In this article, let’s discuss is retail arbitrage legal on Amazon.
Retail arbitrage is a popular strategy used by Amazon sellers to source and resell products for a profit. However, many people wonder whether retail arbitrage is legal on Amazon, as it may seem like a questionable practice. Let’s explore the legality of retail arbitrage on Amazon in more detail and discuss when reselling on Amazon becomes illegal.
What is retail arbitrage?
Retail arbitrage is the process of buying products at a cheap price from retailers such as Walmart and Argos, then reselling those items for a higher price on another marketplace such as Amazon or eBay. Obviously, earning profit. Sellers can earn the difference as profit.
Is retail arbitrage legal on Amazon?
Generally, it is not illegal to resell an item. It makes no difference whether you buy the items physically from the store or online. There are existing marketplaces that are made for people to resell products in order to make money. As mentioned earlier, Amazon and eBay. However, there are certain challenges that don’t allow reselling of items (depending on the marketplace) that will be tackled in the next chapter.
When does reselling items become illegal on Amazon?
Again, retail arbitrage is legal on Amazon. However, when you run a business on Amazon, please follow their rules and regulations. If not, you’re going to be at risk of getting your account suspended or even banned from the Amazon marketplace.
It only becomes illegal when you…
Create inaccurate listings
This is one way to put your account at risk on Amazon since this is a way of misleading the customers. Of course, they are going to receive an item that they didn’t buy or didn’t actually want. Be careful of the photos and descriptions you post on Amazon. You don’t want to post a photo of a 3-pack and give the customer a 1-pack. Again, that’s going to cause problems.
Now, when you do send a wrong item to the customer, Amazon is going to take the necessary action that should resolve the issue. Amazon will put a red flag on your account and mark that listing as inactive.
Ignore copyright laws
Amazon is strict about this and they will take corrective measures if you are selling products that have Intellectual Property (IP) that belong to someone else. And this for sure will cause complaints.
Remember, when you create a listing using someone else’s image, trademark, logo, design, etc., without the appropriate permission from the intellectual property rights owner, it’s considered illegal and a copyright infringement. For example, if you’re going to create a listing with Disney on it, and you haven’t got their permission. Obviously, that’s going to be against their IP.
Don’t worry! There is a way to avoid selling products that have intellectual property, and that’s by checking. You can use our Fast Track FBA Brand Checker, this is going to support you in understanding all the brands that we know that are looking out for their brands. Some of these brands are red flagging and proactively sending out letters of complaints speaking to Amazon about sellers, so it’s better to avoid that.
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Sell prohibited items
Not all items are allowed to be sold on Amazon. If you’re thinking about participating in the Fulfillment by Amazon (FBA) program, which is their way of fulfilling shipments to the customer. Whereby Amazon stores, packs, ships, and delivers the product to the customers and you’ve got to comply with their product restrictions. Generally speaking, they’re saying not to sell prohibited items such as alcoholic beverages, defective items, expired items, gift cards, batteries, and so on.
Amazon prohibits these items from being sold because many of these items are dangerous to ship and can cause issues whilst in transit. Amazon does not completely ban these items, but selling them may require approval. If you want to know more, read about the dangerous goods program whereby you can sell some items but not through the FBA program.
Personal Thoughts
Is retail arbitrage legal on Amazon? I’ve been selling on Amazon for the last 5 years and there is no issue with it. In terms of legalities, it’s definitely legal to sell on Amazon. You can sell and resell products and that’s fine.
There are a couple of things to be mindful of around those products that have warranties on them. Also, you’re not going to be able to offer those warranties because you’re not an authorized distributor of the product. So, it is best to stay away from products that have warranties and extended warranties on them.
When are you going to start your retail arbitrage journey?
A lot of people are doing retail arbitrage on Amazon and many people are successfully doing it for a long period. Remember that retail arbitrage is just trade; buying low and selling high. This has been going on for thousands of years and it will continue to go on. The only difference is the fact that this trade is happening online.
The world is changing, and this will continue to happen. And there will be people like you and me that will take advantage of that. Also, there will be places like Amazon where we can resell items.
If you to know more about getting started on Amazon and learn exactly how much you need to start your Amazon business, you can read our previous article about it. Also, the tools you need to start.