Does Retail Arbitrage Work? Our Third Sale on FBA
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Does retail arbitrage actually work? Is it a viable income stream that can help you earn extra money?
There are some who make a full time income through retail arbitrage like The Selling Family. Fulfillment by Amazon has allowed this family to quit their jobs and earn income solely through retail arbitrage.
The potential profits that can be made with FBA is enough to strike an interest with my wife and I. Instead of jumping in full time, we decided to start slow and learn the process one sale at a time.
This will allow us to first see if we can successfully earn side income through retail arbitrage. It will also let us decide if this is an income stream that can be sustainable and something that we actually enjoy.
Retail Arbitrage Using FBA
Today I would like to 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 3rd sale using FBA. Just three days after our 2nd order was made, we made another sale – which was the craft item I provided details on in our original retail arbitrage post.
Unlike the first item we sold, our last two sales have made us very little profit. These last couple of sales have been on products listed at under $10 on FBA. I have since realized that there is very little profit potential selling products on FBA for under $10. The FBA fees will eat into any profit you may be expecting.
Here is a quick recap of our third sale and progress thus far with FBA –
Our Third Sale
Our third sale was exactly the same as our second. It was the 2nd out of 8 craft items we bought at Big Lots for $3.20 (after tax). The items were all listed on FBA for sale at $8.99.
Here is a breakdown of the 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.
As I mentioned in our previous post, paying $5.36 in fees to sell this low cost item on Amazon killed any profits we could have had. If we decide to stick with FBA, then we will certainly look for more profitable items to sell in the future.
If you are curious about potential costs to sell your items, here is a good breakdown of the FBA fees.
FBA Inventory Update – First Shipment
Every time we make a sale on FBA, we will update the status of our first shipment – which contained 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 third sale, we now have a balance of ($33.82). If we were to pull the plug on our retail arbitrage money experiment today, we would be in the hole just under $35.
The hope is to continue selling the remaining 8 units that we have at the Amazon locations and turn a slight profit. With 6 units remaining of the craft item, we just won’t be able to make a huge profit in the end and will likely break even.
Every new sale that we make on Fulfillment by Amazon, we learn something new. We know that it is possible to sell items on FBA – with very little effort. Besides spending a couple hours packing up our products to ship – there was very little effort involved.
Another thing we learned is that 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. Even though we paid about 35% for the craft item compared to what it is selling for on Amazon – the associated fees are just too much to make any profit.
The good news is that we are constantly learning new things about this potential income stream. It is also kinda fun watching items get sold – although it is a little slow. But there is just a really good feeling when you read one of those emails letting you know an FBA item you have listed has sold.
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?