The whole story about Amazon’s trade-in program, and how to profit from it.
Two parts to this article:
- Total rundown of Amazon’s trade-in program.
- Exactly how to profit from it (including some exclusive numbers & cool advanced moves)
(If you’re already super-familiar with the ins and outs of Amazon trade-in, skip to Part II here.)
About a year ago, a buzz in the Amazon selling world erupted seemingly out of nowhere: Amazon trade-in credit “arbitrage” was the new gold rush.
The idea was very enticing, and it went like this:
There are hundreds of thousands of books (and around half a million items total) that Amazon will offer instant trade in credit for.
If you find a copy (book, CD, video game, etc) for sale on literally any site in the world that costs less than than the trade in value, you get to profit the difference (in Amazon trade-in credit, which can be traded up to cash, as we’ll discuss).
And not “profit” in the speculative sense the way you’re used to when selling books: Amazon actually locks in the trade-in amount, and as soon as the item is shipped and received, you receive the credit.
No more wondering about prices dropping, dealing with seller feedback, repricing, or virtually any headache we’re used to dealing with selling products on Amazon.
(This is not a puff piece on Amazon trade credit. I’ll get to the myths and downsides, including hard numbers, in a moment.)
The hype is understandable. But is it overblown?
The lazy-person’s way to make money on Amazon
It appeals to the secret (or not so secret) lazy person in all of us: Get paid (credit) to click around the internet, and the outcome is guaranteed (only marginal risk – Amazon locks in that price and guarantees it).
It almost seems too good to be true. Is there such a thing as easy, risk-free money on the internet?
Yes and no.
“Yes,” if you avoid the most basic mistakes, the risks are minimal (basically a shady seller sending an incorrect / damaged book).
“No,” in that it’s not as easy as the “get rich quick” hucksters make you think (a lot of the trade in credit hype was spread by “get rich quick” marketers like Luke Lambo and “Textbook Money,” who carpet-bombed the internet with webinars for their high priced Amazon trade in arbitrage tools).
The people who do well at trade in credit arbitrage are willing to dedicate serious time to scouring the Amazon trade in store, hunting opportunity across the internet like a laser-focused predator. They accept the trade-off: In exchange for the elegance and simplicity of near-risk-free, totally online sourcing, they’re willing to dedicate significant time to hunting down the profit.
(If you’re one of those people with a short attention span who tends to give up if you don’t achieve results in 5 minutes, don’t even try this. It does work, but its not that simple.)
How I got intimate with Amazon trade in data
Over at my book arbitrage tool Zen Arbitrage, we’ve built a massive data harvesting system that is processing tens of millions of products daily. Among this, trade in value not just for books, but everything. As far as the trade in data, I never really paid attention to it. But after the buzz over Amazon trade in became a deafening roar, I started to look at the data more closely.
With access to this data, I know exactly what the numbers look like. Exactly what the opportunity is, the price fluctuations, and more. Over the past few months, I’ve gotten to know these numbers intimately.
From looking at this numbers, I can give a more sober take on exactly what the opportunities are in trade in credit arbitrage (fancy term for buying low and selling high), and I’ll be sharing some of those numbers with you both in this article and more over the next week.
There are two parts to this article
- The basics of Amazon’s trade in program.
- How to profit from trade in.
(If you’re already well-versed in Amazon Trade In, skip to the advanced material in Part II by clicking here)
How Amazon’s Trade In Store Works
To submit a trade-in:
- Go to the Trade-In Store and search for eligible items
- Click Trade in to add items to your trade-in submission.
- Select the condition of your item(s) based on the criteria listed, then click Continue.
- Click Submit your trade-in to print your prepaid UPS shipping label.
- Ship your items within 7 days.
A few facts about Amazon’s trade in program:
The price is locked in for 7 days: As long as the book is shipped by then, you’re guaranteed this amount. To those whose biggest frustration about selling on Amazon is price volatility, you’ll love this.
Amazon pays for shipping: They issue you a pre-paid shipping label, so just get it to UPS and the rest is taken care of.
Amazon only offers trade in value for high-demand books: Their whole business model here is offering a smaller amount than they expect to sell this for, and only for high-demand books. In the Books category, it is rare to see something ranked worse than 300,000, and most books are better than 100,000 (i.e. high demand)
The trade in value is inherently a fraction of its expected sales price: The higher the demand for the book, the higher the percentage of its average sales price Amazon will offer in trade in value, but naturally the trade in value is always less than Amazon expects to sell it for. Buy low, sell high. Amazon is just doing a smarter version of what we’re doing already.
