3 Hacks to Boost Profit Margins for your Online Arbitrage Business
In the competitive world of FBA online arbitrage, every dollar you can shave off your cost price makes a big difference to your profit margins. Read these three tricks to learn how to shave your costs and increase your margins.
Tip # 1 – Use cashback sites
One of our favorite online arbitrage tools are cashback sites. A cashback site is a site that offers rewards just for clicking a store’s link via their site. If you complete a purchase after clicking through the cashback site, the cashback site will award you a percentage of your purchase as cashback. Cashback sites make money by receiving affiliate commissions for customers that click via their site and they award part of that commission to you. Commissions can vary for each store by the day, so the best way to make sure you’re getting the best return is to scout out all the cashback sites before you purchase, to see who is offering the best deal. We use cashbackmonitor.com to make that job easier. They display a list of all cashback sites and their current offer for the site you are inquiring about.
On our online arbitrage sourcing list, we do that work for you. Each list has a column indicating which site is currently offering the best cashback percentage for a given lead, and what that percentage is.
Cashback is one of the easiest ways to lower the cost of your online arbitrage deals and increase your profits. Neglecting to click through one is like leaving free money on the table.
Tip # 2 – Use giftcards
There are many sites such as raise.com that sell gift cards at discounted prices. People frequently receive gift cards as gifts, often to stores that they never shop at. Selling these cards at a discount helps them recover part of the value. Purchasing these cards can greatly increase your profit margins. For example, if you purchase a $100 gift card for $80, and use it for your $100 purchase, that automatically puts you at a 20% advantage over your competitors. In addition to raising your margins, it also gives you more wiggle room if you need to lower your price to compete for the buy box. These discounts are great, since they stack with any store discount as well. Cardbear.com is great for monitoring which sites are offering the most discounted gift cards for the stores you are interested in.
A few words of caution when purchasing gift cards; make sure you are getting an e-card with instant delivery, if you need it to complete an immediate purchase. Also, check reviews for each site before purchasing them. In case you have any issues with the card (balance not as advertised, etc.), you want to make sure that they stand behind their products. Also note that most of these sites only allow purchases from within the US.
Tip # 3 – Use credit cards that offer cashback rewards
This may not seem like it will make much of a difference, but ultimately it really adds up. There are some cards out there that offer as much as 2% cashback rewards. Over the years doing online arbitrage, we’ve made back thousands of dollars in credit card rewards alone!
The great thing about these three tips is that they can all be combined with each other, and used simultaneously with store coupons and sales.
Just one quick example of how this works in action:
You want to buy a pair of shoes that costs $100.
You click through a cashback site that gives 10% back. – $10 off
You buy a $100 gift card for $85 – $15 off
You checkout with your 2% rewards credit card. – $2 off
Your new cost: $73
And this is not including any store sales or promo codes that can stack on top of these! It’s easy to see how using these tricks will increase profit margins tremendously.
Happy sourcing!