The e-commerce industry is always changing, with trends that come and go. In 2023, retail arbitrage is proving a popular side hustle for entrepreneurial minds, particularly selling products through Amazon FBA. You can make great profits if you know how to maximize your earnings.
If you want to build an online business that can flourish, you should get familiar with current and incoming trends. This guide is your golden key to understanding the future of online arbitrage.
Niche dominance? You bet. AI-powered sourcing? Buckle up, we're racing toward more informed decisions. Sustainability? It's not just a trend but a compass pointing to the future for e-commerce retailers.
With these trends and more, online arbitrage sellers can make better decisions that benefit their business in the long run. So, whether you're a seasoned merchant or a newcomer to Amazon arbitrage, OA Cheddar is your backstage pass to the best strategies.
Here's how to maximize success with the top OA trends for 2023.
How Is OA Changing?
Gone are the days of trudging through crowded malls or battling garage sale pandemonium. Online arbitrage is changing the retail game, offering a streamlined approach that lets you conquer the e-commerce world from the comfort of your own home.
People have been doing retail arbitrage for decades. However, the current world of online arbitrage is changing in many ways. There are several themes that run through these changes.
Technological Innovations: Technology is altering the world around us rapidly. In particular, it's revolutionizing the commerce sector. Arbitrage software is changing the game for resellers, and new innovations are driving enormous changes in this sector. Plus, other technologies like smartphones and voice search are changing how people shop.
Multi-Channel Approaches: Resellers are going beyond the traditional boundaries of marketplaces like Amazon, eBay, and Alibaba. Instead, they are cultivating an online presence through social media and more to grow businesses that outsell their competitors.
New Strategies for Sourcing: As customer priorities shift, keeping up with demand is important. Resellers are tapping into an increased desire for sustainability by adapting to new sourcing strategies, including local sourcing.
Online retailers can grow incredible businesses by focusing on these new trends. Below, we'll explore all of these in more detail. Here are ten trends changing OA for the better.
Image source: Amazon
1. Niche Dominance
In the early days of online arbitrage, resellers could peddle almost anything in their online stores. Now, though, competition is fierce. It's more important than ever to find a niche and learn how to dominate it. Niche dominance refers to honing in on a specific industry to harness the power of targeted customer demand. The deliberate pivot toward niching down is not just a passing trend; it's a calculated move that turbocharges sourcing and marketing.
Several profitable niches on Amazon attract a lot of web traffic, including:
- Pet supplies
- Toys and games
Above all other categories, one reigns supreme. Home and kitchen is expected to hit $500 million in value in 2023. While competition is fierce, profitability can also be high, which is another factor resellers must consider when choosing a niche.
Once you have a niche, you can start considering sales rank. Every product on Amazon has a number in the best seller rank, showing how well it sells within its product category. You can check out the best-sellers in your niche and try to outsell your competitors with products that have high demand and high profitability.
When you master the art of niche dominance, you'll see the metrics in your Amazon seller account ticking steadily upwards.
2. AI-Powered Software
For a while now, resellers have leveraged online arbitrage tools to make the process of sourcing quicker and easier. However, artificial intelligence (AI) has entered the arena to change the game once again.
AI-powered software is like having a virtual assistant that does everything automatically. Alongside automatically searching for products, AI software can create trend forecasts and predictions that help you stay ahead of the competition.
Inventory software goes one step further by using AI to predict the amount of stock you will need. It frees up a lot of time so you can focus on other aspects of your business.
AI-powered software is like a secret weapon to help your business power forward. With the ability to source products, make predictions, and provide actionable insights into how to grow your business.
Be warned, however, that such software is seldom cheap.
3. Sustainable, Eco-Friendly Products
With growing consumer awareness, there's a surge in demand for eco-friendly and sustainable products. Online arbitrage resellers are beginning to source items that align with these values.
The e-commerce landscape is awash with products that deliver on performance while also helping the planet. This is not likely to be a fleeting trend, so it's best for resellers to jump on the bandwagon early if they want to gain a competitive edge.
The statistics are staggering: over 60% of respondents to a NielsenIQ survey said they would pay more for a product with sustainable packaging. A further 78% said that a sustainable lifestyle is important to them.
With sustainability as an increasingly important issue, consumers are likely to opt for an eco-friendly Amazon product over a similar one that's harmful to the planet. If you can, try to work eco-friendly products into your niche.
4. Local Sourcing
Another recent trend is a shift toward local sourcing. In part, this is related to the trend in sustainability, as consumers seek items that haven't travelled far overseas.
The desire for locally-sourced products is strong in several niches. For example, 72% of B2B buyers "always or generally" prefer to source locally.
There are several other benefits to be found from local sourcing:
- Faster shipping times
- Lower shipping fees
- No import cost
But it's not just about the balance sheets; it's also about the stories. Although many consumers are shifting away from brick-and-mortar stores and toward online shopping, they still enjoy the care that goes into locally sourced products from small businesses.
With this in mind, resellers can incorporate traditional retail arbitrage into their business model, buying products from local sellers to market online.
