ROI is the heartbeat of a successful Amazon arbitrage business. Sellers who consistently turn a profit know how to analyze ROI properly before purchasing any product. In this article, we'll walk you through the exact steps to evaluate ROI like a pro — using real-world logic, formulas, and tools like ROI Scanner.
What is ROI and Why Does It Matter?
ROI stands for Return on Investment. It tells you how much money you make compared to what you spend. In arbitrage, ROI helps you quickly decide if a product is worth reselling on Amazon.
ROI (%) = (Net Profit / Cost of Goods) x 100
For example, if a product costs $10 and you earn $5 profit, your ROI is 50%. The higher the ROI, the better — but context also matters (like sales volume and competition).
Step-by-Step ROI Analysis
Step 1: Start With the Buy Cost
Include the product price, taxes, shipping, and any cashback you receive. This is your "Cost of Goods." Example: $12.50 total cost after tax and shipping.
Step 2: Estimate the Selling Price on Amazon
Check the current Buy Box price and average sale price using tools like Keepa or ROI Scanner. Example: You plan to sell for $29.99.
Step 3: Calculate Amazon Fees
Use a fee calculator or built-in tools (like ROI Scanner) to subtract referral fees, FBA fees, etc. Example: Amazon charges $10.50 in fees.
Step 4: Subtract Cost & Fees From Selling Price
Net Profit = $29.99 - $10.50 - $12.50 = $6.99
This is how much you make after all costs.
Step 5: Calculate Your ROI
ROI = ($6.99 / $12.50) × 100 = 55.9%
In this case, a 55.9% ROI is strong, especially if the product sells quickly and consistently.
Pro Tips for Real-World ROI Analysis
- Use tools like ROI Scanner to automate fee and ROI calculations on over 100 stores.
- Always cross-check with Keepa to validate pricing history and demand.
- Set a minimum ROI target (e.g., 30% or higher) based on your business goals and risk tolerance.
Why Tools Like ROI Scanner Save Time
Manually calculating ROI for each product is slow and prone to error. ROI Scanner shows your profit, ROI %, sales rank history, competition, and trends — all directly on the product page while sourcing.
Try it Yourself:
Visit your favorite online retailer, open ROI Scanner, and analyze a few listings. You’ll see instant ROI data in seconds.
Conclusion
Knowing how to analyze ROI like a pro will improve every aspect of your arbitrage business — from sourcing to scaling. Use real data, apply a consistent process, and let smart tools handle the heavy lifting.