By Chris Green - Arbitrage: The authoritative guide on how it works, why it works, and how it can work for you

by Chris Green

Arbitrage is the practice of taking advantage of a price difference between two or more markets, striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the market prices. This is the complete, authoritative, and exhaustive manual outlining the Arbitrage business model. It has been compiled and made available to anyone interested in buying products to be resold online. In this book, Chris Green will give you the keys to the Arbitrage Kingdom with the mindset of unlimited opportunities and abundance and not one of scarcity. Empires are being built by using powerful new programs like ScanPower to source and evaluate items for resale. Pair this with Amazon's amazing fulfillment program called Fulfillment By Amazon (FBA) to outsource the storage, shipping, and customer service of your items, and you have a completely scalable, nearly risk-free business model with a near-zero entry cost. The techniques described in this book can be used by anyone, anywhere to build a small side business or large empire. The only limit is you imagination.

Genres: Business, Entrepreneurship, Amazon, Nonfiction, Technology, Finance

Paperback

First published September 13, 2012

About the author

Chris Green self-published his first book in 2011 and continues to publish new books to this day. He has sold hundreds of thousands of books, with multiple books reaching #1 bestseller status. Chris is on a mission to help authors SELL MORE BOOKS through modern book marketing. He founded Authorpreneur.com to help authors become better marketers through proven book marketing strategies. Like many authors, Chris enjoys talking about writing, publishing, and marketing books with anyone who’s interested. You might find him online spending time answering author’s questions on social media. He enjoys life in New England with his wife and two very cool children.

Reviews

[Cara · Rating 4 out of 5]

This book offers a great introduction to "arbitrage" using Amazon as a secondary market, using Fulfillment by Amazon (FBA) for order fulfillment. I've heard about this idea several times before, and it always seemed stupid to me, but for whatever reason, this time it caught. I really enjoy shopping, and whenever I see a ridiculously good deal on something that I don't need, I'm always bummed that I can't do anything with it. This is an opportunity to change that. I wouldn't even remotely consider this sort of thing if it wasn't for FBA. I hate shipping stuff. Hate it!!!! But if I just send a big box of stuff once in a while on my own schedule (not because someone ordered it an now I'm a bad person if I don't send it), that's a lot more palatable.

Anyway, the basic idea is that you buy stuff way cheap somewhere it's not in demand and sell it at a higher price somewhere else, where it is in demand (i.e., Amazon). Because Amazon stores all the stuff super inexpensively, this is much more doable and scalable than it once was--you don't need a whole warehouse of stuff in your garage. You can put it in Amazon's garage, ha ha. And because the fees with FBA are so low, you'd be insane to store and ship all this stuff yourself, except possibly for small, expensive specialty items.

Main points made in this book:
- FBA is awesome, not only in the hassle it saves you, but also in the advantage it gives you: if you use FBA, your item will be eligible for free Prime shipping and free SuperSaver shipping, and it will show up higher in the list of items for sale because its total price assumes $0 for shipping.
- Because customers trust Amazon and want free Prime shipping, you can price your item higher as an FBA seller than others can who do their own fulfillment. It's more important to convince them you're for real than to have the lowest price.
- Prices go up when there is more demand than supply, and vice versa. That's why prices change all the time on Amazon.
- In the old days, all this was much more labor-intensive and/or guessing-oriented. Now you can just scan stuff on your smartphone and instantly see what it's selling for on Amazon, and what the fees would be if you were to sell it at that price. (The book goes on and on about the author's product, ScanPower, but the Amazon Seller's App also does this, and it's free.)
- This isn't just about getting books from the thrift store for 25 cents or whatever. The author sells a lot of toys and power tools.
- It's not about grabbing the next sale or being the lowest price. It's about making a good margin so you can stay in business. If there is another of your item listed super-cheap, you don't have to match that price. You can just ignore it until that one sells. Also factor in the cost of returns. The author recommends starting with products that are selling on Amazon for at least 3x what you pay for them. Over time, look for 100% margin, or maybe as low as 50% if you can sell a lot of the item quickly.
- The author prefers buying things from in-person stores, rather than getting online deals. Everybody everywhere has access to the online deals, but the local ones may have a big untapped market somewhere else.
- You can also use FBA to fulfill your orders outside Amazon--ex. Ebay orders. Enable Multi-channel fulfillment if you want to do this. Customer service is only included for purchases made through Amazon, not multi-channel. But you still get to use Amazon's shipping rates no matter where you sell the item, so you can offer 2-day shipping "free" (work the cost into the selling price) and next-day for only $9.99 (or whatever). This makes your listing stand out on Ebay or similar.
- Once you get started, it's basically just buy more stuff, sell more stuff, make more money. The more you put into it, the more you'll get out.
- Don't try to compete with Amazon on price. They'll match you, and they can always outlast you. You can move your price up and down to snag a few sales during the lag before they match you, though.
- You may be able to make a deal with your local libraries and/or thrift stores to sell their extra stuff on consignment or buy it in lots really cheap or split the proceeds of selling it on Amazon. Consignment gets a little complicated, though.
- Make sure you have a ton of stuff in inventory ready for the fourth quarter. Sales go way, way up then. This guy shows sceenshots of Amazon payouts of $11,000+, $18,000+, and $30,000+ for the three fortnights leading up to Christmas 2009, then $5,000 and $3000 for the two after, when most of the returns hit. In 2010, it was $6000+, $11,000+, $27,000+, $10,000+ (before Christmas through New Year's), and $700 (gross sales $4000+ but all the returns hit here).
- Don't assume if a sale is picked over that all the good deals are gone. The author always finds something.


