Amazon FBA Retail Arbitrage: Complete Guide to Scanning, Sourcing & Selling in 2026

What Is Retail Arbitrage — And Is It Still Viable in 2026?

Retail arbitrage is one of the most accessible ways to start selling on Amazon. The concept is straightforward: you walk into retail stores, find products selling below their Amazon price, buy them, ship them to Amazon’s warehouse, and pocket the difference when they sell.

It’s not glamorous. You’ll spend hours scanning clearance aisles, loading your car with poly bags of inventory, and printing FNSKU labels at your kitchen table. But for thousands of resellers, it’s a real business that generates consistent income — and one of the best ways to learn the Amazon ecosystem without risking thousands of dollars on wholesale or private label.

Let’s be honest about the landscape in 2026. Retail arbitrage is more competitive than it was in 2020. More sellers know about it, scanning apps are widely available, and Amazon has tightened restrictions on some categories and brands. But “more competitive” doesn’t mean dead. Clearance deals still happen every single day. New products rotate through retail shelves constantly. And most people who try retail arbitrage quit within a few months because they don’t put in the work — which means there’s still room for those who do.

This guide covers everything you need to start and run a retail arbitrage business on Amazon in 2026. We’ll walk through setting up your seller account, choosing scanning apps, sourcing at specific stores, understanding Amazon fees, prepping shipments, dealing with returns, and scaling up.

If you’re more interested in sourcing products online from your computer, check out our Online Arbitrage Guide instead. And if books are your focus, we have a dedicated Book Scanning & Reselling Guide that covers that niche in depth. This article is about the core retail arbitrage model — walking into stores and scanning physical products.

How Amazon FBA Retail Arbitrage Works

The retail arbitrage model has a simple workflow, even if the execution takes practice to master.

The Basic Cycle

1. Find discounted products at retail stores — clearance racks, end caps, seasonal markdowns, coupon stacks
2. Scan each item with a scanning app to check its Amazon selling price, sales rank, and fee breakdown
3. Buy the profitable items — ones where the math works after all Amazon fees
4. Ship inventory to Amazon’s warehouse (this is the “FBA” part — Fulfillment by Amazon)
5. Amazon handles the rest — storage, shipping to customers, customer service, returns
6. You collect the profit after Amazon takes their cut

The Math in Action

Here’s a typical retail arbitrage example:

That’s an 81.9% return on your $10 investment. Not every item hits numbers like that — many will be in the 30-50% ROI range — but a clearance shelf can yield several items at these margins in a single trip.

The key insight is that FBA handles the hard parts of e-commerce. You don’t need a warehouse, you don’t ship individual orders, and you don’t field customer calls. Your job is sourcing and prep. Amazon handles everything after the product arrives at their fulfillment center.

Setting Up Your Amazon Seller Account

Before you scan a single barcode, you need an Amazon Seller Central account. Here’s how to get started.

Individual vs. Professional Selling Plans

Amazon offers two account types:

Start with Individual if you’re testing the waters and expect to sell fewer than 40 items per month. The per-item fee of $0.99 is cheaper than the $39.99 monthly fee until you cross that 40-unit threshold.

Upgrade to Professional when you’re consistently selling 40+ items per month, need Buy Box access (critical for competitive listings), or need to request category approvals (ungating).

Registration Steps

1. Go to sellercentral.amazon.com and click “Sign Up”
2. Provide a valid government-issued photo ID
3. Enter your bank account details (where Amazon will deposit your earnings)
4. Add a credit card (for any fees owed)
5. Verify your phone number
6. Complete the tax interview — you’ll fill out a W-9 form with your SSN or EIN
7. Wait for account verification (usually 24-72 hours, sometimes longer)

Setting Up FBA

Once your seller account is active:

1. Navigate to Settings → Fulfillment by Amazon in Seller Central
2. Complete the FBA setup wizard
3. Review and accept FBA terms of service
4. Set your default shipping preferences
5. Familiarize yourself with the Manage Inventory dashboard — this is where you’ll create shipments

💡 Pro Tip: Apply for a free EIN (Employer Identification Number) from the IRS before setting up your account. Using an EIN instead of your personal SSN adds a layer of separation between your business and personal identity, and you’ll need one eventually if you form an LLC.

Essential Scanning Apps for Retail Arbitrage

Your scanning app is your most important tool. It’s what tells you whether a product sitting on a clearance shelf is a goldmine or a money-loser. Here’s what’s available in 2026.

