Is retail arbitrage allowed on Amazon?

One of the worst moments in my over 10 years of selling online was when my Amazon seller account was suspended.

I’ll never forget the moment when I looked down at my phone and saw the notification. It was around midnight and I was in the middle of brushing my teeth. The email started with saying:

“We have removed your Amazon selling privileges due to buyer complaints about the condition or description of items they received from you.”

Obviously I got my account back. But what got me suspended in the first place?

If you ask a lot of people, they would tell you that as a retail arbitrage seller, it was only a matter of time before I ran into trouble and got suspended. They will tell you that retail arbitrage is against Amazon policies or that retail arbitrage is “illegal on Amazon.”

In this post we’re going to answer the question “is retail arbitrage allowed on amazon”, then we’re going to look at some of the specific things that can and will get you suspended from the platform.

Is retail arbitrage allowed on Amazon?

Yes, retail arbitrage is allowed on Amazon. 

Contrary to what some people believe, there is nothing about retail arbitrage that violates Amazon’s policies.

Anyone who claims otherwise isn’t familiar with what Amazon’s policies actually are. If you are going to sell on the platform, I recommend reading all the documentation Amazon provides. I know for most accounts you set up its okay to just click the box to accept the terms and conditions without reading them, but this is one where you should take the time to read it all. You can save yourself a lot of trouble this way.

What about online arbitrage?

Online arbitrage is also allowed on Amazon.

Everything that I say in this article about retail arbitrage also applies to online arbitrage. The only difference between the two is that with retail arbitrage you are shopping in stores whereas with online arbitrage you are shopping on websites.

But someone told me that I would get banned…

There are lots of other sellers out there who like to say that retail arbitrage will get you banned. 

Again, this isn’t true. 

I’ve been performing retail arbitrage for over 10 years, selling millions via RA every year. If it was only a matter of waiting for Amazon to catch you performing retail arbitrage, I would have been permanently banned many years ago.

There are a few main reasons that you hear stories of retail arbitrage sellers getting suspended:

  1. Many new sellers who try retail arbitrage make a mistake and do things that actually are against the rules.
  2. Amazon will side with customers and major brands over small sellers.
  3. Amazon uses suspensions for what may seem like minor violations.
  4. Amazon shoots first and asks questions later.

For the record, I would consider myself a “small seller” in the grand scheme of things. By “major brands”, I mean large household names like Apple, Disney, and Nike. These brands have the potential to drive revenue numbers that you and I can’t even dream of, so naturally Amazon will cater to these businesses over ours.

These four factors lead many sellers to complain about the injustice of Amazon and how they don’t appreciate all the small sellers who help make the platform tick. 

I can understand why this is frustrating for people, especially if you’ve been on the other end of a situation where they shoot first and ask questions later (i.e. a legitimately unfair suspension triggered by something out of your control).

But these buyer-friendly policies have also helped make Amazon the most lucrative place to be as a seller, and I personally have found that going the extra mile to read all their policies and ensure we don’t break them has been enough to enjoy success as a retail arbitrage seller on the platform.

So what will get you banned?

Once again, if you aren’t familiar with Amazon’s policies, it’s a good idea to read through them. 

Here are some things I would start with reading:

The main things that will get you suspended are:

  • Listing an item as new when it doesn’t match their definition of new.
  • Listing an item for a category or brand that you aren’t allowed to sell.
  • Slow shipping on merchant-fulfilled orders.
  • Getting reported as inauthentic by a buyer without a clear paper trail for your products.
  • Purposely circumventing rules to try to get more sales.
  • Purposely circumventing just about any Amazon policy.

In general using the wrong condition is the most common problem in my experience. Amazon has very strict guidelines as to what can be considered new, and many sellers unintentionally violate this rule when they list something that had been previously opened or that had damage to the packaging as “new”.

Here is Amazon’s definition of new:

New: Just like it sounds. A brand-new item. Original manufacturer’s warranty, if any, still applies, with warranty details included in the listing comments. Original packaging is present for most New items but certain items may be re-boxed.

The original manufacturer’s warranty part is something people like to cite as a reason retail arbitrage isn’t “legal”. While it’s true that you can’t sell items that are missing their warranties, this generally is only a problem for major brands and electronics.

How to Avoid Suspensions As A Retail Arbitrage Seller

Here are the top things you should do to avoid getting suspended as a retail arbitrage seller on Amazon:

  • List your items in the proper condition. When in doubt, go a condition level down instead of up.
  • Never try to list something you aren’t allowed to be selling.
  • Take care of your customers.
  • Ship seller fulfilled orders out in a timely fashion.
  • Keep your receipts. Don’t sell anything you don’t have a clear paper trail of where it came from.
  • Review your account health dashboard in seller central regularly.

