Online arbitrage is the most common technique applied by retail sellers in Amazon or eBay marketplaces. On the surface, the business model is very simple. Just identify the product source less the retail market, buy them online and ship it to warehouse or FBA centre. Sell those products in Amazon, eBay or any other marketplace where one can make a good profit. The whole system is very easy to understand but difficult to execute. Many new traders end-up with loads of inventory and later they will sell in liquidation stocks.
In an arbitrage strategy, having the right tools to analyse the price, products and trend. Using these data one must come up with the right plan. In addition, sourcing and shipping must be on time as well.
Steps in arbitrage deals;
- Identify the right products with the help of data available.
- Shortlisted products must be lesser price than leading marketplaces like Amazon or eBay.
- Shipping should be on track and make an arrangement in warehouse or FBA.
- Start the listing process in marketplaces and input the right price.
- Start selling the products
Finding the right tools
Tools are very important in any online business. Even if you are just starting or already a leading seller, having the right tools will help you make the right business decision. Software, data and analytics will help you beat your competitors. Let us have a look at the factors which are essential for arbitrage in the eCommerce business.
1) Identify the trend
The trend is your friend. Identify the products which are fast-moving in leading market places. Manual verification or searching process will take forever and you will be misguided very easily. So trend identifier will definitely help you shortlisting at least hundreds of products. Nowadays software which is equipped with Natural Language Processing and Machine Learning models will detect the leading products. Not only by one data points but many data points, engineered by passionate data scientists. Trendy products generally move quickly and save a lot of time.
2) Beat the competitors by the best price
Software with price analytics will fetch the perfect price entry points which will calculate the ROI even before you place orders. This will give the competitive edge and you can start selling at great discounts. Coupled with trend analysis, arbitrage sellers can start selling products even before the other seller notice. The software also equipped with the best sourcing, price, shipping time and many information which are the holy grail for sellers.
3) Supply-Demand analysis
Sometimes there will be a huge demand for certain products which are not sold by any other sellers or very fewer sellers. Softwares can identify the products in demand or predict the demand and supply. This is done with the help of sales history of leading marketplaces, sentiment analysis and trend as well. In an arbitrage strategy, no one wants to sell the products that move slowly or products which has too many competition. Sales history will help in identifying product on-demand with a stable price in the market and high ROI.
4) Cost analysis
From identifying the products to ROI, understand the cash flow. This process is very important and generally time-consuming. Having the right tool will help in understanding best with the help of data visualisation.
5) Product sourcing
Exploring the potential products in multiple suppliers website is an exhausting job. There will be multiple offers based on the number of orders, product type or design. One must have a central system to compare all the factors related to the product. This will definitely a great help in making a decision faster.
6) Dropshipping in Online Arbitrage
This is a very similar approach but when sellers don’t have inventory or warehouse, this process is called Dropshipping. Ship from the 
source to buyers directly. All you need is a laptop and an internet connection. If you find a retailer who sells the product lesser than the marketplaces like eBay, then one can make a deal with great ROI. The best thing is the whole process can be automated with the help of software.
Finally, selling the product on marketplaces at lightning-fast is the fundamental concept of online arbitrage. Timing is the crucial step and hence using the correct tools in the market helps you work efficiently. From identifying the products, questioning the price, demand-supply analytics and to shipping & customer service must be handled efficiently without wasting time and resources. Software and modern tools play a critical role in Online eCommerce arbitrage.