Amazon Seller App (Free)

Amazon’s own app has a built-in barcode scanner. Point your phone camera at any product’s barcode, and it shows you:

• Current Amazon selling price
• Your eligibility to sell the item
• A basic profitability estimate
• Sales rank

Pros: Free, shows your specific eligibility and restrictions, decent barcode recognition. Cons: Slow compared to dedicated apps, limited historical data, basic profit calculator doesn’t account for all costs, no Keepa integration.

The Seller App is fine for casual scanning but most serious retail arbitrage sellers upgrade to a dedicated tool within their first month.

Scoutly

A popular mobile scanning app built specifically for retail arbitrage.

Key features: Fast barcode scanning, profit calculator with customizable cost inputs, BSR and Keepa chart integration, multi-marketplace support, IP alert warnings, variation detection.

Pricing: Around $29-39/month depending on plan.

Best for: Dedicated retail arbitrage sellers who want speed and data without toggling between multiple apps.

SellerAmp SAS

Formerly known simply as SAS, SellerAmp has become one of the go-to analysis tools for arbitrage sellers.

Key features: Detailed deal analysis scoring, ROI and profit calculations, Keepa chart integration, IP complaint alerts, hazmat flagging, storefront analysis for OA.

Pricing: Starts around $16-20/month for base plans.

Best for: Sellers who want a thorough analysis score for each product — it essentially gives each potential buy a “grade” based on multiple data points.

Keepa

Keepa isn’t a scanning app — it’s a price history tracker, and it’s arguably the most important tool in your arbitrage stack.

What it shows you: 90-day (and longer) price history, BSR history over time, number of seller changes, Buy Box price trends, Amazon’s own in-stock history.

Why it matters: A product might show a current price of $30 on Amazon, but Keepa could reveal that it was $30 only yesterday — it’s been $15 for the past three months. Without Keepa, you’d buy at $10 thinking you’ll profit at $30. With Keepa, you’d see the price is inflated and pass.

Pricing: Free for basic features, approximately $23/month for full price tracking and data access.

BuyBotPro

An automated analysis tool that integrates with the Amazon Seller App. You scan a product, and BuyBotPro gives you a buy/don’t-buy recommendation based on configurable criteria.

Best for: Sellers who want faster go/no-go decisions without manually checking every metric.

Pricing: Around $29-45/month depending on plan.

App Comparison Table

💡 Pro Tip: At minimum, start with the free Amazon Seller App plus the Keepa browser extension. This costs you nothing and covers the basics. Once you’re sourcing regularly (2+ times per week), upgrade to a dedicated scanning app like Scoutly or SellerAmp — the time savings and better data will pay for themselves quickly.

Understanding Amazon’s Key Metrics

Scanning apps are only useful if you understand the numbers they show you. Here are the metrics that determine whether an item is a buy or a pass.

BSR (Best Sellers Rank)

Every product on Amazon has a Best Sellers Rank within its category. A lower number means the item sells more frequently.

These ranges are general guidelines for most categories. Some categories like Books have millions of listings, so a BSR of 200,000 in Books is more acceptable than 200,000 in Toys. Context matters.

As a new seller, aim for products with a BSR under 100,000 in their category. Under 50,000 is ideal. Once you learn how to read Keepa charts and understand category-specific velocity, you can start taking calculated risks on higher-BSR items with strong margins.

Buy Box Rotation

The Buy Box is the “Add to Cart” button on an Amazon product page. When multiple sellers offer the same product, Amazon rotates who gets the Buy Box based on price, fulfillment method, seller metrics, and account history.

Key Buy Box considerations for retail arbitrage:

• FBA sellers get priority over Merchant Fulfilled (FBM) sellers at similar prices
• Matching the lowest FBA price is usually enough to share the Buy Box
• If Amazon is selling the item directly, you’ll get minimal Buy Box time — this is often a pass unless your cost is extremely low
• Fewer total sellers = more Buy Box share — look for listings with 2-5 FBA sellers, not 20+

Price History (Keepa Charts)

Never trust the current price alone. Always check Keepa for:

• 90-day price trend — is the current price stable, rising, or a temporary spike?
• Amazon in-stock history — does Amazon regularly sell this item themselves? (orange line on Keepa)
• BSR history — is the product consistently selling, or did it have one good week?
• Seller count over time — are more sellers piling on, which could push prices down?

