The Truth About Amazon to e. Bay Arbitrage. Have you ever bought an item on e.

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Bay then received a package from Amazon, with a gift receipt inside? Maybe you’ve come across DS Domination, or another site like it, promising to teach you how to run an automated ecommerce business? Or if you’ve dug deeper you may have found tools for repricing e. Bay listings when prices change on Amazon, or even for automatically purchasing items from Amazon. If you’ve encountered any of those, you’ve dipped a toe in the frankly murky world of “Amazon to e.

Bay arbitrage”. In this post I’m going to explore it in depth. Yes, it’s dominated by get- rich- quick schemes, but that’s only part of the story. Beneath all that, there’s an interesting phenomenon going on, with innovative technology available and genuine businesses in operation. Watch One Night With The King Download. From Pocket Money to Spending Millions on Amazon.

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British scientist Ben Hovell started arbitrage selling on e. Bay in 2. 00. 8. He bought an item on e. Bay, only to have it arrive in a box from Amazon. Ben then discovered that the item was cheaper on Amazon than on e. Bay, and pieced together what had happened: He purchased the item on e.

Bay. The e. Bay seller purchased the item from Amazon, and entered Ben’s address for delivery. Amazon shipped the item. The e. Bay seller kept the difference. It’s important to understand that this isn’t Fulfillment by Amazon (FBA) and the seller does not purchase the item in advance.

The key is that the item is only bought from Amazon once a sale has been made on e. Bay. Amazon is effectively being used as a drop- shipper. Having understood the basics, Ben decided to get into the arbitrage selling business himself: Hard drives were very expensive at the time, so I listed ten on e. Bay and copied the prices from Amazon, with a bit added on. Then I sold one, which was wonderful.

I sold another one a week later, which was wonderful again. The next sale did not go as smoothly.

The price had gone up on Amazon, and he lost money on the sale. Amazon actually makes millions of price changes every day, which creates a major challenge for arbitrage sellers. But Ben stuck with it, checking Amazon’s prices every morning and changing his price on e. Bay accordingly. The next step was creating a piece of software to check Amazon prices three times a day and if they had changed, create an upload for e.

Bay’s File Exchange system to update the prices. With this automation in place, Ben scaled up his business, and had hundreds of e. Bay listings running: It had gone from a hobby to a little more serious.

We are talking about £1. Not a living, but worth having. I realised my constraint on growth was twofold: one, I needed more e. Bay listings and two, I needed to update prices more frequently. Next Ben commissioned more powerful software to check prices every hour, and found a company in India to outsource the work of writing e.

Bay listings. Both constraints were resolved, and the business “just ballooned and ballooned.”Sales were growing rapidly, and both e. Bay and Pay. Pal fees started to go down thanks to volume discounts. By using an Amex credit card with cash- back, the Amazon purchase price was in effect lowered by 1.

At this point Ben employed someone for 2 to 3 hours per day to place orders on Amazon – up to fifty a day – and was making tens of thousands of pounds in profit a year. He was spending millions of pounds on Amazon. What did he sell?

Anything and everything on Amazon’s bestsellers lists, as long as it was priced between £5. There was no other market research – listing was so cheap it just wasn’t worth refining it further. He’d list everything on e. Bay for the Amazon price plus a percentage and a fixed “fee”, a kind of commission for handling the transaction.

But then things changed: It got increasingly difficult to buy. Amazon said “hey, this isn’t for personal use”, and stopped me from buying. I don’t know why it happened, there’s no dialogue there. There are ways to get around it but I decided that it wouldn’t last forever and went back to being a scientist. That was in 2. 01. Ben’s style of arbitrage selling was based on high volumes, and clearly it can be profitable. With good software and outsourcing, it seems like he found internet marketing’s holy grail of a “passive income”.

So what’s the catch? It’s a zero- sum game with a race to the bottom. Not everyone can make money doing the same thing. But arbitrage selling will continue to exist as a niche, run by people with the willpower and programming knowledge to do it. It’s like trading on the stock exchange, which still has arbitrage with fast frequency transactions, and we still have arbitrage in the betting markets. It’s exactly the same game and will always be there.

It just happens to be doing it with consumer goods. Ben is now working on making his software public, and free, using Amazon affiliate links to generate an income from it.

The service, which will be at huge- river. Bay listings based on Amazon products. It will then check Amazon every hour and update the e. Bay listing if the price changes, or end the listing if Amazon goes out of stock. It will work for e. Bay and Amazon US and UK.

End to End Automation. So arbitrage can work, providing high customer satisfaction and generating a profit, but is it a “real” business? Generating a large chunk of income from a personal cash- back credit card, while profitable, doesn’t seem like a great business foundation. And crucially, if you are not adding any value to the transaction then there’s nothing to stop a competitor doing exactly the same thing, and a price war will soon begin. To find out more I spoke to Doug Feigelson of Zinc Technologies, who make a software tool called Price. Yak. Price. Yak calls itself “the most advanced repricer for e.

Bay”, but what it really specializes in is – you guessed it – Amazon to e. Bay arbitrage. It’s particularly interesting because it automates more of the arbitrage process than any other tool out there, to the best of my knowledge. This is what it can do: Create e. Bay listings from Amazon products. Reprice e. Bay listings when Amazon prices change. Automatically order sold items from Amazon. Post tracking information back to e.

Bay when the order is dispatched by Amazon. Automatic ordering from Amazon is the biggest deal here, because nobody else does it (a notable exception is an Amazon buying API provided by Segemai Technologies). Doug was also an arbitrage seller himself before getting into the software side: About six years ago I was selling a lot on e. Bay, and realised I could do arbitrage from Amazon to e. Bay. I was learning software and could automate a lot of it. The part I loved about it was writing the software, and the part I hated was customer support and calling e.

Bay when there were problems with the account. With 2. 00,0. 00 listings on e. Bay, and over 1. 00 orders per day, Doug was the seventh- largest bookseller on e. Bay. He had automated buying from Amazon, while other arbitrage sellers were limited by the need to place orders manually. With ordering taken care of, Doug found customer support was making the biggest demand on his time. Many e. Bay sellers will be able to identify with time- consuming problems like wrongly classified returns, policy violations, selling restrictions, and long calls with e. Bay seller support.

Having moved on from selling to software, Doug works with many arbitrage sellers. I asked him about the perception of Amazon to e.

Bay arbitrage today. It’s a very legitimate way to run an e. Bay business. There’s a niche real business there, and a whole aura around it of Multi- Level Marketing (MLM), and people just trying to get rich selling the information. We really hate that.

It’s really annoying and very noisy. There’s a lot of people out there who are not looking to do any work, but it’s a real business and you need to put real work into it.

In terms of strategy, Price. Yak’s sellers fall into two main camps.