5. Multi-Channel Selling
Online arbitrage sellers now have the opportunity to work in multiple channels. It's easy to sell across platforms such as Etsy, Amazon, eBay, and more. Furthermore, some arbitrage resellers are leveraging third-party platforms like social media sites to grow their business (more on that later).
Every selling channel has its pros and cons. While Amazon is one of the most popular marketplaces, there are downsides. Amazon fees for FBA, for example, may put off some sellers.
That said, Amazon is a titan in the reselling industry. The site rakes in $14,900 every second. That's $894,000 a minute and $53 million per hour.
In other words, while arbitrage reselling is undergoing a shift, it doesn't look like Amazon is going anywhere. For now, it continues to reign supreme as the go-to marketplace for online arbitrage sellers.
Multichannel selling is not without its challenges, but it shows how adaptable resellers can be. Diversification may be key, but Amazon is likely to remain the cornerstone of OA.
6. Private Label Integration
Typically, online arbitrage is all about reselling items at a higher price. However, private labelling is emerging as a popular way for resellers to put their own stamp on things. Private label selling involves selling unique, branded products by leveraging manufacturers and suppliers.
Sales of private label brands totalled $158 million in 2020. Of course, 2020 was a unique year for online sales, although brick-and-mortar stores suffered. As a result, these figures may not be the most accurate reflection for 2023.
Still, many resellers are turning toward private-label products as a way to boost their sales. With greater control over branding and quality, private-label items offer a great chance to improve those coveted profit margins.
When reselling products online, private label integration can help you imprint a unique signature on your OA business.
7. Mobile Commerce Optimization
Mobile shopping is still on the rise. In the last six months, at least 79% of smartphone users have made online purchases on their mobile devices. As a result, it's more important than ever for resellers to optimize their product listings for mobile.
It's more complicated than it sounds. Different devices have different layouts, so you may need to perform some A/B tests to figure out which product listings perform the best.
Here are some general guidelines:
- Amazon has a minimum image size of 1000 x 1000 pixels to enable zoom. 1200 x 1800 px is even better as a minimum size range, but 2000 x 3000 px offers the best quality.
- Keep it short and sweet to fit on a mobile screen. Keep the title to 80 characters, the description to 200 characters, and add three bullet points of information.
- Avoid hero images with fixed text, as these become hard to read on mobile.
Many users browse on mobile but make the final purchase on desktop. However, the percentage of products sold on Amazon that are purchased through a mobile browser could be set to increase in the coming years. Either way, optimizing for mobile is key to ensuring your content stands out.
8. Subscription Box Models
The Amazon "buy box" is coveted among sellers. This box lies to the right of product listings, allowing consumers to add to cart for an instant purchase. Not all sellers are eligible for the buy box, and fierce competition takes place. Only sellers with excellent metrics can win the buy box, but since 82% of Amazon sales go through the Buy Box, it's worth trying to obtain.
Nowadays, subscription box models are taking over. The "Subscribe and Save" feature in the buy box window is a way to keep sales rolling in without even having to try.
Resellers can take advantage of the subscription model by focusing on evergreen, replenishable products. For example, if your niche is health and beauty, consider items like makeup or Q-tips, which customers replenish on a regular basis. By incorporating a subscription feature into your business model, you can ensure consumers return to your business over competitors.
9. Voice Search Optimization
Hey Alexa, how common is voice search?
Recent research indicates that half of the US population uses voice search daily. Meanwhile, 35% of US consumers have smart speakers, with this number increasing. Amazon Alexa is one of the most popular smart speaker options, and since it's connected to the owner's Amazon account, it presents an invaluable opportunity for resellers.
Share of individuals who own any smart speaker brand in selected countries in 2020 and 2022, by country:
Essentially, optimizing product listings for voice search is similar to the SEO practices you probably already use. When users are buying products through voice search, they use casual language that is conversational in tone.
An Amazon Echo owner might ask Alexa for:
- Best cooking equipment near me
- Best baby clothes in Los Angeles
- Recommended beauty products for anti-aging
Using words like "best" or "recommended" in your product titles can help you optimize your product listings for voice search. Since this is a quickly evolving field, though, resellers will need to stay on their toes and keep checking the latest research.
10. Social Commerce Integration
Many online arbitrage sellers are tapping into the shopping platforms on social media. Instagram and TikTok both have shopping tabs integrated into the app, meaning users can make purchases at the tap of a button. Impulse buying is common, so speaking to the consumer's desire to solve a problem immediately is vital.
As we mentioned earlier, many resellers are utilizing multi-channel selling methods as part of their business model. With a strong social media presence, you can advertise products on social media and link to your Amazon storefront.
Another way to leverage social media is by collaborating with influencers in your niche. This could mean keeping a close eye on the products they're using to help with sourcing or reaching out to leverage their influence through paid ads.
Leveraging Leads Lists for OA Success
In online arbitrage, success isn't just a destination; it's a journey. As the industry continues to evolve, there are more ways than ever to find profitable products, market your business, and resell items.
Here at OA Cheddar, we understand the power of reselling. If you want to make the most of your business, consider investing in our leads lists. With access to hand-picked, profitable products from expert 7-figure resellers, our leads lists give you everything you need to achieve next-level success.
Plus, you get access to expert webinars with industry leaders, updating you on the latest trends and providing actionable advice.