FBA Fee Breakdown

Amazon charges several fees that eat into your margin:

The net profit formula:

Net Profit = Sale Price - (Product Cost + Referral Fee + FBA Fee + Inbound Shipping)

Use the FBA Storage Fee Calculator on Underpriced to estimate storage costs for your inventory, especially if you’re planning to send in seasonal items that might sit for months.

💡 Pro Tip: A common beginner mistake is forgetting about inbound shipping costs. If you’re shipping a box that costs $15 via UPS and it contains 10 items, that’s $1.50 per unit in shipping that directly reduces your profit. Always factor this in.

Best Stores for Retail Arbitrage in 2026

Not all retail stores are created equal for arbitrage. Here’s where to source and what to look for at each one.

Walmart

Walmart is the single most popular store for retail arbitrage, and for good reason — massive inventory, frequent markdowns, and clearance sections in nearly every department.

Where to find deals:

• Clearance endcaps — the ends of aisles, often with yellow clearance stickers
• Back-of-aisle clearance — hidden sections where discontinued items collect dust
• Rollback pricing that happens to be well below Amazon prices
• Seasonal transitions — post-holiday clearance events (January, late February, late July)

Best categories at Walmart: Toys, home goods, electronics accessories, health & beauty, small appliances, baby products.

When to go: Early mornings (less competition from other scanners), and specifically on Tuesday and Thursday mornings when many stores process new markdowns. Monday mornings after weekend returns are restocked can also surface deals.

Store-specific tools: Walmart.com can show in-store pricing at your local store. Some sellers use tools like BrickSeek to check for clearance pricing at nearby locations before driving there, though its accuracy varies.

Target

Target runs one of the most aggressive clearance programs of any retailer, going from 30% off to 50%, 70%, and finally 90% off on the same items over a period of weeks.

Where to find deals:

• Endcap clearance — marked with red clearance signs
• Bullseye’s Playground (formerly Dollar Spot) — seasonal items at $1-$5
• Target Circle app — digital coupons that stack with clearance pricing
• Hidden clearance — scan items that look out of place or have one unit left; the tag may show regular price but the register rings clearance

Best categories at Target: Toys (post-holiday is legendary), home décor, kitchen gadgets, health products, seasonal items, beauty.

When to go: Monday mornings for new markdowns. Post-holiday periods (January, after Easter, after July 4th, after Halloween) are goldmines. Target typically follows a markdown schedule by department — learning your local store’s pattern is incredibly valuable.

💡 Pro Tip: Download the Target Circle app and scan clearance items with it before going to the register. Sometimes the app shows additional discounts (e.g., an item is 50% clearance plus a 20% Target Circle offer). This can turn a marginal deal into a great one.

CVS and Walgreens

Drugstores are underrated for retail arbitrage. They carry health, beauty, and personal care products that often sell well on Amazon due to brand recognition and Subscribe & Save demand.

Where to find deals:

• Clearance sections (usually a dedicated aisle or end section)
• ExtraCare (CVS) / myWalgreens rewards — points and cashback that effectively reduce your cost basis
• Seasonal candy and gifts at 50-75% off after holidays
• Vitamins and supplements — clearance on discontinued or repackaged items

Best categories: Health & beauty, vitamins, personal care, seasonal items, first aid.

Caution: Many health & beauty and grocery-adjacent items on Amazon are gated (restricted). Always check your selling eligibility before buying at the register.

HomeGoods, TJ Maxx & Marshalls

These TJX-brand stores sell brand-name products at 20-60% below retail. The challenge is that inventory is unique — you can’t reliably replenish what you find.

Strategy: Scan branded items (kitchenware, home décor, name-brand accessories) and look for items where the Amazon price is 2-3x what TJ Maxx charges. Fragrance and brand-name kitchen items can be especially profitable.

Limitations: Slow scanning (each item is unique), can’t build replenishable sourcing, no clearance schedule to follow.

Big Lots

Big Lots specializes in closeout inventory, which is exactly what retail arbitrage sellers want.

Best for: Toys (especially Q1 clearance of holiday toys), seasonal items, home goods, food storage, and branded consumables.

Strategy: Visit during their major clearance events (January, post-summer). Their toy section can be a goldmine in late January/February.

Kohl’s

Kohl’s clearance racks combined with Kohl’s Cash and percentage-off coupons can create effective discounts of 70-80% off original prices.

Strategy: Stack clearance pricing + Kohl’s Cash earned from previous purchases + percentage-off coupon codes. The effective buy price can be absurdly low. Focus on brand-name items (kitchen appliances, electronics accessories, Nike/Under Armour).