Downsides To Trade In Credit Arbitrage
Anyone someone touts “Make instant internet profits with no risk and without leaving your computer!!!” get very suspicious. They’re leaving something out.
Guys like Luke Lambo and “Textbook Money” have spread a lot of hype (and made a lot of enemies) over trade in credit arbitrage, so let’s give a more sober take.
Here’s the other side of trade in credit arbitrage:
- It’s hard.
- It’s volatile.
- You’re inherently not getting the full value for your books.
It’s hard: By hard, I don’t mean “digging ditches” hard. You are in your pajamas on your computer, after all. You have to spend a lot of time scouring Amazon and Bookfinder.com links to make serious trade credit. There are tools that will greatly streamline this, but it is not “fast easy and instant results.”
It’s volatile: I’ve seen the numbers. When there is a product on Amazon whose price drops below the trade in price, it is usually gone in under a couple hours.
You’re not getting the full value for your books: By the nature of the fact Amazon is offering “X” for a book, that book has a cash market value of more than “X.” Amazon will always pay you in trade less than what they can sell it for. That means you can always get more selling that book for cash.
So why do trade in credit at all? It appeals to a certain type of risk-averse seller who doesn’t want to deal with volatility – they want something guaranteed.
Upsides to Trade In Credit Arbitrage
- The prices are locked in: You no longer have to worry about price fluctuations and dropping prices.
- You don’t have to wait for a sale: Once Amazon receives the book, payment is instant.
- Shipping is free – Amazon pays for it: Just print a shipping label and you’re good to go.
- You don’t have to leave your computer.
Amazon Trade In Credit – By The Numbers
Total number of offers in each category of Amazon’s trade in store (on average):
- Books: 125,000 to 350,000
- Music: 125,000
- DVDs: 100,000
- Video games: 10,000
Total in Amazon’s trade-in store right now: 400,000 (approx)
That’s the trade in program in a nutshell.
Before we go into more detail, he’s the basic trade In credit mining formula:
- Search Amazon.
- Assess if current lowest price is lower than trade in value (yes this actually happens, as I’ll cover in a moment).
- Run book through Bookfinder.com (or other book price comparison tools) to find the cheapest copy anyone on the internet. Find copies cheaper than the trade-in amount.
- Order it.
- Lock in the price, ship in the book, and get paid.
Going deeper: The three ways to profit off trade in arbitrage:
- Amazon-to-Amazon trades.
- Bookfinder-to-Amazon trades.
- Hacking price fluctuations (kind of advanced).
Profit method #1: Amazon-to-Amazon Trades
Is it possible to actually buy a book on Amazon for less than the trade in value? And why would that even be possible?
Yes, you can do that. At any given moment, there are thousands of products on Amazon whose prices have fallen below the trade in value (I’ll give you some specific numbers in a second).
This means (almost) risk-free Amazon spending money – without even leaving Amazon.
This seems too good to be true, so how does this happen?
To illustrate how and why, let’s take the Books category. On average are 250,000 books in Amazon’s trade in store (give or take) at any given time. That’s 250,000 opportunities for price anomalies, 250,000 products in constant price fluctuation, and 250,000 opportunities for the selling price to temporarily drop below the trade in value. Prices for products are fluctuating like crazy all the time, usually multiple times a day, so there’s nothing surprising about this.
Then consider that trade in books are inherently high-demand. The average trade in book is selling dozens of copies daily. Let’s just pick a lowball average figure and say the average across the trade in store is 5 copies sold per day. (No one knows what the average is, but this feels like a safe number).
So we know that the price is changing at least 5 times a day (barring sales coming from a seller with multiple copies for sale). With copies so rapidly getting listed, sold, and repriced, there creates incredible price volatility (again, dramatically more than Amazon as a whole).
With these numbers, this means that to one degree or another, there are over one million price changes and one million small opportunities for the price to drop below the trade value. And that’s just within the books category.
(I realize this is extremely flawed math, and I’m not trying give serious estimates here, just a general sense of price volatility).
