In this article, I will show you how much profit I actually make in one week.
If you are planning to make money in online arbitrage and want to know how much profit I make in one week, then stay until the end of this article. I will share with you what my sales are and how much profit I made from that, and also share my thoughts about it.
Introduction
A little backstory on why I am making this article is because I’ve been selling on the UK marketplace in Amazon for the last 5 years doing online arbitrage. In those 5 years, I’ve experienced many low profits, cancelled orders, restock limits, Amazon account withholding my money, and many issues.
Now, with that experience and learning within Amazon UK, I can say we are doing well 13 months ago. And I want to replicate this journey again in the USA marketplace because I believe in Amazon businesses and different marketplaces and risk diversifying. Also, opening myself to more opportunities to learn about the Amazon game.
If you’re one of those people who are also thinking about selling on Amazon doing online arbitrage or maybe still hesitant to continue selling on Amazon, then this is a chance for you to know about the opportunities in the online arbitrage business model and what it offers.
What is online arbitrage?
Online arbitrage is basically a business model whereby you are buying products online from a website and reselling them on another website or in the Amazon marketplace for a profit. A typical kind of transaction might be buying branded products, Lego for example: buying for £10 and reselling on Amazon for £20.
If you want to know if you can make money on Amazon with online arbitrage, we created an article for you to learn more.
And yes, online arbitrage is different from retail arbitrage. Retail arbitrage is going in store physically, whereas, in online arbitrage, you are solely online. If you want a business model that you can do from the comfort of your own home or perhaps someone like me who likes to travel the world. Then, this business model is for you.
Top 3 categories that we sell on our Amazon business
Before I share the figures with you, let me tell you some of the top categories I’m selling in the UK marketplace which can help you replicate it on your Amazon business.
Toys and Games
Time and time again, we’ve seen the products under this category sell fast selling, and they are always in demand. These products are not seasonal so they sell all year round, especially in quarter 4. They sell well. Not only that, but we can also get discount voucher codes from suppliers of toys and games.
Beauty Products
We also sell well in the beauty products category. Most of the products under this category are selling all year round and are also selling well in quarter 4. This is probably the one where we have the number of suppliers, (i.e. retail online stores) that we can buy from within the UK.
Health and Personal Care
Based on my experience, we’ve seen that there are many suppliers of this similar to beauty products and they are not limiting orders. Meaning, you don’t have to buy 1 to 3 items only, but you can order in bulk like 99 to 100 products. In addition, they are allowing Amazon online sellers to do multiple orders at once for a discounted price.
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How much profit do I actually make in one week?
After knowing the top categories we sell well, I am now going to share with you how much profit I actually made from selling these products doing online arbitrage in the UK. This is the result of a profit-and-loss software that we use called the Seller Toolkit, and this talks about the gross profit made from actual revenue, the sales, including VAT, and then the actual units sold.
Let me talk through the numbers now. Quite simply, what you are looking at is we made £72,000 worth of sales. We had VAT, and that’s £20 in the UK. Obviously, Amazon fees generally cost around 15% for the referral fee. After that, we also have FBA fees because we do all the FBA fulfillment plans, so that comes in per unit basis. We might have closing fees on top of that and also prep fees. For our prep fees, we sold about £2,916 units. We’ve got to pay prep on that, also had the items shipped from the prep center to the Amazon center. Next is the cost of the goods sold, which is quite simply how much we had to pay for the cost of goods.
Once we removed all of that, what we get left with is £4,888. We lose 20% pretty much off the top solely due to the fees. It does have a big impact, and it’s something to consider when selling on Amazon UK vs USA since Amazon USA doesn’t have VAT.
The £4,884 has to have some other costs taken off. We have to take all our software costs, take the Amazon selling account and that’s £30 a month. We also have to take off the staffing costs and other accounting fees that we’ve got during that period.
that period that's going to come out.
I shared some figures for about one week in the UK and hopefully, you’re listening. We have to pay VAT since we’re a registered seller in the UK. If you go over £85,000 at the moment in a 12-month period, you have to register for the 18. What does that mean? 20 of your total revenue has to get paid to the government as a tax.
Now, this has a big impact on profitability within your business and it’s one of the downfalls of selling in the UK. I still really enjoy selling in the UK marketplace instead of the US marketplace because there are no VAT sales. You don’t really have to adjust to it so it makes life so much easier.
Quite simply, my Amazon UK business is making money and is profitable. We’re seeing in the Amazon USA marketplace is much better and VAT is a big part of that. Now, if you are interested in getting started in the USA and wanted to see how to do it, make sure you incorporate it in the right way. Use the right bank accounts and get all the right prep centers and accounts.
Can you really make money in online arbitrage?
You might be looking at this saying, “Hey Tom, that is a lot of money to be doing £72,000 in retail arbitrage in one week.”
That’s maybe not so much if you look at percentage-wise, you’d call it 5%. You should say total revenue coming out as net profits and everyone talks about 10%.
A couple of things that we do slightly in our business and what you generally see in my business if you follow my journey is that I am now an owner-investor in my business. I work two hours a week for two companies, with a turnover in excess of £4M. That’s pretty good and even if I’m netting out 5% on £4M for working two hours a week, I’m still pretty happy about that. That’s a really good ROI.
Now, the other thing is I’m a believer in risk diversification. Something that I learned earlier on, which is from a book called Rich Dad, Poor Dad. He talked about using other people’s money to make money. If you’re ever interested in property markets, you should check this book out.
Why not use that same concept with the Amazon business? What does it mean? Quite simply, I use my money to build the business to start with, then after a while, we start getting Amazon loans credit facilities because our revenue is doing really well. And the net result is that within this Amazon business.
Simply, I have no money in this business, and right now, what’s really interesting is the fact that I’m making 3,000 with £0 down. Which is absolutely incredible. I can now take my money out, put that money plus the profit into the Amazon USA business, build that business up, and continue that process.
What I will do is link a video format of this article for those people who prefer watching than reading. This video is also an in-depth discussion of how much profit I made in one week.
How much profit are you making in a week?
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