Recently we polled our members to see how they are sourcing products for their Amazon and online ecommerce businesses. This was the result.
Although this is a small sample of our total membership, I was surprised by the results. A majority of people are still sourcing via arbitrage, whether it be online or in store. This is definitely a somewhat risky but profitable model in the short term.
This leads me to wonder, what is the future of arbitrage? Is it a sustainable business model? I will say yes with some major reservations.
- This model will become harder and harder to do on Amazon.com as the rules are tightened, brands are restricted and inauthentic claims are harder and harder to fight.
- Those who have been doing it successfully for at least a year are at a bigger advantage because they have achieved some mastery and cash flow.
- While Amazon.com may be more challenging, those who can adapt to international marketplaces such as Amazon in Europe and Linio in Latin America will thrive. (Linio will be adding major shipping functionality from the US in 2017 which will make it a much better fit for arbitrage than it is now.) Many people in other countries are desperate for our brand name goods and the seller marketplace and warehouses are not nearly as congested as the US ones are. Developing countries in particular will be great for arbitrage such as Latin America (Linio.com), India (Amazon.com), and even China.
- Sellers who learn international marketplaces besides Amazon will be at a huge advantage. For example, if selling in the UK, what other marketplaces besides Amazon make sense for selling?
- Sellers who can sell in multiple marketplaces will be safer. For example, selling on Ebay, Jet, Facebook, Pinterest, Instagram and even local will be able to fully capitalize on their deal sourcing capabilities.
Arbitrage is still a viable business model for many but keep a lean inventory to make sure that pivots are not too costly. The days of just send it into Amazon and move on are over. Accounts must be much more closely monitored, records kept better and growth strategies must be employed.
I would love to hear YOUR arbitrage experiences and opinions. Please comment below.