And this doesn’t even factor in new listings at weird prices, repricers doing the weird things they do often multiple times a day, and sellers manually pricing like crazy people and under-pricing the trade in value.
All of this comes down to one thing: There are 1+ million price fluctuations daily within the Amazon book trade in store, and over a million small potential opportunities for prices to drop below the trade in value.
How often does this happen? I have specific numbers for you
How often does the lowest price on Amazon actually drop below the Amazon trade in value?
Because we’ve got a monster data-harvesting machine working 24-7 over at Zen Arbitrage, I have some numbers for you.
I just checked a moment ago, looking at just Books and DVDs (excluding all other categories), and got the real-time numbers.
At this moment there are 1,257 products you can purchase for prices below their trade in amount.
That’s over 1,000 instant trade in arbitrage opportunity, without leaving Amazon, in just two categories, right now.
That’s just at this moment (we don’t store the numbers that would indicate how much lower or higher than average this is 1,257 figure is on a given day, but I asked our developer to store that over the next few days so I may have some super-specific numbers for you next week).
Consider also that these opportunities come and go extremely fast. On any given day, its totally possible there are 10,000+ products appearing (and quickly disappearing) that can be bought and instantly traded in for a profit – all within Amazon.
And then consider I just looked at two categories (the only two we store data on right now). Across the entire Amazon trade in store, this is likely to be much higher.
What do these numbers translate to in terms of a percentage? How often will you see opportunities like this if you were just cruising around Amazon’s trade-in store?
Right now there are 140,000 books in Amazon’s trade in store, and 80,000 DVDs. The figure fluctuates a lot, and 140,000 for books is unusually low.
For Books & DVDs, when you add 140,000 + 80.000, then divide by 1,257, it basically means this:
Approximately 1 out of every 175 products has a price lower than its trade in value.
That’s not cause for a complete lottery-winner freak out, but pretty incredible.
Quite a weird (and cool) glitch in the Amazon Matrix.
Profit method #2: Third-party-site-to-Amazon-trades
This is where it gets much easier.
Amazon prices tend to stay pretty stable relative to their trade in value (174 out of 175 times, as we just established). But there are dozens of other bookselling sites across the internet. This is where it becomes a complete wildcard. Prices on other sites can be all over the place, and vary wildly.
A book can be $100 on Amazon, $70 on Powells, and $60 on eBay. Like I said, its just a complete wildcard.
So if you take any book with trade in value and run it through these other sites, there’s a significant chance of finding a copy not just cheaper than Amazon, but cheaper than its trade in value.
Hopefully this is getting exciting for you.
To make this easier, the way we can do this with one click is BookFinder.com: BF scans over 40 bookselling sites, and sorts them lowest price to highest.
It is true that Amazon is the lowest price most of the time. But new Amazon fees have made the potential for trade in arbitrage using Bookfinder.com a lot more interesting…
Prior to the the new Amazon fees for books ( which went into effect earlier this year), I would estimate that Amazon had the lowest priced book of any site on the internet about 90% of the time (just an estimate).
After the new fees, selling books on other sites became a lot more interesting to a lot of sellers, and based on my unscientific observations, Amazon is now the lowest price copy on the internet a lot less. I would estimate Amazon only has the cheapest copy about 80% of the time (again, an estimation).
Even compared to just a year ago, the potential for finding cheaper copies of books on sites other than Amazon has doubled (third disclaimer: just my estimation).
How to scan several sites automatically as you search Amazon?
Let’s say you don’t want to copy-and-paste ISBNs into BookFinder painstakingly one book at a time (who does). Are there shortcuts?
The following two browser extension embed book price comparison data directly onto the Amazon product page:
Book Burro (free, limited to 5 sites)
Cleer Platinum (paid, embeds AddAll book price comparison link on Amazon)
Profit method #3: Timing for historical price fluctuations.
This is where it gets even more interesting.
All I’m going to do right now is tease next week’s article that goes deeper into this (with specific dates for highest and lowest trade in values), but here’s the idea:
Trade in values are fluctuating all the time. Going up, going down, going sideways. Amazon is one giant algorithm, and that algorithm is constantly adjusting trade in values based on numerous factors.
And these aren’t always trends that apply to every book, or every textbook, or any other broad category. They algorithm will adjust based on trends of specific books.
As a random example: Trade in value of certain law books tends to go up around the time of bar exams.
