Grocery - The BEST Category For New Sellers

A great way to get into the arbitrage game

Welcome back!

As 2022 is coming to a close, I’ve almost finished my first full year of selling on Amazon. I spent a lot of time thinking about what helped me get to where I’m at now.

Since I plan on ramping up my content production, I want to share as many of my experiences as possible so that you have all of the information you need to build a successful arbitrage business of your own.

I may be spending big on inventory now, but when I transitioned away from books at the end of last year I didn’t have that much capital to work with. One thing that I think really helped me was the category I was initially selling, which was Grocery. While it’s hard to sell a lot of grocery at scale as an arbitrage seller, I think it’s a great category for beginners - and I’ll be telling you why in this post.

Low Barrier to Entry

When it comes to arbitrage, there’s two hurdles that a lot of new sellers will face - capital and ungating. It can be daunting to invest $50-100 to get permission to sell just one brand (Nike, Lego, etc.) as you’re still limited with what types of items you can sell. Not only that, but if you’re not starting with a lot of cash you may only be able to buy 10-15 units at once. With limited amounts of inventory, your capital can get tied up if you make poor buying decisions.

Grocery shatters both of these barriers. Getting ungated in the category as a whole will only cost you around ~$30 (Frontier Co-Op Wholesale) and a lot of items in this category are low cost. You can buy something for $4, sell it for $11, and make $2 profit. While that doesn’t sound very sexy, getting these small wins will help you gain experience as an Amazon seller and get some profits under your belt.

Another good thing about grocery is that even though it’s one of the smaller categories on Amazon, a big portion of it is bundle listings. Bundle listings are good for beginners because it’s more difficult for scanning software like Tactical Arbitrage to identify those opportunities, and after prep center fees most experienced sellers won’t find them to be worth their time. It’s a great niche that beginner sellers can fill to get some experience.

Retail Arbitrage Friendly

I know that some people like to start doing Retail Arbitrage first (going to physical stores to source inventory) before they dip their toes into Online Arbitrage. If this is you, you’ll have no problems finding profitable grocery opportunities at your local Walmart / Target. Depending on where you live, you might also have access to opportunities that most sellers don’t since some regional grocery chains like Meijer and Jewel-Osco have good deals but won’t ship orders at all.

I never really did any RA, but if I did I think I’d be pretty good at it because a lot of my best selling grocery items back in the day were sold at Walmart. I could drive down the road, clean out my local Walmart of all the cake mix / cheese puffs and come back home in the span of 20 minutes. If there’s enough demand, I may go source $100 of profit at my local Walmart just for laughs.

(Almost) No Returns

The final reason grocery is a great starting point for new sellers is the lack of returns. It can be very demoralizing when you get a package at your house and it ends up being a damaged product that you sent in to Amazon 2 months earlier. I remember getting a pair of shoes back that was obviously worn for a few weeks before the customer returned it, and it was beyond saving - I was pissed.

One thing I didn’t realize back then but really appreciate now is that the vast majority of items in the grocery category aren’t able to be returned. If you’re selling something like fruit snacks or cans of soup, the people buying those products are likely just going to eat them and won’t even think of trying to return them - and even if they did, Amazon wouldn’t want to take back a half-empty box of Fruit Gushers. Not having to worry about returns in the early days of your arbitrage business will give you some peace of mind and allow you to focus on the more important things, like sourcing more items.

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Expect more posts like this on a regular basis, and check out my course that’s releasing this Friday.