Learn how to analyze online arbitrage deals
Amazon FBA sellers must learn how to analyze online arbitrage deals to be profitable with the business model.
To establish if a deal is a Go or No Go, four questions must be answered:
Is this online arbitrage deal profitable?
Are there any restrictions to sell this lead on Amazon?
Is there enough demand for this product?
Is the supply favorable to this online arbitrage deal?
Fortunately, the Sellerwiz Amazon FBA Calculator and Deal Analyzer extension was created to address these issues and makes learning how to analyze arbitrage deals simple and quick, even for beginners.
The example below shows how simple it is to examine an online arbitrage deal.
The first step after loading the extension was to enter the purchase price as well as any additional discounts or charges you expect to spend on this deal. In this situation, the product was on sale for $24.99 on DSG, and I had a 5% discount coupon. I used 13 percent off gift cards to pay, but I had to go to a nearby store because they’re only usable in-store! I also used the advanced FBA profit calculator to insert my inbound shipping and preparation charges.
Sellerwiz did its magic after the data was entered. The total score, which is a computer-generated number that takes into account all aspects of the transaction, was 90 percent, and it was presented right away. It demonstrated that the deal met all of the criteria and passed the analysis with flying colors.
We could use the one-click analysis to end here, but for the sake of learning and for those who enjoy delving into the intricacies, let’s go over each question one by one.
Is this online arbitrage deal profitable?
The arbitrage deal is incredibly lucrative. The deal’s ROI is above 79.61% percent, with a total profit of $346.17 for 20 units. The win frequency indicates that the deal has often achieved breakeven or better, which is comforting.
Are there any restrictions to sell this lead on Amazon?
We already know there are no restrictions because the “You Can Sell It” statement informs us, but let’s take a closer look at each factor to see how comprehensive Sellerwiz’s research is. The limitation section assesses five factors:
- Eligibility: Is it allowed for us to sell the item?
- Dangerous Goods: Is the item dangerous, necessitating the seller’s participation in the Dangerous Goods program? Is the item under Hazmat review?
- IPI risk: determines if the likelihood of a brand owner filing an IP claim is high or low. As the number of seller in the listing implies, it is quite low in this situation
- Meltable: Particular items are melted and cannot be transported to Amazon during the summer in some areas. Sellerwiz keeps track of this for you.
- Oversize: items that are overly large incur additional shipping and storage costs, so keep this in mind.
Is there enough demand for this product?
So we know that the product is profitable and that there are no restrictions to sell it on Amazon. Now we need to find out whether there is enough stable demand. The message at the header of the section tell us that demand is Good and that sales are high but, let’s delve in!
Sellerwiz displays both absolute and relative Best Sellers Rank rankings, as well as sales projections. The section shows the current, last 30, last 90 and past 180 days. The item is among the top 0.06 percent of best sellers in the sports category, with monthly sales of roughly 364+ pieces.
Is the supply favorable to this online arbitrage deal?
Last but not least, there’s the supply section, which is mostly concerned with competition. Supply circumstances are good, and competition is fair, according to the section heading. On the plus side, the Buy Box Concentration is quite low, indicating that no single seller is very dominant. We also notice that Amazon isn’t included in the listing. The number of offers is more than optimal, but each seller’s stock appears to be little, and the combined stock appears to be only enough for 5 days of sales (DSI = 4.94).