One very interesting part was the three case studies/testimonials in the "Anyone can do this" chapter.
Nancy Green: mainly books. She looks for books <= $1 each that are selling for $8 or more on Amazon. She'll go up to $3 if the Amazon price is $11+. In 2010, she spent ~$8000 on inventory and received ~$32,000 in payouts (after all Amazon fees), for a net profit of ~$24,000.

That seemed pretty cool to me, until she said, "I like to think of it as turning $1 into $4 about eight thousand times a year." Then it started seeming like a lot of work!

Interestingly, the third case study person also hits a lot of book sales, but she has kind of the opposite approach. (She also sells everything else, too--takes her scanner with her and scans stuff everywhere.) She said, "When I go to a book sale full of scanners, I am still usually by myself wondering why the other people are wasting their time on penny books instead of grabbing the DVDs, textbooks and other non-fiction books that will sell for high-dollar amounts." This seems to be the author's stance, too. One of the first examples he gives is buying power tools for $100 apiece and selling them for $300. Yeah, that sounds pretty good!

Overall, the author does spend a good bit of time banging the drum for his product, and he does repeat himself a lot, but I still enjoyed the book quite a bit. It's a very exciting idea. I knew almost nothing about this when I bought the book, and it gave me a really solid introduction to the whole thing and showed me how it could work. The whole idea is very exciting, and I'm eager to try it out on a very small scale and see what happens.



Highlights:
Here is an incredible video of the inside of an Amazon FBA warehouse: http://g-‐ecx.images-‐amazon.com/imag...-‐ Tour._V216203492_.html-- Read more at location 747

Real URL: http://g-ecx.images-amazon.com/images...


Amazon even provides a handy FBA calculator here: https://sellercentral.amazon.com/gp/f...-- Read more at location 841

To be sure you are reviewing the most current FBA fees, always check the Amazon FBA website: http://www.amazon.com/gp/help/custome... 42950-- Read more at location 922

You can also use the FBA Calculator to familiarize yourself with the Amazon fees: https://sellercentral.amazon.com/gp/f...-- Read more at location 1511

I try to buy most of my books for a dollar or less with a minimum selling price of $8.00, but I will spend up to $3.00 when I see that the value is $11.00 or more.-- Read more at location 1851

http://www.amazon.com/shops/smoxie-- Read more at location 1885

http://www.amazon.com/shops/littlephilly-- Read more at location 1923

http://amzn.to/mypromotebooks-- Read more at location 2005

The current Selling on Amazon rules can be found here: http://www.amazon.com/gp/help/custome... ?nodeId=1161232 Here is a link to the FBA homepage: http://www.amazonservices.com/content...-- Read more at location 2118

How to Sell at Margins Higher Than Your Competitors By Lawrence L. Steinmetz & William T. Brooks-- Read more at location 2351

scanpower.com/books-- Read more at location 2649

On eBay, you can also now add the Get It Fast option to your shipping settings. I recommend offering 2-‐Day Air shipping for free and factoring in your fulfillment costs into the price of your item. Then, just calculate the difference between Expedited (2-‐Day) and Priority (Overnight) and make that the upcharge for Overnight shipping (or round it to something nice and clean like $9.95).-- Read more at location 2830

Facebook.com/chris-- Read more at location 2986

Use referral code AMAZONBOOK to get an extended one-‐month trial of ScanPower as a special thanks for purchasing this book. New users can sign up here: scanpower.com/store-- Read more at location 3035

When creating new product bundles, just be sure to follow the Amazon guidelines for bundled products: http://www.amazon.com/gp/help/custome... 2390-- Read more at location 3093