Dollar Tree & Five Below

Limited arbitrage potential, but not zero. Seasonal items, party supplies, and craft supplies can occasionally be resold at 3-5x their purchase price on Amazon, especially items that are sold in multipacks.

Ross

Similar to TJ Maxx but with even more chaotic inventory. Brand-name shoes, apparel accessories, and home items can work. It requires patience and a good eye for brands that sell well on Amazon.

Store Comparison Overview

Use the Discount Stacking Calculator on Underpriced to quickly calculate your effective buy price when combining clearance, coupons, and rewards.

Category Restrictions & Gating on Amazon

One of the biggest frustrations for new retail arbitrage sellers is finding a great deal, buying the product, and then discovering they can’t sell it on Amazon. This is called “gating” — and understanding it will save you money and headaches.

What Gating Means

Amazon restricts certain categories and brands so that only approved sellers can list products. This protects buyers from counterfeit or unsafe products, but it also creates barriers for new sellers.

When you try to list a gated product, you’ll see a message like “Approval Required” or “You are not eligible to sell this product.”

Commonly Gated Categories

• Grocery & Gourmet Food — requires invoices from approved suppliers
• Health & Personal Care — partial gating, many subcategories restricted
• Beauty — frequently gated, especially for major brands
• Topicals (lotions, creams, sunscreen) — strict gating due to safety regulations
• DVDs and Media — some restrictions for new sellers
• Toys (Q4 seasonal gating) — Amazon often gates Toys & Games for new sellers during the holiday season (September-January)

Brand Restrictions

Even in categories where you’re approved to sell, individual brands may be restricted. Major brands like Nike, Adidas, LEGO (for new sellers), Hasbro, and many cosmetic brands require additional approval.

How to Get Ungated

• Just apply — for some categories, simply clicking “Request Approval” in Seller Central works, especially if your account is in good standing with a few months of history
• Provide invoices — for stricter categories, you’ll need to submit invoices from an authorized distributor or manufacturer showing a purchase of at least 10 units
• Build account health first — a clean account with positive metrics for 3-6 months makes ungating applications more likely to succeed
• Use a wholesale account — buy small from wholesale distributors specifically to get invoices for ungating purposes

How to Check Before You Buy

Always verify your selling eligibility before purchasing inventory. In the Amazon Seller App, scan the product and look for any restriction notices. Dedicated scanning apps like Scoutly and SellerAmp also flag restricted products.

Make this a non-negotiable habit. There’s nothing worse than buying $200 worth of clearance beauty products and discovering you can’t list a single one.

Products to Avoid

Beyond gating, some products are simply bad choices for retail arbitrage:

• Hazmat items — products classified as hazardous materials (aerosols, certain cleaning products, some batteries) require additional hazmat review and approvals for FBA
• Meltable items — chocolate, certain cosmetics, and other products Amazon classifies as meltable can’t be sent to FBA during warmer months (typically April-October)
• Oversized items — FBA fees on oversized products are significantly higher; margins need to be large to justify
• Items with expiration dates — Amazon requires at least 90 days of shelf life remaining at check-in; track dates carefully

💡 Pro Tip: When you’re new, focus on categories with fewer restrictions: Toys & Games (outside Q4 gating), Home & Kitchen, Office Products, Sports & Outdoors, and Patio items. These categories tend to be easier to get into and have plenty of clearance deals at retail stores.

Profit Margins & Realistic ROI for Retail Arbitrage

Let’s talk real numbers — not the “I made $10,000 my first month!” stories from YouTube thumbnails, but what actually happens for most people.

Realistic ROI Ranges

These ranges assume consistent sourcing effort, not just occasional trips. The variation is wide because retail arbitrage is inherently variable — you find what you find.

A Typical Sourcing Trip

A realistic 3-hour sourcing trip might look like this:

• Visit 2-3 stores
• Scan 100-200 products
• Find 10-25 items worth buying
• Spend $100-$350 on inventory
• Expected gross profit (after all fees): $80-$250
• Effective hourly rate (sourcing time only): $25-$80/hour

But that hourly rate doesn’t account for prep time (labeling, bagging, creating shipments) which typically adds another 1-2 hours per sourcing trip of inventory. When you factor in prep, the effective rate is more like $15-$50/hour depending on your speed and the quality of your finds.

