Guide: An Introduction to Reverse Sourcing for Online Arbitrage and Wholesale
How we start our sourcing process on Amazon, rather than at the retail store.
Welcome to the world of reverse sourcing, where we flip the traditional approach of sourcing products for Amazon FBA sellers on its head.
Most sellers are taught from the start is traditional sourcing, mainly because it lends itself to retail arbitrage. While it has its merits, I firmly believe that reverse sourcing is the method you'll find yourself using more frequently in your day-to-day operations, especially if you're venturing into online arbitrage or wholesale.
In this post, we'll delve into the concept of reverse sourcing, its advantages, and how it can help you uncover profitable opportunities for your Amazon business.
Traditional sourcing vs. reverse sourcing
Traditional sourcing involves visiting retail or online stores, scanning products, and determining their profitability by looking them up on Amazon.
Reverse sourcing, on the other hand, flips the process around. Instead of starting with the retailer, we begin with Amazon itself. We identify the best-selling products and then search for a supplier who can provide those products at a profitable price point.
The key difference is that with traditional sourcing, we scan numerous products to find profitable ones, while reverse sourcing starts with Amazon's top-performing products and focuses on finding the right supplier.
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The appeal of reverse sourcing
Why do I prefer reverse sourcing? Simply put, it's much less exhausting than traditional sourcing. With traditional sourcing, you can spend hours scanning countless products, often without finding a profitable item. It becomes challenging to keep track of what you've scanned and when.
Traditional sourcing works well during temporary sales events or seasonal promotions. It can also work to get your feet wet if you’re new to arbitrage and trying out retail arbitrage. However, for day-to-day sourcing, reverse sourcing offers a more efficient approach.
With traditional sourcing, you are searching for a needle in a haystack of products. With reverse sourcing, you are a trained hunter, tracking your prize—the supplier. For me, this mindset shift changed how I viewed sourcing in general. With traditional, it was easy to get dejected and feel like it was impossible to find products that Amazon wasn’t already selling for the same price.
With reverse sourcing, I knew those other sellers had to have a source they were getting it from for cheaper. I was starting from a place where I knew it was possible.
How reverse sourcing works
Now that we understand the benefits of reverse sourcing, let's explore how it actually works. There are two primary methods, and we'll start with the simpler one, then delve into more advanced techniques later.