To make a new listing for an item that shows no match for the UPC, first do a title search on Amazon.com for the product. There are times where the product exists on Amazon but it is simply not tied to the UPC. If you do find a product page for the item, look it over very carefully to be sure that it is an exact match (or not). Some products vary only slightly and those slight differences can be very important. If the product does not exist, then you can start the process on Amazon of creating a new product. You’ll be asked to enter the UPC for the item as you create it.-- Read more at location 3148

Here are a couple of sites that sell single UPCs. You get a price break if you buy in bulk: http://www.cheap-‐upc-‐barcode.com/ http://www.singleupc.com/ http://www.qualityupc.com/ You can also search online for many other websites that sell UPCs. They are also sold on eBay of all places.-- Read more at location 3161

Things to look for to find potential ‘Amazon Exclusive’ items: Not Currently on Amazon-- Read more at location 3191

Small Companies-- Read more at location 3195

Destination-‐type Products-- Read more at location 3198

Consider products reviewed by Consumer Reports magazine or featured on Yahoo.com. These magazines and websites have readerships in the millions. When they make a Top Ten List for their readers that feature products like the top ten curling irons under $50, you can bet that there is a sub-‐group of those readers out of the entire group of readers who will want to purchase that number one rated product.-- Read more at location 3210

want to purchase that number one rated product. Out-- Read more at location 3214
Note: if its somehow mot already on amazon you win. Edit
http://www.facebook.com/groups/scanpo...-- Read more at location 3290

Say you are selling books on consignment for an ex-‐college professor that you know named Mr. Ted. You would assign SKU numbers to their books beginning with TED. Simple enough, right? Then, when you get your detailed payout report from Amazon, you can sort the entire report by SKU number. This will group all of the TED SKUs together in one block. Copy and paste this block of SKUs into another Excel file where you can add up the totals for Mr. Ted’s sales. You can then calculate their individual payout based on whatever terms you agreed upon.-- Read more at location 3485

We did consignment with our local library when we lived in Texas. Our agreement was 50% of the net payout (meaning ½ of the total that we received from Amazon after all Amazon and FBA fees). Their portion of the payout averaged about $10-‐$15 per book that was sold through our consignment agreement. They were very happy with the program as they were previously getting only $1 per book at their book sale. They dramatically increased their profit per book while doing no additional labor themselves. Win for them. Win for us because we were able to locate an additional source of sellable inventory.-- Read more at location 3491

Consignment with your local library is not the only thing you can do. How about consignment with your local thrift stores? Remember, when you are an FBA seller you have no space constraints so you can handle huge amounts of inventory.-- Read more at location 3505

As I mentioned earlier in the book, there are downsides to FBA and those downsides apply here as well. Amazon or UPS may lose or damage your inventory. You may want to consider some additional types of business insurance to protect you and your consignees.-- Read more at location 3515

A customer may return an item to you long after you have paid out your consignee for the item. Amazon will then debit your account for the purchase price leaving you in negative territory and you still have the item in unknown condition. Do you ask for a return of the consignee’s payment? Or do you debit their next payout? There are different ways to do it, but be sure to consider these possibilities before entering into an agreement with someone.-- Read more at location 3518

This year, we anticipated good sales on the item so we had Home Depot order us 75 of them directly at $79 each. They gave us a bulk purchase discount and of course it was tax-‐free. We sent them all to FBA and they sold out prior to Christmas.-- Read more at location 3553

http://www.amazonservices.com/content... Fill out the form and choose that you are interested in Fulfillment by Amazon, already sell on Amazon, and want help with starting FBA. It will go straight to the FBA Launch Specialist Team.-- Read more at location 3645

https://sellercentral.amazon.com/gp/f... This is the official Amazon FBA Calculator that you can use to evaluate FBA fees and determine an item’s profitability-- Read more at location 3648

Book #1 – The Long Tail By Chris Anderson amazon.com/gp/product/1401309666-- Read more at location 3678

[LaDonna · Rating 1 out of 5]

I liked this book, but I am giving it 1 star because Retail Arbitrage is almost the same exact thing. It has a few more paragraphs in a few of the chapters. I enjoyed that additional information, but I found it so annoying that I had to reread the same book just to read those few additional paragraphs. Skip this book and just read Retail Arbitrage.