The 80/20 Rule of Retail Arbitrage

Most of your profit will come from your best 20% of items. You’ll find the occasional item where you buy at $5 and sell at $45 with a 400% ROI. Those items make your month. The other 80% of your buys will be solid but unremarkable — $3-8 profit per item.

This means you should never skip scanning an item just because it “doesn’t look profitable.” The best deals are often the ones that don’t look obvious.

When to Pass on an Item

Even if the numbers look decent, pass when:

• BSR is above 300,000 and you have less than 50% ROI
• More than 10 FBA sellers are on the listing (price wars are likely)
• Amazon is the current seller and has been in stock consistently (check Keepa)
• The margin is under $3 — not worth the effort and risk for tiny profit
• The item is oversized with less than 40% ROI (oversized FBA fees kill thin margins)
• Price history shows a spike — the current high price is temporary

Hidden Costs to Track

Don’t forget these expenses when calculating your real profit:

• Gas and mileage — deductible, but still a real cost (IRS standard mileage rate for 2026)
• Scanning app subscriptions — $20-$50/month
• Shipping supplies — labels, poly bags, tape, boxes
• Returns — plan for 5-15% of sold items being returned
• Long-term storage fees — slow sellers get expensive after 6+ months

Use Underpriced’s ROI Calculator to calculate profit on specific items, and the Mileage Deduction Calculator to track your driving expenses for tax deductions.

FBA Prep & Shipping to Amazon

After you’ve sourced products, you need to prepare them to Amazon’s specifications and ship them to their fulfillment centers. This is the unglamorous but essential part of the process.

Labeling Requirements

Every product sent to Amazon FBA needs to be individually identified. You have two options:

1. FNSKU labels (recommended for RA): Amazon-specific barcodes that tie the product to your seller account. You print these from Seller Central and stick them on each item, covering the manufacturer barcode.

2. Manufacturer barcodes (stickerless commingled): Amazon mixes your inventory with identical products from other sellers. This is easier but risky for retail arbitrage — if another seller sends in a counterfeit or used unit, Amazon might ship that defective unit to your customer, and you get the complaint. Avoid commingling for RA.

Prep Requirements

Amazon has specific prep requirements depending on the product type:

Building a Home Prep Station

You don’t need a warehouse to do FBA prep. A basic home setup includes:

• Thermal label printer (DYMO 4XL or Rollo) — $100-$200, far cheaper per label than inkjet printing
• FNSKU labels — compatible thermal label sheets
• Poly bags in multiple sizes with suffocation warnings pre-printed
• Packing tape and tape gun
• Bubble wrap for fragile items
• Shipping boxes — medium-sized boxes (18x18x16 or similar), available from U-Haul, Home Depot, or Amazon itself
• Kitchen scale — for weighing boxes to estimate shipping costs
• A folding table — dedicated prep space you can set up and tear down

Total startup cost for a prep station: $250-$400.

Creating Shipments in Seller Central

1. In Manage Inventory, select the items you want to send
2. Choose Send/Replenish Inventory
3. Follow the shipment creation workflow — enter quantities, confirm prep requirements
4. Amazon assigns your inventory to one or more fulfillment centers (you usually can’t choose which ones)
5. Print box labels and apply them to your shipping boxes
6. Choose your shipping carrier

Shipping Options

• Amazon Partnered Carriers (UPS): Discounted rates through Amazon’s partnership with UPS. Usually the cheapest option for small-to-medium shipments. You drop off at a UPS store or schedule a pickup.
• Your own carrier: You can use FedEx, USPS, or other carriers, but you’ll typically pay more than the partnered rate.
• SPD (Small Parcel Delivery) vs. LTL (Less Than Truckload): SPD is for individual boxes (most RA sellers use this). LTL is for pallet-sized shipments — relevant only when you scale significantly.

Restock Limits

Amazon imposes restock limits that cap how much inventory you can have at their fulfillment centers. New sellers get lower limits (often 200-1,000 units) that increase as you sell through inventory and build a track record. This is a real constraint for new sellers — manage it by sending in your fastest-selling items first.

Prep Centers

If you’d rather not handle prep yourself, third-party prep centers will receive your inventory, label it, poly-bag it, and ship it to Amazon for you. Typical costs are $1-$3 per unit depending on prep complexity. This makes sense when your volume is high enough that your time is better spent sourcing than labeling.

Repricing Strategies

Once your inventory is live on Amazon, pricing it correctly is essential. Price too high and it won’t sell. Price too low and you leave profit on the table.

