Online arbitrage is a business model, and growth hacking is a mindset and set of strategies to scale that business rapidly.
Here is a breakdown of both concepts and how to apply growth hacking to an online arbitrage business.
1. What is Online Arbitrage?
Online Arbitrage (OA) is a business model where an entrepreneur buys products from one online retailer, often at a discount or clearance price, and resells them for a higher price on a different online marketplace, most commonly Amazon.
The core principle is simple: Buy Low, Sell High by capitalizing on price discrepancies between different websites.
How it Works:
- Sourcing: Find a product on a retailer’s website (like Walmart, Target, or a smaller e-commerce site) selling for a low price, such as during a sale or on clearance.
- Research: Use specialized tools to check the product’s sales history, demand (Best Seller Rank), competition, and selling price on a platform like Amazon.
- Calculate Profit: Determine the potential profit margin after accounting for the initial product cost, shipping, and marketplace fees (like Amazon’s FBA or referral fees). A good target ROI is often between 10% to 30%.
- Purchase and Resell: Buy the profitable inventory, list it on the higher-priced marketplace (e.g., Amazon), and ship it to the customer (either directly or via Amazon’s Fulfillment by Amazon (FBA) service).
2. What is Growth Hacking?
Growth Hacking is a discipline that focuses on creative, low-cost, and high-impact strategies to quickly and efficiently achieve rapid business growth. It is less about traditional marketing and more about experimentation, data, and iteration to find the most effective ways to drive growth.
Growth hackers often use the AARRR Framework (also known as Pirate Metrics) to structure their strategy:
- Acquisition: How do you get customers?
- Activation: Do customers have a great first experience?
- Retention: Do customers keep coming back?
- Revenue: How do you make more money from each customer?
- Referral: Do customers tell others about your business?
3. Applying Growth Hacking to Online Arbitrage (OA)
In online arbitrage, growth hacking primarily focuses on scaling your sourcing efficiency and maximizing your profitability through data and automation.
A. Acquisition (of Profitable Deals) Hacks
Instead of traditional marketing for customers, the focus is on “acquiring” profitable products quickly.
| Growth Hack Strategy | How to Implement in OA |
| Automated Sourcing & Scraping | Use powerful software to automatically scan and analyze product data spreadsheets from dozens of online retailers, identifying price discrepancies in minutes instead of hours of manual searching. |
| Lead List Leverage | Outsource the initial, time-consuming product research by subscribing to deal lead lists from other experienced sourcers or hiring a Virtual Assistant (VA) to find deals for you. |
| “Rabbit Trailing” Competitors | Use tools to see what products your successful OA competitors are selling on a popular Amazon listing, then reverse-engineer their sourcing to find the same profitable deals. |
| Maximize Cashback Stacking | Systematically use cashback websites, discounted gift cards, store credit cards with high rewards, and retailer coupons simultaneously to reduce your initial product cost by up to 20% or more. |
B. Revenue (Profit Maximization) Hacks
These hacks focus on increasing the profit from the products you already source.
| Growth Hack Strategy | How to Implement in OA |
| Algorithmic Repricing | Use an automated repricer tool that constantly monitors competitor prices and adjusts yours instantly to win the “Buy Box” at the highest possible profitable price, maximizing both sales velocity and margin. |
| Bulk Shipment Optimization | Systematically batch your smaller inventory purchases into larger, consolidated shipments to Amazon FBA to drastically lower your average per-unit shipping cost. |
| Data-Driven Restock Forecasting | Use inventory management and forecasting software to predict exactly when and how much to re-order of a profitable item. This avoids both stock-outs (lost sales) and long-term storage fees (lost profit). |
C. Retention & Referral (Customer-Facing Hacks)
While an OA seller on Amazon doesn’t own the customer in the same way, you can still influence their experience for long-term growth.
| Growth Hack Strategy | How to Implement in OA |
| Feedback/Review Automation | Use approved Amazon tools to automatically send a polite email request for a product review and seller feedback. More positive feedback = higher seller rating = more chances to win the Buy Box. |
| “Thank You” Insert (White Labeling) | (If you are fulfilled by merchant or preparing your own FBA shipments) Include a small, generic “thank you” card in the package. This can lead to a better customer experience and reduce the likelihood of a negative review. |
| Brand Building (The Long Game) | Begin to specialize in one or two product categories. Even if you don’t private label, consistently selling quality items in a niche builds your reputation with Amazon’s algorithm, which can lead to better access to future arbitrage opportunities. |