of unwanted gifts or hobby items, for example) may choose to buy on eBay to make use of their balance. While it’s more rational to withdraw the money and then buy from the cheapest retailer, it might be quicker and more satisfying to spend the balance directly.

On balance, Amazon to eBay arbitrage provides a low-risk way to start selling online. But it’s not zero risk – sellers can still lose money. And it’s not zero skill – it’s easy to get started but there is a lot to learn to become successful.

Here are some of the most common risks:

• Amazon’s price increases
• Amazon goes out of stock
• The buyer wants to return the item

If Amazon’s price increases and your eBay listing is not updated accordingly, you could get an order that would lose you money. You can cancel the order, but that is considered a “transaction defect” by eBay. Too many defects can cause your seller level to be downgraded and lead to higher fees, lower search ranking and even the complete loss of selling privileges.

Amazon going out of stock is a similar situation, except that there is no choice but to cancel the order. Performance metrics will take a hit.

There is always a risk of buyers wanting a refund. With arbitrage selling there is an added layer of complexity to refunds and returns. The arbitrage seller will need to go through Amazon to get a returns label and send it to the customer. They will then need to wait for confirmation of the product being received by Amazon (or the third-party seller) before issuing a refund to the customer. That takes time and the eBay buyer might lose patience and leave negative feedback.

Other risks

Negative feedback can be left for other reasons as well. The risks of negative feedback for arbitrage sellers is often elevated due to:

• The arbitrage seller ordering the wrong product (due to high order volumes)
• Poor or incorrect listing information
• The buyer discovering the product came from Amazon
• The buyer finding the product cheaper on Amazon

Another risk is that angry Amazon sellers file a Verified Rights Owner intellectual property infringement claim (VeRO) because their copyright has been abused. If successful, eBay will remove the affected listings or even suspend your selling account.

Finally, it is worth considering the popularity of Amazon to eBay arbitrage. More and more people are flooding eBay with identical listings and it can be very difficult to make a profit. Only the larger sellers make any real money and even then, it’s not as much as people think.

Some people believe that because an image or wording has been published online that it’s in the public domain and can be freely used. However, unless the description and photos are taken direct from the manufacturer, who will generally permit them to be used to sell the product, the images and description will probably be the copyright of an Amazon seller or perhaps even of Amazon itself.

It can be risky to lift images and descriptions wholesale and use them directly in eBay listings, although a lot of arbitrage sellers do it and some automated software is designed to do exactly that.

To avoid complaints, some arbitrage sellers have a different approach. They list a relatively small number of products, perhaps a few hundred, and work on the titles, photos and descriptions, creating original content such as detailed buying advice. These type of arbitrageurs tend to get a higher proportion of sales on the relatively few listings that they have.

Some Amazon sellers become understandably furious when their Amazon listings are hijacked and put onto eBay. Unfortunately it can be very difficult to stop. Neither Amazon or eBay prohibit arbitrage selling. And both Amazon and eBay make money from every arbitrage transaction, so they are not strongly motivated to stop it happening.

So, what can you practically do?

• File eBay VeRO complaints if sellers are taking your photos and descriptions. If successful, this will get the listings removed.
• Complain to Amazon if you suspect the arbitrage seller is using their Prime membership to resell products on eBay. This breaks the terms of Prime. Give Amazon as much information as you can to help them in their investigation.
• Report the seller to eBay. Arbitrage is no longer allowed under the updated dropshipping policy and eBay may take action.
• List your own products on eBay at a more competitive price than the arbitrage seller.

Some Amazon sellers have even resorted to hiking the price of their own listings on Amazon then quickly placing an order from the arbitrage seller on eBay. The idea is that the arbitrageur will be forced to fulfill the order at a loss or that they’ll cancel it and damage their performance metrics.

However, hiking prices is an extreme approach that could backfire, as the price goes up for genuine customers as well!

This post was originally published in April 2015.