Manual Repricing

When you have fewer than 50 SKUs, you can manage pricing manually:

• Check your listings daily in Seller Central
• Match or slightly beat the lowest FBA price
• Adjust as sellers enter or leave the listing
• This works but becomes unsustainable as inventory grows

Automated Repricers

For larger inventories, automated repricing tools adjust your prices 24/7 based on rules you set:

Pricing Strategies

• Match lowest FBA price: The safe default. You share the Buy Box with other FBA sellers at the same price.
• Penny undercut: Pricing $0.01 below the next lowest FBA offer. Can work but can also trigger a price war.
• Premium pricing for condition/bundle advantage: If your listing has better photos, or you’re offering a unique bundle, you can price above the lowest and still sell.
• Wait-and-hold: For items with few sellers, sometimes listing at a higher price and waiting for cheaper competitors to sell out yields better long-term profit.

When Amazon Is the Seller

If “Ships from and sold by Amazon.com” appears on a listing, Amazon is competing directly with you for the Buy Box. In most cases:

• Amazon will match or undercut any FBA seller price
• Your Buy Box share will be minimal while Amazon is in stock
• This is generally a pass unless you bought at such a low price that you can profit even below Amazon’s price, or if Keepa shows Amazon goes in and out of stock regularly

💡 Pro Tip: Focus on products where Amazon is NOT a seller. Filter for “FBA offers only” in your scanning app if available. Competition from other third-party sellers is far more manageable than competing directly with Amazon.

Handling Returns, Removals & Problem Items

Returns are an unavoidable part of selling on Amazon. Amazon’s return policy heavily favors buyers, and as an FBA seller, you’ve agreed to their terms.

Return Rate Expectations

A return doesn’t always mean a loss. If the item is returned in sellable condition, Amazon relists it automatically. But if it’s returned as “Customer Damaged” or “Defective,” it goes to your unfulfillable inventory.

Handling Unfulfillable Inventory

When inventory becomes unfulfillable, you have three options:

1. Create a removal order — Amazon ships the items back to you. You pay a removal fee ($0.97-$1.98 per unit). You can inspect them and resell on eBay, Facebook Marketplace, or relist on Amazon if they’re actually fine.
2. Liquidate — Amazon sells them through their liquidation program at 5-15 cents on the dollar.
3. Dispose — Amazon destroys the items. Small disposal fee ($0.32-$0.97 per unit). Sometimes this is the most cost-effective option for low-value items.

Long-Term Storage Fees

Inventory that sits in Amazon’s warehouse for more than 271 days starts incurring long-term storage fees ($6.90/cubic foot or $0.15/unit, whichever is greater). After 365 days, costs increase further.

Mitigate this by:

• Sourcing products with BSR under 100,000 (they sell faster)
• Repricing aggressively on slow movers after 90 days
• Removing or liquidating inventory before the 271-day mark
• Being realistic about seasonal items — if it didn’t sell during season, cut losses early

Use the Return Rate Calculator on Underpriced to see how returns impact your overall profitability by category.

Tax Implications for Retail Arbitrage

Retail arbitrage income is taxable business income. Here’s what you need to know at a high level.

Amazon 1099-K Reporting

Amazon issues a 1099-K to you and the IRS when your gross sales exceed $600 in a calendar year. This reports your gross sales, not your profit — so you need accurate records of your expenses to avoid overpaying taxes.

Resale Certificates

In most states, you can apply for a resale certificate (also called a sales tax exemption certificate or seller’s permit). This allows you to buy inventory without paying sales tax at the register, since you’re purchasing for resale. This directly improves your margins — paying 6-10% sales tax on every purchase cuts into already-thin margins.

Each state has a different process. Some stores accept resale certificates easily (Walmart), while others are hit-or-miss (Target can depend on the cashier). Having a printed copy of your certificate readily available is essential.

Key Deductions

As a reseller, you can deduct:

• Cost of Goods Sold (COGS) — what you paid for the products
• Mileage — IRS standard rate for sourcing trips
• Shipping supplies — boxes, labels, poly bags, tape
• Scanning app subscriptions — tools used for business
• Amazon selling fees — referral fees, FBA fees, storage fees
• Home office — if you use dedicated space for FBA prep

For comprehensive coverage, read our 1099-K Tax Guide and Tax Deductions Guide. You can also use the Reseller Tax Deduction Calculator and Mileage Deduction Calculator to estimate your deductions.