[Dave Jones · Rating 3 out of 5]

While this book does a respectable job of teaching the reader of the opportunities available of the
Amazon.com FBA (Fulfillment By Amazon) selling program, it is also a thinly-disguised infomercial for the author's PowerScan pricing scanning subscription that will put you on the fast-track to ridiculous FBA success! Sorry, I just drank the book's Kool-Aid. :)

I wouldn't mind the plug for PowerScan if the author didn't ignore the freebie alternatives. Sure, he mentioned them, but the "mention" just consisted of copying/pasting app images! There was no description of what features the freebies offered. I would’ve (mostly) forgiven the shameless PowerScan plugs if he could tell me SPECIFICALLY how they differentiated from, say, Amazon’s app. This would’ve (assuming PowerScan lives up to its hype) made an effective promotion of this offering. The fact that he didn't do a side-by-side compromises the book's objectivity. That alone discounts my rating by about 1.5 stars.

When Mr. Green isn't talking about PowerScan, -- and even when he does -- he does a respectable job describing the advantages and opportunities that FBA offers. He also does a decent job of telling us how to navigate in the FBA world. He is just a little bit redundant but stops short of the "dead horse" stage.

I borrowed this from Amazon Prime's library. I probably would've been mildly annoyed if I paid $3 for a PowerScan ad. There's just enough legit content so that I would get over it with minimal complaining.

[Aaron Scott · Rating 2 out of 5]

Take the original content of this book, remove the repetition, and it would be about three paragraphs long. It isn't really about arbitrage - it's about understanding Amazon and it's FBA program. Which is fine, but all that information is freely available on Amazon's website, with just as much clarity. The original insight this book provides is around how to find sources for FBA sellers, how to check prices, etc. Perhaps "Scanpower, a good tool for your FBA business" would be a more accurate title.

[Barbara · Rating 1 out of 5]

A Good Beginner Book That Gives Accurate and Honest Advice

I have sold items on eBay and Amazon for years and was looking for some new points of views. Well this book has them. And to give the author credit.. even though he is selling Scanpro he does tell you how to do everything in this book without his product. I tip my hat to you Chris. That is a class act.

[Jordan Brown · Rating 4 out of 5]

The definitive guide to starting a business on Amazon. Chris Green lays out all the essential information someone needs to know for getting started and how to scale. There's never been a better time to get in on the ecommerce game!

"This is not a volume game; it's a margins game. Sellers who consistently make the most margins will thrive in the good times and survive the tough times. Sellers who ignore margin and try to 'make it up in volume' will work way too hard for too little of a reward. Always run the numbers!"

[Christina bullis · Rating 5 out of 5]

Very informative

I am new to amazon selling and I am looking for more information about it. This book is packed with great input for newbies like me. I would definitely recommend it to those who are starting their amazon business. Absorb everything and apply the knowedge.

[Adam · Rating 4 out of 5]

There is much to like about this book. It's informative, actionable, and rooted in real business rather than vague principles. I learned quite a lot and am glad I read it.

I didn't rate the book as five stars primarily because the author spends a significant portion of the book pushing a product he owns. I find this frustrating, because the book purported to be generally informative rather than a pitch. I would not have felt as strongly if he had only pitched in one place, preferably in the appendix, but he mentions the product regularly throughout the book. I also found this work somewhat repetitive. The author probably should have edited more aggressively, because certain concepts are repeated almost verbatim in multiple locations, sometimes within a few pages. It should also be noted that some of the information about how Amazon functions is now dated, given that the book is three years old.

Overall, I did like the book, learned important concepts, and would recommend it to anyone interested in Amazon arbitrage. For those not interested in selling on Amazon, the book may not be worth reading.

[Amy Fuller · Rating 5 out of 5]

Good, complete guide for FBA selling

The completeness of this book gives me confidence to test my own FBA hobby before deciding to invest in the Scanpower software that the author developed. If this had been a purely advertisement book about Scanpower, I would not have dared.

Fortunately, Mr Green took the opportunity to explain FBA selling, the tricks, ins, and outs. This attention to detail made for a much better book. If you're thinking about an arbitrage business or hobby, this is your first primer.

[Rdj · Rating 5 out of 5]

Loved it!

Read it in days, plan on putting it to work immediately.

Highly recommended. Could get us all out of corporate downsizing, unemployment and recession. Do not hesitate. But Now!

[Jen Crumley · Rating 3 out of 5]

Written for a novice seller or one that has had little experience on Amazon. Felt like the book was selling his app ScanPower the whole time. Very little value added for a more experienced seller. If you are new to Amazon then it would be a great book to start with. Well organized.

[Stephen Smotherman · Rating 5 out of 5]

The best book to start your journey on selling on Amazon FBA.

[John Market · Rating 5 out of 5]

STUNNER! I read this cover to cover and it is an all inclusive read for the online reseller! Definitely a must own!

[Eric Sutherland · Rating 4 out of 5]

Covers the subject well and useful for Amazon, FBA and E-bay Sellers.