I must be missing something about arbitage.

I have no idea what I'm doing but I'm thinking about testing out arbitage on Amazon since I've heard it has the least amount of fees.

Reading up on topics here, the basic premise seems to be to offer a product and when you sell something, find someone else on Amazon or somewhere else with the same product, buy it and send it to the address of the person who purchased from you.

For some reason though, I have the feeling it can't be that easy. I have a few questions.

1. I see alot of topics here asking for wholesellers. Is it hard to find someone else selling your item or something?

2. What is the risk I'm taking on? What happens if they return the item?

3. How do I get prospective buyers as a new amazon seller (thus having no credibility, no seller status)? I don't have the money to buy from myself to increase it like people recommend.

4. Is there any other aspects of drop selling I'm neglecting? Did I capture the gist of it? Do I need to buy anything on Amazon as a requirement to do well as a seller (pro accounts, anything)?

5. Lets say I have a magical situation where I have lots of buyers. How do I keep up with all these orders?

6. I only have about... maybe $80-100 to start with. If someone did purchase from me, how would I afford to buy the product I'm trying to arbitage? (until the payments come in and my business is up and running)?

7. Can I sell anything or do I need permission to sell a company's product?

anyone?

I'm confused as to what exactly "arbitage" is...

I was under the assumption this was a very heavily saturated market. EBay dropshipping would be much more profitable if you could find a good niche and supplier.

However, there are large inherent risks.with this business model.

Profit margin isn't worth it in my opinion especially with such a small investment. Better off with a mns or something similar to build up funds.

I know arbitrage...but not on Amazon. Not sure it is a reliable business model.

Then explain it on ebay or whatever platform you feel more attuned with.

smallgiant said:

I was under the assumption this was a very heavily saturated market. EBay dropshipping would be much more profitable if you could find a good niche and supplier.

However, there are large inherent risks.with this business model.

Profit margin isn't worth it in my opinion especially with such a small investment. Better off with a mns or something similar to build up funds.

Click to expand...

Those risks being....?

Well with arbitrage in general, your money is always tied up in products. Profit margins are small. Any shipping delays or problems will become your problem. You will get all the bad reviews if whoever you order from does not provide.

Dropshipping has similar inherent risks, but they are possibly more damaging. In general this would be done through ebay, and PayPal. Shipping times will always be slow, and you have to trust your drop shipper will not just screw you at the end. Basically you will be taking orders for product you do not actually have, you then transfer the portion your dropshipper requires, and hope he sends the product. All bad products, slow shipping, and other problems will be brought down on you.

Also, if like me you had a successful dropshipping business on eBay and then your dropshipper just decides to not ship one day, your entire business can come crashing down.

But there is no way, even if everything gets messed up, that I'll end up having to pay money to cover the product I didn't deliver, right?

I just cancel their order and they get really pissed off and ruin my feedback and sales.

But I won't magically get into debt, right?