💡 Pro Tip: Track every sourcing trip with a mileage tracking app from day one. Those miles add up fast — 20 miles per trip, 3 trips per week, 50 weeks per year = 3,000 miles. At the IRS mileage rate, that’s a meaningful deduction most new sellers miss.

Retail Arbitrage vs. Other Amazon Selling Models

Retail arbitrage is one of several ways to sell on Amazon. Here’s how it compares to the alternatives.

Retail Arbitrage vs. Online Arbitrage

OA is the same concept — buy low, sell high on Amazon — but done from your computer instead of in stores. OA allows sourcing from anywhere and is more scalable, but it’s also more competitive for well-known deals and requires different skills (browser extensions, deal sites, cashback stacking).

Many sellers do both. RA is better for finding unique local deals. OA is better for finding replenishable products you can reorder. See our Online Arbitrage Guide for a deep dive.

Retail Arbitrage vs. Wholesale

Wholesale involves buying products in bulk directly from brands or authorized distributors at a fixed wholesale price. It’s more predictable and scalable than RA, but requires higher upfront investment ($2,000+ for initial orders), supplier relationships, and the ability to negotiate accounts.

Many successful Amazon sellers start with RA to learn the ecosystem, then transition to wholesale once they understand which categories and brands sell well.

Retail Arbitrage vs. Private Label

Private Label means creating your own branded product and selling it on Amazon. It offers the highest margins and scalability but also the highest risk and startup cost. You need product research, manufacturing (often from China), branding, and Amazon PPC advertising.

PL is the long game. RA is the immediate-cash-flow game. They serve different purposes, and many sellers eventually move from RA toward PL once they’ve built capital and Amazon expertise.

The Common Path

A realistic progression for many Amazon sellers looks like:

1. Start with RA — learn the ecosystem, build capital, understand what sells
2. Add OA — extend sourcing to online deals, build replenishable lists
3. Move into Wholesale — establish supplier accounts for consistent inventory
4. Consider Private Label — launch your own products with the knowledge and capital you’ve built

Not everyone follows this exact path, and there’s nothing wrong with staying in retail arbitrage if it’s profitable and you enjoy it. But understanding the full landscape helps you make informed decisions about where to invest your time.

Scaling Your Retail Arbitrage Business

If you’ve been doing retail arbitrage for a few months and want to grow, here are proven strategies for scaling.

Build a Sourcing Route

Instead of randomly visiting stores, develop a planned route:

• Identify your 6-10 most productive stores
• Map a circuit that minimizes driving time between them
• Designate specific days for specific routes (Walmart/Target Mondays, Drugstore runs on Wednesdays, etc.)
• Track which stores consistently yield the best deals and double down on those

Track Replenishable Products

Some clearance items appear at the same store chain repeatedly. When you find a product that sells well once:

• Record the product, store, and price in a spreadsheet or app
• Check for that product (or similar deals) on future trips
• Set up Keepa alerts for price drops on products you’ve profited from before
• Certain brands cycle through clearance predictably — learn these patterns at your regular stores

Develop Store Relationships

Getting to know store managers and department leads can be a genuine advantage:

• Ask when markdown days happen (many stores have specific days for clearance processing)
• Some managers will give you a heads-up about upcoming markdowns
• In some stores, you can request to see back stock or items about to hit the floor
• Being polite and professional goes a long way — you’re a regular customer, not a nuisance

This doesn’t always work, and don’t push if a manager seems uninterested. But when it does work, it’s a significant edge over other sellers scanning the same store.

Hire Help

As your business grows, the prep bottleneck becomes real. Consider:

• Hiring a part-time prep assistant ($12-$18/hour) to label, bag, and box inventory
• Using a prep center for overflow
• Teaching a sourcing partner your criteria so they can scan and buy while you handle another store
• Your time is most valuable during sourcing — delegate everything else as soon as the math makes sense

Diversify Sales Channels

Don’t rely entirely on Amazon. For items that don’t meet Amazon’s criteria (too low BSR, gated brands, used condition), sell on:

• eBay — great for brands restricted on Amazon
• Mercari/Poshmark — for clothing, shoes, accessories
• Facebook Marketplace — for oversized or local-sale-friendly items

Use Underpriced to quickly check item values across multiple platforms so you can decide where each product sells best.

Moving Toward Wholesale

Once you’ve identified categories and brands that consistently sell well through RA, you’re in a strong position to approach those brands’ authorized distributors for wholesale accounts. You’ll already know:

• Which products sell at which velocity
• What margins the market supports
• How to navigate Amazon’s listing and fulfillment systems

This knowledge is the foundation for a wholesale business and represents the most natural scaling path from retail arbitrage.

