4 Powerful Yet Underutilized Strategies to Boost Your Amazon Arbitrage Margins

For Amazon arbitrage sellers, increasing profit margins is crucial due to the inherent challenges of inconsistent inventory, market saturation, and maintaining profitability.

Enhanced profit margins provide a buffer against fluctuating costs and competition, ensuring sustainable business growth.

This article offers actionable strategies to help sellers get started on this path, such as leveraging discounted gift cards, maximizing credit card rewards, utilizing cash back portals, and recovering lost profits through FBA reimbursements.

For instance, using discounted gift cards can instantly boost margins by up to 7%, while strategically applying for credit cards can add up to $10,000 in yearly profit through rewards. 

Implementing these strategies can lead to significant savings and enhanced profitability, empowering sellers to stay profitable on Amazon.

What is Amazon Arbitrage?

Amazon arbitrage involves buying products from US retail stores either online or in-store, and reselling them on Amazon for a profit. This practice is known as Online Arbitrage (OA) when sourcing products online and Retail Arbitrage (RA) when buying in-store. Common stores for sourcing include Target, Nike, Adidas, Sephora, and Macy's.

Challenges of Amazon Retail Arbitrage

Although the arbitrage business model can be lucrative, maintaining profitability in Amazon arbitrage can be challenging due to the following obstacles:

• Inconsistent Inventory: Arbitrage sellers often rely on sales, promotions, and available stock, which can vary.
• Market Saturation: More sellers sourcing the same products from the same stores. This can lead to price competition and reduced profitability.
• Fees: Amazon charges various fees, including referral fees, FBA fees, and long-term storage fees, which can take a chunk out of your profits.

Due to these challenges, maintaining profitable margins can be difficult, and you need to continuously seek ways to optimize your strategies. 

So, what's the solution?

In this article, we’ll explore four powerful yet underutilized Amazon seller tips that can help you to increase your profit margins within an arbitrage amazon business.

1. Leverage Discounted Gift Cards

The first strategy involves purchasing gift cards at a discount and using them to buy products at full value, thus saving money on inventory purchases. This method provides a guaranteed and instant way to decrease your inventory costs and directly boost your ecommerce profit margins.

How It Works for Amazon Sellers

By buying gift cards for stores where you source inventory, you can reduce your effective purchase price. For instance, purchasing a $100 Adidas gift card at 7% off means you pay only $93. When you use this gift card to buy $100 worth of products at Adidas, you have instantly increased your profit margin by 7%.

The primary benefit of using discounted gift cards is the immediate cost savings they provide. This strategy helps increase profit margins, ensuring that every dollar you spend goes further. It is a simple yet effective way to enhance your purchasing power and maximize your profits.

Buying Discounted Gift Cards

Discount gift card providers like ArbitrageCard offer a wide selection of discounted gift cards for popular retail stores, making it easy for Amazon sellers to integrate this cost-saving strategy into their business operations.

These gift cards enable sellers to increase their margins by an average of 6.5% and have provided over $30 million in gift cards to arbitrage sellers to date. Specifically, by using ArbitrageCard, sellers can find discounted gift cards that help them save on inventory purchases and boost their overall profitability.

Additional ArbitrageCard Features

In addition to offering discounted gift cards, ArbitrageCard provides the following features to help streamline your gift card management:

• Easy Tracking: Easily mark your gift cards as used and keep them separated from your unused gift cards.
• Gift Card Dashboard: Use the gift card dashboard to sort, filter, and export gift card data, allowing you to view and manipulate your data in bulk.
• Automated Barcode Generator: Generate barcodes for using gift cards in-store automatically.
• Balance Updates: Built-in function to manually update and track the balance on each gift card.
• Coming Soon: The Automated Balance Checker Tool, allowing sellers to check their gift card balances in bulk using automation.

Click here to learn more about ArbitrageCard.

2. Maximize Credit Card Rewards and Cash Back

The reality is that the vast majority of Amazon sellers are not fully maximizing their credit card rewards and cash back. This is a very powerful, yet underutilized tool that can significantly boost profit margins without requiring major changes in purchasing behavior. 

