Selling on Amazon with Arbitrage and Dropshipping

January 04, 2026 7 min read 6 views

A Complete Beginner’s Guide for the US, Canada, UK, and Europe

Amazon has become one of the most powerful global e-commerce platforms, offering sellers access to millions of customers across North America and Europe. For beginners who do not want to manufacture their own products, two business models stand out as the most accessible entry points: Amazon Arbitrage and Amazon Dropshipping. Both models allow sellers to leverage existing products and established demand, but they differ significantly in execution, risk, and scalability.

This guide explains how arbitrage and dropshipping work, how they differ, and how to start selling across the United States, Canada, the United Kingdom, Germany, France, Italy, and Spain in a compliant and sustainable way.

Understanding Amazon Arbitrage and Dropshipping

Amazon arbitrage is based on a simple principle: buying products at a lower price from one source and reselling them on Amazon at a higher price. This can be done in two main ways. Retail arbitrage involves sourcing products from physical stores, often from clearance sections or seasonal discounts. Online arbitrage follows the same logic but sources products from online retailers instead of brick-and-mortar stores.

Dropshipping, by contrast, allows sellers to list products on Amazon without holding inventory. When a customer places an order, the seller purchases the product from a supplier who ships it directly to the customer. The seller earns the difference between the Amazon sale price and the supplier cost.

While both models avoid product development and manufacturing, the key distinction lies in inventory ownership and fulfillment control. Arbitrage sellers typically buy and temporarily own inventory, often sending it to Amazon’s fulfillment centers. Dropshipping sellers never physically touch the product and depend entirely on supplier performance.

Comparing the Two Models

Arbitrage is often favored for its control and profit potential. Sellers can inspect products, ensure authenticity, and take advantage of Amazon’s fulfillment network to offer fast Prime shipping. However, arbitrage requires upfront capital and time-intensive product sourcing.

Dropshipping appeals to sellers who want to start with minimal capital and inventory risk. Since products are purchased only after a sale occurs, there is no risk of unsold stock. The downside is thinner margins, reduced control over packaging and shipping, and strict compliance requirements that leave little room for error.

Many experienced sellers eventually adopt a hybrid approach: using dropshipping to test demand and switching to arbitrage or bulk purchasing once a product proves profitable.

Registering as an Amazon Seller Across Regions

Before selling, a seller must open an Amazon Seller Central account in the relevant marketplace. Amazon structures seller accounts regionally, allowing one account to cover multiple countries within North America or Europe.

In North America, a single seller account can be used to sell in the United States and Canada. Registration requires identity verification, banking details, a chargeable credit card, and tax information. Sellers choose between an Individual plan, which charges per sale, and a Professional plan with a monthly subscription.

In the United Kingdom, sellers must provide similar documentation, but tax compliance becomes more prominent. VAT registration is often required, particularly for non-UK sellers or those using Amazon fulfillment services.

Across Europe, marketplaces such as Germany, France, Italy, and Spain operate under a unified European seller account. VAT registration is mandatory in at least one EU country before selling. If inventory is stored in multiple countries, additional VAT registrations are required. Europe also enforces stricter consumer protection and environmental compliance rules, making accuracy and documentation especially important.

Sourcing Products for Arbitrage

Successful arbitrage depends on identifying products with strong demand, limited competition, and sufficient margin after fees. Sellers evaluate products by comparing sourcing cost, Amazon selling price, referral fees, fulfillment fees, and expected sell-through speed.

Retail arbitrage typically focuses on discounted branded products, seasonal items, toys, beauty products, or household goods. Online arbitrage relies more heavily on price tracking, historical data, and software-assisted analysis to identify temporary price mismatches.

Regardless of sourcing method, sellers must avoid counterfeit goods, restricted brands, and categories that require approval. Keeping receipts and purchase documentation is essential in case Amazon requests proof of authenticity.

Sourcing Products for Dropshipping

Dropshipping success depends almost entirely on supplier reliability. Sellers must work with wholesalers or manufacturers who can ship products without including their own branding, invoices, or marketing materials. Amazon requires the seller to appear as the sole seller of record on all shipments.

Products selected for dropshipping should have consistent demand, stable pricing, and manageable return rates. Because margins are lower, dropshipping works best when operational efficiency is high and order management is disciplined.

Inventory monitoring is critical. Selling out-of-stock products leads to cancellations, which can severely damage account health. Many sellers start with a small catalog to maintain control before scaling.

Creating and Managing Amazon Listings

Most arbitrage sellers list products on existing Amazon detail pages, adding their offer to an already established listing. This simplifies the process and leverages existing reviews and search visibility.

New listings are more common in dropshipping scenarios. These require careful attention to product titles, bullet points, descriptions, and images. In Europe, listings must be localized in the appropriate language to meet customer expectations and improve conversion rates.

Pricing strategy is central to success. Sellers must remain competitive while protecting margins, accounting for fees, VAT (in Europe), and fulfillment costs. Automated repricing tools are often used to maintain Buy Box eligibility.

Fulfillment Options and Order Handling

Amazon offers multiple fulfillment methods. Fulfillment by Amazon (FBA) allows sellers to send inventory to Amazon warehouses, where Amazon handles shipping, customer service, and returns. This is the preferred method for arbitrage sellers seeking scale and Prime eligibility.

Fulfilled by Merchant (FBM) requires the seller to ship orders directly to customers. Dropshipping operates under this model, with suppliers shipping on the seller’s behalf. Accurate tracking, fast handling times, and reliable communication are critical.

Managing returns varies by region, especially in Europe where consumer return rights are stronger. Sellers must have a clear return process and respond promptly to customer inquiries.

Compliance and Account Health

Amazon enforces strict policies, particularly for dropshipping. Sellers must ensure that they, not the supplier, are clearly identified as the seller. Using other retailers as dropshipping suppliers is prohibited.

Account health metrics such as order defect rate, late shipment rate, cancellation rate, and response time are closely monitored. Consistently meeting Amazon’s performance standards is essential for long-term account stability and Buy Box visibility.

In Europe, additional legal obligations apply, including VAT compliance, packaging regulations, and product safety requirements. Sellers expanding internationally should treat compliance as a core business function, not an afterthought.

Regional Differences and Strategic Considerations

Customer expectations, tax treatment, shipping logistics, and language requirements vary by region. North American prices are typically listed before tax, while European prices must include VAT. Shipping speed expectations are highest in markets with widespread Prime adoption.

Language localization plays a significant role in Europe, where customers expect listings and communication in their native language. Fulfillment strategies also differ, with cross-border logistics requiring careful planning to avoid delays and unexpected fees.

Conclusion

Amazon arbitrage and dropshipping offer accessible entry points into global e-commerce without the need for product manufacturing. Arbitrage provides greater control and profit potential, while dropshipping offers flexibility and lower upfront risk. Both models require discipline, compliance, and continuous learning.

By understanding regional requirements, sourcing responsibly, optimizing listings, and maintaining high operational standards, sellers can build scalable Amazon businesses across the United States, Canada, the United Kingdom, and Europe.

The most effective approach is to start small, test products, reinvest profits, and adapt strategies as experience grows. With consistent execution and a long-term mindset, Amazon can become a powerful platform for international e-commerce success.