How to work out what you can afford to pay for stock, and how to stop listings quietly going underwater when either end moves.
Online arbitrage is buying from one retailer at one price and selling on a
marketplace at a higher one. Retail arbitrage is the same trade with a trolley
instead of a browser. Both live or die on one number: what you actually keep
after fees.
More than people plan for. On a £20 sale, marketplace commission takes a
chunk, VAT takes a fifth if you are registered, and postage is real money.
A product bought at £12 and sold at £20 does not make £8.
Work backwards instead. Take the selling price, remove commission, remove VAT,
remove postage, and what remains is the most you can pay for the item. If that
number is below what your source charges, there is no deal here regardless of
how good the discount looked.
Arbitrage margin is not stable, because neither end of it is.
Your source is a shop that runs promotions and ends them. Your selling price is
set by whoever else is on that listing. A product you checked in March can be
losing money by May with nothing having visibly happened - no alert, no email,
just a slightly different number at each end.
This is why arbitrage sellers who scale tend to fail on the accounting rather
than the sourcing. Fifty products you check occasionally will contain a few
that are quietly underwater.
Set a minimum price per product derived from cost rather than from your current
price, and let the repricer compete only above it. A floor set at what you are
charging today is not a floor - it just means the price can never come down,
the listing never wins, and repricing looks broken.
Then keep the cost side current. If you source from Amazon, we can track the
live Amazon price and rebuild your floor from it automatically - that is
Amazon to OnBuy. For other suppliers, upload costs by CSV
or sync from Shopify, and revisit them when your buying changes.
In categories you understand, yes. Broadly, it is harder than it was: more
sellers are automated, and the obvious deals get taken within hours.
What still works is being faster and more precise than the seller next to you -
knowing your true cost per unit, having floors that reflect it, and repricing
continuously rather than when you remember. None of that is glamorous, and all
of it is the difference between a hobby and a margin.
Whichever has fewer sellers on the listings you can source. That is usually not
the biggest one. OnBuy listings frequently have a handful of sellers where the
equivalent elsewhere has thirty, which is worth more to an arbitrage seller than
raw traffic - a Buy Box you can actually win beats a bigger audience you cannot.