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How much can you make with retail arbitrage? When we first started out, I was skeptical of even making a single sale. That all has change now that we have actually started to see some sales come in over the past month.
My wife and I are starting to realize the potential for turning retail arbitrage into a sustainable income stream. While we are not earning crazy amounts of cash just yet, our initial testing of retail arbitrage has had plenty of things to like.
First of all, we are actually making sales – which honestly still surprises me to this day. We have listed a total of 11 items and have sold 5 of them in about a month. It is not a ton of sales, but they are sales bringing in real money.
Secondly, there really isn’t much work involved – other than the upfront buying of inventory and packing them up for shipments. I won’t lie – packing up our first shipment drove me crazy and I felt that the work involved wasn’t worth the effort. Looking back now, I have started to change my mind. A couple hours upfront work is probably worth it after all.
Retail Arbitrage Using FBA
It is that time again where I will give a quick update on our Fulfillment by Amazon (FBA) money experiment. We are testing out selling through FBA to see if it can be a viable extra source of income for our family.
We have now made our 4th and 5th sales using FBA and are starting to get excited about the potential prospects. Of the most recent two sales, one was very profitable and the other not so much.
Here is a quick recap of our most recent sales and progress thus far with FBA –
Two More Sales
Our latest two sales on FBA are perfect examples of a good product to sell and another that is not all that profitable and should be avoided. One provided a return of 168% profit from the original sale price. The other only returned $.43 in profit.
The 4th item we sold on FBA was another electronic item that we had listed. It was the same item as our first ever sale on FBA. Here is a breakdown of the sale –
- Sold 1 Unit for – $34.99
- FBA Fee’s – $9.26
- Cost of the Item – $6.99
The total profit (not including shipping and packaging) for this item was – $18.74. That is well over 100% profit and is the type of item I would like to try and resell in the future. The item is small and easy to ship and obviously has a market out there.
On the flip side, our fifth sale was another one of the craft items we have listed. This is the third of eight of these items we listed. We found out quickly after selling the first one that there is not much profit potential selling items on FBA for under $10!
Here is a breakdown of our fifth sale.
- Sold 1 Unit for – $8.99
- FBA Fees – $5.36
- Cost of the Item – $3.20
The total profit (not including shipping and packaging) for this item was – $0.43.
After making both sales, we increased our total income from FBA by $19.17 (less any shipping and packaging fee’s).
Comparing FBA Fee’s
In a previous post, I detailed several of the FBA fee’s and why it is not a good idea to sell items under $10. Today I would like to revisit these fee’s and show the breakdown of our latest two sales.
The first (more profitable) item was higher in fee’s but made a lot more income. The second (and much less profitable) item was lower in fee’s but made less than a $1.
Electronic Item – Sale Price $34.99
- FBA Order Handling Fee – $1.00
- FBA Pick & Pack Fee – $1.06
- FBA Weight Handling Fee – $0.96
- Per-Item Fee – $0.99
- Referral Fee on Item Price – $5.25
Total Fee’s – $9.26
Percentage of Sale Price – 26.5%
Craft Item – Sale Price $8.99
- FBA Order Handling Fee – $1.00
- FBA Pick & Pack Fee – $1.06
- FBA Weight Handling Fee – $0.96
- Per-Item Fee – $0.99
- Referral Fee on Item Price – $1.35
Total Fee’s – $5.36
Percentage of Sale Price – 59.6%
As you can tell from the fee’s listed above, the Order Handling Fee, Pick & Pack Fee, Weight Handling Fee, and Per-Item Fee for both items are identical. The Referral Fee on Item Price is the only variable fee and is a percentage of the sale price.
It is the total fixed fee’s of $4.01 on both items that makes the item selling at $8.99 much less profitable. If all the fee’s were variable based on the sale price, then there would likely be a higher profit potential on items selling under $10 on FBA.
FBA Inventory Update – First Shipment
Whenever we make a sale on FBA, we update the status of our first shipment – which contained a total of 11 items. These items consisted of 3 different products that were shipped to 3 different FBA locations. The total costs for this first shipment was – $66.81.
These costs included the price of the items to sell, shipping fees, and materials. No FBA fees were included in this total.
After our fourth and fifth sales, we now have a balance of ($4.46). If we were to pull the plug on our retail arbitrage money experiment today, we would be in the hole just under $5. Not too bad for our first trial of selling on FBA but we can hopefully do better.
We have 6 total units remaining in our first shipment at a couple different Amazon locations. The hope is to continue selling these remaining units and turn a slight profit. With 5 units remaining of the craft item, we just won’t be able to make a huge profit in the end but it certainly has been a good learning experience.
Conclusion
Selling items on FBA is actually much easier than I originally thought. In just about a months time, we have made 5 sales – which isn’t great but it is bringing in a little extra cash.
In this short amount of time, we have learned plenty of things about selling on FBA. For example, selling items for under $10 is not going to be profitable. The fixed FBA fees associated with non-media items are just too high and will cut into your profits. The key is finding smaller items that don’t cost a lot to ship that can be sold for well above $10. Our electronic item is the perfect example where we made a return of over 150%!
We have six items remaining in Amazon FBA inventory that we hope to sell over the next couple of weeks. In the meantime, we have been searching for products to sell in our second shipment.
Do you have a profitable FBA income stream? What types of items do you sell? Have you ever broke even or lost money when selling something on FBA?