Is Retail Arbitrage Still Worth It in 2026?

This is the question every potential seller asks. Here’s an honest answer.

The Pros

• Low startup cost — you can start with $200-$500 in inventory, a smartphone, and the free Amazon Seller App
• Immediate learning — nothing teaches the Amazon ecosystem faster than hands-on selling
• Cash flow — you can go from sourcing to receiving payment in 2-3 weeks (faster than wholesale or PL)
• No MOQs or supplier contracts — buy what you want, when you want, in whatever quantity
• Flexible schedule — source on your own time, prep at home
• Real income potential — $1,000-$5,000+/month is achievable for consistent sellers

The Cons

• Time-intensive — sourcing in stores takes hours of physical effort every week
• Unpredictable inventory — you never know what you’ll find on any given trip
• Account risk — IP complaints, inauthentic claims, and policy violations can happen, especially with brand restrictions
• Thin margins on some items — after all fees, some items net you $2-3 per unit
• Physically demanding — lots of driving, walking, and lifting boxes
• Limited scalability — there’s a ceiling to how much one person can source in stores
• Increasing competition — more sellers scanning the same clearance aisles

Who Retail Arbitrage Is Best For

Retail arbitrage is ideal for people who:

• Want to start an Amazon business with minimal capital
• Enjoy the “treasure hunt” aspect of finding deals
• Have flexible time (students, stay-at-home parents, side hustlers)
• Want to learn the Amazon ecosystem before committing bigger money to wholesale or PL
• Are patient enough to build skills over 3-6 months before seeing consistent income

Who Should Skip It

Retail arbitrage is probably not for you if:

• You hate shopping and scanning in stores
• You want passive income (this is active work)
• You need immediate, reliable income from month one
• You’re not willing to invest time in learning the tools and metrics

The Realistic Path Forward

The smartest approach is to view retail arbitrage as an education and capital-building phase, not necessarily as your forever business model. Start with RA, learn what sells, build up cash reserves, and then decide whether to stay in RA, expand into OA, move to wholesale, or launch private label products.

Many of the most successful Amazon sellers today started by scanning clearance aisles at Walmart. The skills you build — understanding demand, reading data, managing inventory, navigating Amazon’s systems — transfer directly to every other Amazon selling model.

Getting Started: Your First Week in Retail Arbitrage

If you’ve read this far and want to try it, here’s your action plan for week one:

Day 1-2: Setup

• Create an Amazon Seller account (Individual plan to start)
• Download the Amazon Seller App
• Install the Keepa browser extension on your computer
• Order FNSKU labels and poly bags (they’ll arrive by the time you need them)

Day 3-4: Learn the tools

• Practice scanning items around your home to familiarize yourself with the Seller App
• Read Keepa charts for products you already own — learn what BSR, price history, and seller counts look like
• Watch 2-3 YouTube tutorials on reading scan results (there are many good, free ones)

Day 5-6: First sourcing trip

• Visit a Walmart and/or Target clearance section
• Scan at least 50 clearance items
• Don’t worry about speed — focus on understanding the data
• Buy 3-5 items that show clear profit potential (BSR under 100K, 30%+ ROI after fees, no restrictions)

Day 7: First prep and shipment

• Label your items with FNSKU stickers
• Poly bag anything that needs it
• Create a shipment in Seller Central
• Pack and ship your first box to Amazon

That’s it. Your first shipment won’t be perfect, and your first sourcing trip will be slow. That’s normal. By your fifth sourcing trip, you’ll be scanning three times faster and spotting deals your first-time self would have walked past.

Conclusion

Amazon FBA retail arbitrage in 2026 is not the easy-money opportunity some people advertise, but it is a legitimate and accessible way to build an e-commerce business. The sellers who succeed are the ones who learn the tools, understand the data, source consistently, and treat it like a real business rather than a casual hobby.

Start small, track everything, and don’t be discouraged by mistakes — every experienced seller has a story about the time they bought 30 units of something they couldn’t sell. The learning curve is real, but so is the income potential.

Whether you’re scanning clearance aisles or comparing prices online, having the right tools makes all the difference. Use Underpriced to quickly check item values across platforms, and explore our free reselling calculators like the FBA Storage Fee Calculator and ROI Calculator to make data-driven sourcing decisions. The more data you have before you buy, the more profit you’ll keep after you sell.