Systems are the backbone of every successful business, including online arbitrage. Until you can get yourself away from working ‘in’ the business, it is really hard to scale revenue and growth. Although retail arbitrage is the most popular entry-level business for Amazon sellers, it’s hard to scale the model for high revenue and success.
Good News for Online Arbitrage Selling Models: With online arbitrage, you can use automation to scale your Amazon FBA business to millions of dollars in revenue (we’ve done it). And, making the transition from retail arbitrage to online arbitrage isn’t really that hard.
People often ask us how we structure our automated online arbitrage businesses for optimal scalability. So, we created this flow chart to show the architecture that we use:
How to Automate and Scale an Amazon Online Arbitrage Business
Our Automated Online Arbitrage Business System Flows Like This:
Sourcing Online Arbitrage Leads – a team of virtual assistants source arbitrage leads manually and also with digital scraping tools. They compare product prices on retail websites with prices on Amazon.com.
Analyzing Metrics – the sourcing team analyzes resale potential by following structured protocols and rules that uphold the quality of products we are looking for.
Daily Online Arbitrage Sourcing List – If the lead has resale potential, the sourcing teams add it to a spreadsheet with all metric information listed for further analysis by a buyer. An admin assistant then scrapes the lead information into a spreadsheet that is prepared for the buyer. Leads may come from manual team sourcing, premium lead lists, or lead scraper tools.
Buying OA leads – another highly trained virtual assistant known as the “buyer” carefully analyzes all of the online arbitrage leads on the lists and makes a decision whether to buy or not. The buyer not only decides which products to buy, but how many of each product to buy based on an analysis of the metrics available.
Shipping to Prep Company – When purchasing, the buyers ship all items to prep companies in sales tax-free states.
Inbound Inventory – The buyers share the purchase information with the admin assistant, including the product, quantity, order #, prep company used, and any notes that may need to be exchanged.
Tracking Inventory – Admin takes the information and adds it to an inventory log via Google spreadsheet.
Listing Identification– Since we are reselling items, and we are only looking for items that already have Amazon sales pages created, our admin only needs to verify which existing sales page each product will use, as opposed to creating new sales pages for new products. Sometimes creating new listings can also be a huge home run, but we generally target online arbitrage leads that are already listed and selling well.
Creating Shipments – Once the products have arrived at the prep companies, the admin works with the prep company to inspect, package, label, and ship the products to Amazon FBA warehouses for sale. Shipments can be created using Amazon Seller Central, Inventory Lab, or other inventory management programs that are compatible with the Amazon marketplace.
Amazon Receives Products – UPS carries all Amazon shipments if they are created using their system. The admin tracks the products as they approach Amazon warehouses to monitor their arrival.
Live Inventory Pricing – Once the shipments are created, the admin sets the sales price and the listings go live once the products are received by Amazon.
Repricing – Because there is usually more than one seller on each product listing, we use a repricer to automatically reprice our products if a competitor drops below or above our price. The admin sets the minimum and maximum sales prices in the repricer, and it automatically matches prices to win the buy-boxes on the listing. We use Informed.co as our repricer.
Sales – Most products sell like crazy given our product research is thorough. The goal of buying and reselling is to only purchase products that are already in high demand so they move from the shelves quickly.
Fulfillment – Amazon fulfills all orders that are made directly to the buyer through the Amazon FBA program. Amazon also handles all returns and refunds, which are automatically added or deducted from the seller account.
Customer Service – If a buyer needs assistance or has a question, an admin assistant takes care of it with 24 hours of receiving the message.
Bi-Weekly Payments – Every two weeks, Amazon pays out the balance on the account owed to the seller. This is your gross sales minus all expenses and fees.
Product Reconciliation – After products arrive at Amazon FBA warehouses, they need to be accounted for because sometimes there are issues during shipments, warehouse transfer, etc. The admin assistant tracks all arrived items and reconciles anything that is damaged or missing. If we are not at fault, the admin assistant files a request for reimbursement from Amazon.
Liquidation – If for some reason a product doesn’t sell, it needs to be liquidated or destroyed. There are several options for product liquidation.
Party – Self-explanatory.
Yes, it’s true that we are almost entirely removed from any actions above that are considered ‘in’ the business. Besides some urgent actions and possible emergency situations, we really only work ‘on’ scaling and automating the business systems further. Our team is compiled of incredible assistants that work from anywhere they choose, on their own time, as long as the work gets done.
Building Your Own Online Arbitrage Business
We will cover the systems, metrics, and all the tools and services that we have used to build our online arbitrage business throughout this blog. It is our hope that you can learn from the systems that we have created and build something that works for you too.
Remember, there are unlimited ways that people run and manage their Amazon online arbitrage businesses. The above architecture is just our preference, and we are sharing it to give you some ideas on what is possible. Chances are, your systems won’t be exactly like ours. And, there are certainly some less than ideal situations that all sellers have to deal with too.
We make money on most of the products we sell, but we certainly lose money on some of them too. Free markets aren’t 100% predictable, but they can be predictable at a very high percentage if you study the metrics we are about to show you and use the information to make good buying decisions.
In our next post, we are going to discuss when we implemented certain tools and services into our online arbitrage businesses to help support the business models and scale growth.
Leave us a question or comment below.
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Timeline of Growth and Automation for an Amazon FBA Online Arbitrage Business
Great! All laid out. Thank you!
If a seller has a tax exempt reseller certificate, does it matter if you’re sending products to a prep center in a tax free state or not? Is there still a benefit to that? Thanks!