By simply using different credit cards to buy the same products and inventory, sellers can get more value from their spending.

Choosing the Right Credit Card for Business Expenses

Many sellers rely on a single credit card, like the Capital One Spark Cash Plus card, which offers unlimited 2% cash back. While this is beneficial, there are more strategies to maximize rewards. Sign-up bonuses from various cards can provide substantial extra value.

Here are some examples of valuable sign-up bonuses:

• Chase Ink Business Preferred: 100,000 points for spending $8,000 in the first three months.
• Amex Business Platinum: 120,000 points (or more) for spending $15,000 in the first three months.some text
  • Pro Tip: If you haven't gotten this card before, search for it in incognito mode. You can often find an elevated offer of 190,000 points for spending $15,000 in the first three months.
• Capital One Venture X Business: 150,000 points for spending $30,000 within six months.

Strategies for Maximizing Points and Cash Back

To maximize points and cash back, consider applying for several new credit cards throughout the year to take advantage of sign-up bonuses. By strategically planning your spending and using the right cards, you can easily rack up an extra $10,000 in profit from cash back and rewards. 

Here is a PDF guide which showcases 9 credit cards that can help you achieve that benchmark of $10,000 in extra cashback: How to Add $10,000 of Profit in a Year With Credit Cards.

If you're looking to understand how to convert credit card points into cash, we've got you covered. Generally, most credit card points are valued at a minimum of 1 Cent-Per-Point (1cpp). However, the value can increase depending on how you utilize them.

For instance, the 100,000-point offer from Chase mentioned above would equate to at least $1,000 in cashback.

Both Chase and American Express (Amex) points can be converted to cash at a base rate of 1cpp. It's important to note that for Amex, you need to have a business checking account with them to make this conversion.

On the other hand, if you redeem your points for travel, you can often achieve a higher value per point.

Common Mistakes to Avoid

Many sellers miss out on the benefit of credit cards by not paying off balances in full every month, accruing them interest fees.

Ensure you know your statement open and close dates, set up auto-pay to at least cover minimum payments, and ideally pay off balances in full to avoid interest. Analyzing your inventory turnover time and setting aside capital if needed can help.

Additionally, consider using 0% APR credit cards that offer decent sign-up bonuses and cash back rates. This option can protect you even further against interest fees. You can learn more about 0% APR credit cards and see a full list of current options in this article from Doctor of Credit.

ArbitrageCard’s Free Mini Course

The topic of credit card rewards maximization and cash back is extremely vast and contains a large amount of information. For those who want to delve deeper into this subject, ArbitrageCard offers a free mini course. This course goes in-depth into strategies mentioned here, as well as others such as:

• How to completely offset the $695 annual fee on the Amex Business Platinum card.
• How to get Chase to manually approve you for a card even after an initial denial.
• How to get the same card multiple times and earn the same sign-up bonus each time.
• Understanding and maintaining a healthy credit score, and how getting more credit cards can actually improve your credit score.

To learn more about these advanced strategies, you can sign up for ArbitrageCard’s free mini-course The Cashback Mastery Blueprint.

3. Utilize Online Cash Back Portals for Online Arbitrage

Online cash back portals like Rakuten, TopCashBack, and BeFrugal offer an additional layer of savings on your purchases. By simply starting your shopping journey through one of these portals, you can earn a percentage of your purchase back in cash.

These portals partner with various retailers and earn a commission for driving traffic to them. In return, they share a portion of this commission with you as cash back. To benefit, you just need to create an account, search for the retailer through the portal, and complete your purchase.

How to Maximize Cash Back through Portals

To maximize your cash back earnings, always check multiple portals to see which offers the highest rate for the retailer you’re purchasing from. Consistently use cash back portals for all online shopping, and keep an eye on special promotions and higher cash back days.

Comparing Cash Back Rates

There are a few websites that compile and compare the cash back rates from different portals, making it easier to find the best deal for your purchase. For example, CashbackMonitor.com and Cashbackholic.com allow you to see and compare cash back rates from various portals for a specific store.

