Is Retail Arbitrage Illegal?

A question many Amazon sellers have a concern about is whether Retail Arbitrage is actually illegal or not. The question was raised when an Amazon Seller posted a screenshot of an official cease-and-desist letter from a popcorn manufacturer. This manufacturer began claiming it was illegal for them to sell their products on Amazon.

The seller was very worried. He was afraid that he would not only get sued but also lose all the money he used to invest in the inventory. The act of reselling a product you possess is not illegal; however, there are some best practices to follow in order to steer away from legal trouble.

Here is a screenshot of the cease-and-desist letter the Amazon seller received.

Example of a product violation email

The US Supreme Court Weighs In

US Supreme Court has directly concluded that it is not illegal. Retailers cannot stop someone from selling their products if their merchandise has been legally acquired.

Although it is legal, you must be aware of some challenges. Oftentimes Amazon sellers could receive harassment from corporations trying to intimidate you away from selling their products online.

Here are four ways to be extra careful and avoid trouble when selling Retail Arbitrage on Amazon

  1. Selling certain products and brands as New
  2. Always keep your receipts from your sourced products
  3. Avoid dropshipping on Amazon through certain brands and manufacturers.
  4. Avoid sourcing any counterfeit products

In short, the practice of reselling items or Retail Arbitrage as a whole is not Illegal. However, always do your due diligence on products and brands before you sell them for Retail Arbitrage. You are new to Retail Arbitrage, you can view our comprehensive full guide here.

Although there are some gray areas particularly in retail arbitraging, do not be discouraged to try. Just follow the rules of thumb and steer away from sourcing brands that only allow their products to be sold through authorized resellers. Retail Arbitrage is still profitable in 2020 and is a great way to make some side income or get in the Amazon ecosystem.

Is Retail Arbitrage Illegal?
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