How I Made $1.4 Million Last Year on Amazon Doing Retail Arbitrage


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Jun 25, 2023

How I Made $1.4 Million Last Year on Amazon Doing Retail Arbitrage

This as-told-to essay

This as-told-to essay is based on a conversation with Gaye Lisby, a 60-year-old Amazon business owner from Branson, Missouri. The revenue her business, Banana Factory Outlet, makes has been verified by Insider. The following has been edited for length and clarity.

I'd just left a bad marriage and moved into my sister's house when I first heard about retail arbitrage — the process of buying items at one price and then selling them somewhere else at a higher price.

A young man who I was friends with had constantly been telling me about multilevel marketing opportunities. I'd tried a few of them and discovered they weren't for me. But he kept coming around to me about retail arbitrage again and again saying, "Gaye, you really need to check this out."

Finally, I went to talk to him about it and found out he'd made six figures doing retail arbitrage on Amazon. Needless to say, I was interested.

He taught me about going to stores like Walmart and TJ Maxx and scanning items and helped me set up an Amazon seller account so I could see how the free Amazon seller-scanning app worked.

So I just went home and looked around my house to see if I had anything that might sell.

I ran across this old cookbook that I'd bought for $2 at the Emma's Museum of Junk in Jasper, Arkansas. I'd bought it because it was a duplicate of a cookbook my mom had had forever, and I thought one of my kids might want it — but neither of them did, so I figured I might as well see if it would sell.

Well, when I scanned it, it turned out that it was selling for $89 on Amazon, so I put it up for sale right away. That was in October 2014. I put that money right back into buying things to sell and started going out to local stores and scanning through everything.

Back then, my sister and I did everything ourselves. Now, we reinvest about 60% of our revenues, and since we've hired great folks to do some of the buying and all of the shipping for us, I only spend about 20% of my time on our actual retail arbitrage business.

The Amazon scanner app offers key pieces of data that most sellers use, and I base my buying decisions on it.

For example, are there any restrictions on selling the product you've scanned? Many consumables and topicals are "gated" — the word used to mean "prohibited" in Amazon seller lingo. You have to go through a whole process to offer those products, and there are many other reasons a product can be gated.

Does the product show a lot of sales activity on Amazon recently? What's its sales rank? We've learned how those key pieces of data fit into a buying decision.

At first, my sister was teaching at a school, and she'd come home from work and we'd go down to the basement at night and on the weekends and package up our orders to send out.

Then, in 2015, we did $508,000 and finished that year by going down to the bank on December 31 and giving our banker a check to pay off my sister's mortgage on our house.

In 2016, we built our business to $1.7 million, which was such an amazing achievement that I felt ready to start a group to help other people achieve financial freedom selling Amazon retail arbitrage. That group, which I colead, is called Amazon Seller Tribe. Because I spent a considerable amount of time working on the launch of the Tribe, our 2017 gross revenue was $795,000.

In 2018, we made $1.2 million, and in 2019 we topped the million-dollar mark again with $1.1 million. In 2020, however, multiple health crises derailed us a bit, knocking us back to $789,000. Hard work pays off, though, and by the end of 2021 we were right back on track with a final tally of $1.4 million.

Eventually, my day job was just too much, and even though I loved my patient, I had to pursue my dream.

All of our free time, between 30 and 40 hours a week, we worked on this business, and by the time I left my job, our operation was big enough that we were sending shipments to the Amazon warehouse to be sent out by FBA (fulfilled by Amazon). That's important to be able to do eventually so that you can offer your products with Prime shipping — you get so many more orders that way.

Our company, which we named Banana Factory Outlet, is now on track to do $2 million in gross revenues in 2022 — based on last year's numbers and our first quarter sales to date — with our own little warehouse on our property and five people working for us. There are some days when I don't even set foot in the warehouse and just work in the office, take care of my mother, or spend time with my family.

I feel like Amazon has been a great equalizer. I mean, if two menopausal grandmothers living in the Ozarks can do it, anyone can do it, too.

Sure, you can start with the free Amazon scanning app for sellers, but very quickly anybody who really wants to earn will likely move to Inventory Lab's free Scoutify app, which gives great data to help make buying decisions.

But the best advice I can give, which almost no beginning seller will follow, is buy shallow and wide. That means, if you go to a store and find a product and it looks profitable and has 100 available, don't buy them all. You're not the only fish in the seller sea, and there might be 50 sellers with 100 available to them. If all 50 buy all 100, there's going to be at least one seller in the mix who never really learned what they're doing and they'll panic when they see other sellers join the listing. Then they'll make the mistake of tanking the price, and everybody's profit goes with them.

Better to hop in and out with eight units and sell through before the foolish or unlearned seller comes in with theirs. Then you've grabbed your profit and are sliding off to your next buy and next sale.

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But I didn't have a whole lot of money to buy products to start my business The big discount stores are great, but sometimes it's the little stores that can really pay off, where they have products that are discontinued or that people have a hard time finding In the first 3 months we were selling on Amazon at the end of 2014, we made $17,000 in gross revenues As we got the business off the ground, I worked a full-time job as an aide to an elderly gentleman into 2016. My sister stopped teaching in mid-2014 for health reasons. For people who are interested in getting started, first I'd say, just scan everything