By using these tools, you can ensure you’re getting the highest possible cash back rate for your purchases.

4. Recover Lost Profits through FBA Reimbursements

Another way to increase margins is by getting FBA reimbursements for fees you shouldn’t have been charged for. Many sellers are unaware that they may be eligible for reimbursements on fees related to lost shipments, incorrect charges, or damaged inventory. These fees, if left unchecked, can eat into profit margins, so it’s crucial to identify and reclaim them.

Examples of fees that sellers can often get reimbursed for include:

Inbound Shipments

• Canceled Shipments
• Receiving discrepancies
• Inbound shipment damaged by carrier

Lost Items

• Lost in transit
• Lost in the warehouse
• Unfair reimbursement

Damaged Items

• Damaged item in the warehouse
• Disposed by Amazon
• Unfair reimbursement

Customer Returns

• Refunded orders not returned within 60 days
• Customer refunded more than paid
• Wrong item returned
• Chargeback not refunded

Overages & Discrepancies

• Removal orders
• Incorrect weights and dimensions
• Overcharged orders

By ensuring these fees are reimbursed, sellers can significantly reduce their costs and improve their profit margins.

How to Manually Track and Claim Reimbursements

To claim these reimbursements manually, sellers need to regularly audit their Amazon accounts. This involves:

• Identifying potential reimbursement opportunities by reviewing inventory reports and account statements.
• Creating support tickets in Seller Central to dispute the charges.
• Submitting necessary documentation and following up with Amazon to ensure the claim is processed.

This process can be time-consuming and requires a keen eye for detail to ensure no potential reimbursements are missed.

For those who prefer not to manage this manually, consider using Seller Investigators (SI) by Carbon6. This service automates the reimbursement process by:

• Auditing your Amazon seller account for potential reimbursement opportunities.
• Identifying issues such as lost shipments, incorrect fees, and damaged inventory.
• Handling the entire process of contacting Amazon and filing claims on your behalf.

Why Use a Third-Party Reimbursement Service Provider

• No Upfront Costs: Sellers only pay a 25% commission on successfully recovered funds, eliminating any risk or upfront expense. SI will also perform a FREE initial audit on your Amazon seller account to determine if there are any fees you can get reimbursed for.
• Time Savings: By automating the reimbursement process, sellers can focus on other aspects of their business while SI manages the claims.‍
• Increased Likelihood of Recovery: Carbon6's Seller Investigators service boasts a 95.9% success rate on all reimbursement cases filed. They have recovered over $100 million in total reimbursement fees for their users, significantly boosting sellers' profit margins.

Stacking Strategies for Exponential Impact

Each of these individual strategies is already extremely valuable on their own. However, where it really gets interesting is when you can stack multiple strategies together to get exponentially more value. This approach can boost your profit margins beyond what any single strategy could achieve.

Combining several strategies can lead to substantial savings. For instance, you could:

• Buy a discounted gift card through ArbitrageCard prior to purchasing the products you plan to sell.
• Stack your credit card rewards by buying the gift card using a new credit card to work towards a sign-up bonus.
• Go through an online cash back portal for additional cash back when you make the purchase.
• Use Seller Investigators by Carbon6 to recover fees that you might have been charged incorrectly when selling those products on Amazon.

By stacking these strategies, you can achieve substantial savings and increased margins. For example, if you combine a 7% discount from a gift card with 5% cash back from a portal and a 12.5% ROI from a credit card sign-up bonus, your effective savings could be 24.5%! Over time, these compounded savings can significantly enhance your profitability.

Calculations for Stacked Savings

• 7% discount from a gift card
• 5% cash back from a portal
• 12.5% ROI from a credit card sign-up bonus (e.g., Chase Ink Business Preferred: spend $8,000 to get 100,000 points, which is a 12.5% ROI)

Total combined savings: 24.5%, and that's not even counting the additional money you would save through FBA reimbursement fees!

By implementing these combined strategies, you can maximize your profit margins and significantly improve your overall profitability in the Amazon arbitrage business. This approach leverages the power of stacking multiple techniques to achieve exponential value.