If you haven’t read my guide on the basics of retail arbitrage, you should probably go do that now:

https://onlinesellingexperiment.com/retail-arbitrage-2/

If you follow my advice about scanning items in store, you will avoid the vast majority of issues that arise from selling products you aren’t supposed to sell because the free Amazon seller app will tell you if something is restricted.

Like I mentioned above, it is also wise to steer clear of electronics unless you are certain that you are allowed to sell the product or brand in question and you are certain that the full manufacturer’s warranty will transfer.

If you do find yourself suspended, here is a guide that may help:

https://onlinesellingexperiment.com/amazon-account-suspended/

What items are restricted on Amazon?

Here is the page where you can get more information about what is restricted on Amazon and why:

https://sellercentral.amazon.com/gp/help/external/200164330

Here is the list they provide:

  • Alcohol
  • Animals & Animal-Related Products
  • Art – Fine Art
  • Art – Home Decor
  • Automotive and Powersports
  • Composite Wood Products
  • Cosmetics & Skin/Hair Care
  • CPAP Cleaning and Disinfecting Devices
  • Currency, Coins, Cash Equivalents, and Gift Cards
  • Dietary Supplements
  • Drugs & drug paraphernalia
  • Electronics
  • Explosives, Weapons, and Related Items
  • Export Controls
  • Food & Beverage
  • Gambling & Lottery
  • Hazardous and Dangerous Items
  • Human Parts & Burial Artifacts
  • Jewelry & Precious Gems
  • Laser products
  • Lighting
  • Lock Picking & Theft Devices
  • Medical devices and accessories
  • Offensive and Controversial Materials
  • Other Restricted Products
  • Pesticides and Pesticide Devices
  • Plant and Seed Products
  • Postage meters and stamps
  • Recalled Products
  • Recycling electronics
  • Refrigerants: Ozone-Depleting Substances and Substitutes
  • Subscriptions and Periodicals
  • Surveillance Equipment
  • Tobacco & Tobacco-Related Products
  • Warranties, Service Plans, Contracts, and Guarantees
  • Upholstered Furniture, Bedding, & Other Quilted Products

The list of restricted brands is long and not worth trying to remember. Like I said above the easiest way to avoid restricted brands is to scan all your items and avoid anything that the Amazon Seller app says you aren’t allowed to sell.

The above isn’t a comprehensive list, and there will be other brands and products that you won’t be eligible to sell without obtaining approval.

How to get “ungated” so you can sell restricted categories, products, and brands on Amazon

Just because you start restricted from selling something doesn’t mean it will always be that way. There are many things that you can get “autoapproved” for just by asking once you’ve built up your account history with good metrics.

Another way to get approved for more categories and brands is by becoming an authorized reseller. This is done by setting up wholesale accounts with authorized distributors which will get you invoices that you can use to get ungated.

This is why we recommend planning on adding wholesale once you’ve built up enough money and experience to be successful.

To learn more about restrictions and getting ungated on Amazon, check out this guide:

https://onlinesellingexperiment.com/amazon-restricted-categories/

Is retail arbitrage worth trying?

In my opinion retail arbitrage is worth trying and I wouldn’t let the potential pitfalls we discussed above to stop me from trying even if I was brand new. At the end of the day, the benefits outweigh any potential risks in my opinion.

Retail arbitrage lets anyone get started on Amazon without needing thousands of dollars in the bank. You don’t need to invent a product, import things from China, or wipe out your savings to buy inventory before you’ve ever even sold anything.

Established sellers ask why anyone would want to put up with the risks when they could just do wholesale or private label – but diving into wholesale isn’t a viable decision unless you are starting with a decent amount of capital. If you are starting with less than $1000 total and still want to build a successful business, hustling via retail arbitrage is something you can start right now and the experience and money you gain can be used to launch yourself into wholesale and your own brand down the road.

That is the route I took, and I’ve been very happy with the results.

If you are interested in trying retail arbitrage, make sure you check out our Arbitrage Accelerator Challenge and aim to sell $250 or more in your first 30 days:

https://pro.onlinesellingexperiment.com/p/challenge

Questions?

If you have any questions or would like to share your own experiences, use the comments below!

Do you think retail arbitrage is worth trying? Why or why not?

2 thoughts on “Is retail arbitrage allowed on Amazon?”

  1. This is some great information! I have heard a lot about drop-shipping on Amazon lately, so I was curious if that meant that retail arbitrage was allowed too. I definitely think it’s always good to go down a condition instead of up on any type of reselling platform. Thank you for all of the info on what specifically is and isn’t allowed.

    1. Hi Sarah,

      Glad to hear you enjoyed the post!

      When it comes to drop shipping there are ways to do it that are allowed on Amazon. If you are trying to buy items from another retailers website and ship them directly to customers, that is generally against Amazon’s policy.

      If you have a distributor or supplier that you work with directly who is willing to ship items to customers as they sell, then that is an allowable form of drop shipping on Amazon.

      Hope that helps!

      Best Regards,
      Ryan

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