The Value Retailer Opportunity
Pound shops and value retailers like Home Bargains and Poundland might seem like unlikely sourcing grounds for Amazon FBA. The products are cheap, which can mean thin margins. But certain items from these stores do sell for considerably more on Amazon — particularly seasonal products, branded goods that appear sporadically, and items that customers find convenient to buy online rather than visiting a physical store.
Home Bargains
Home Bargains is arguably the most productive of the value retailers for Amazon arbitrage. They stock a mix of branded and own-label products across cleaning, health and beauty, food, homewares, and seasonal goods. Their stock rotates frequently and includes branded items at prices below other retailers.
The key with Home Bargains is focusing on branded items rather than own-label products. Their own-label goods rarely have Amazon demand, but branded cleaning products, health and beauty items, and popular snack foods can produce reasonable margins when the price difference is sufficient.
Poundland
Poundland has moved away from the everything-for-a-pound model and now sells items at various price points. Their branded stock is more limited than Home Bargains, but they occasionally carry products that sell for significantly more on Amazon. Seasonal items — particularly Christmas decorations, Easter products, and Halloween stock — can produce the best margins when bought at Poundland's low prices and sold on Amazon to customers who missed the season in store.
Making the Numbers Work
The challenge with low-cost sourcing is that Amazon fees eat a larger percentage of your selling price. A product that costs one pound and sells for five on Amazon might sound like a good margin, but after FBA fees of approximately three pounds and the referral fee, you might be left with fifty pence profit. You need volume to make this worthwhile, and you need to be selective about which products clear the minimum profit threshold.
Focus on items where the price gap between the store and Amazon is large enough to absorb fees and still leave meaningful profit. Typically, you want to sell for at least three to four times your purchase price to make value-retailer sourcing viable.
When It Works Best
Value retailer sourcing works best for seasonal items bought in advance of the peak selling period on Amazon, multipacks or bundles where you can combine several cheap items into a higher-value listing, and branded items that appear sporadically at prices well below their typical retail level.
It is also a useful training ground for new sellers. The financial risk is minimal — if a product does not sell well, you have lost a pound or two rather than fifty. This lets you learn the scanning and evaluation process with very little downside.