There is a little-known pattern to trade in values – both when they tend to go up, and when they tend to go down. If you know what these dates are, you can time both your purchases and trades to buy low and then trade in when the prices peak.
(Again, we’re locking in that price with one click of a button).
Let’s take a hypothetical example: You’re looking at a medical textbook with a trade in value of $100. You know historically it reaches its peak trade in value in 3 months. There’s a copy for $115. Not enough to profit now, but you know trade in prices are about to surge, so you’re confident this $115 purchase will yield a profit.
S/he with the best data wins.
Recovering gambling addicts beware: This will trigger a relapse.
And now it gets even more interesting
What if you also knew when purchasing prices were cheapest? Instead of just timing your trades for the highest trade in value, what if you timed your purchases to get the lowest price?
(There is a way to get all this data. We’ll get to this next week – I’m just laying out the principles now. Seriously, I can’t wait to share this with you).
Top 5 Tricks For Profiting Off Amazon Trade In Credit
Let’s get even deeper.
#1: Speed-searching: Increase efficiency 10x by analyzing prices to know when you should click over to BooksFinder.com
We talked about how the best opportunity is in using BooksFinder.com to scan over 40 bookselling sites. But should you click over every for every single book? How do you know what books to click on and which will almost certainly have no opportunity?
There’s a couple of tricks.
First, I have to reiterate there is potential for any book to have room for profit. Literally any book. But if you want to increase efficiency, here’s is what you do:
One, only click over on the highest priced books (we’ll talk about this next).
Two, focus on any book for which the sales price is close to the trade in price. Prices on other sites tend to stay within range of the prices on Amazon. That doesn’t mean they match to the penny, it means they stay “close.” (Again, generally). Part of this is just general “efficient market” phenomenon, part of it is repricing software that sets prices on 3rd party sites to match Amazon’s. It’s just how things work.
So let’s hypothetically say you’re skimming through the Amazon trade in store and see 19 books with $100 trade in value each selling for $200. Then let’s say the 20th has $100 trade in value but it is selling for $130. There is a much better chance of finding that $130 book cheaper than $100 on a 3rd party site than those other 19 books combined.
When the sales price is close (I measure “close” by within 1/3) to the trade in value, there’s a dramatically higher likelihood of profit.
#2: Don’t ignore razor thin margins, because the profit is guaranteed
Let’s assume you’re currently in the business of selling books. You probably have rigid profit margin standards (expecting to double your investment, triple, etc).
Do not apply those to trade in arbitrage. This is a different game, with different rules.
Remember the reasons you have those ROI standards to begin with: To buffer against prices dropping, to buffer against Amazon commission, to buffer against long term storage fees, and more.
None of those apply with Amazon’s trade in program: The price is set in stone, there are no commissions, and there are no fees.
Would you pay $50 for a book you would only make $5 if you sold it on Amazon? No chance. The margins are too thin.
But with trade in, most potential for uncertainty is accounted for, and that $5 is virtually guaranteed.
It’s an entirely different way of thinking. Whereas your usual formula goes:
“Will this allow me room for profit when all the smoke clears and buffer me against the potential for a loss.”
…it shifts entirely to this one:
“Is this fixed, guaranteed amount worth my time?”
As an example, the total time cost for that $5 profit book is the time it takes you to checkout, then put it in an envelope and affix the Amazon shipping label. Assuming you’re already going to the UPS store to drop off other books, the time cost is only a few minutes.
Those $3 and $5 profit books can really add up.
#3: Profit off timing your trades
Timing your trades is a big part of this game. There are two sides to this: Knowing when prices to buy books are lowest, and knowing when trade in values are highest.
(I’ll be revealing numbers on both next week).
#4: The best opportunity is in the more expensive books
The biggest opportunities are with books in the $100+ range. It’s infinitely easier to find a book with $125 trade in value you can find on another site for $110 than a book with $30 trade in value you can find elsewhere for $15.
#5: Know how to turn Amazon trade-in credit into cash
If you can master online book arbitrage, and know how to turn $100 in trade credit into $1,000 (or more), you basically rule the world.
(Article on various formulas to implement this in the next 7 to 10 days).
The only two major ways to screw up trade in credit arbitrage
- Buying international / incorrect editions.
- Buying damaged books.
So I mentioned several times this is a mostly risk free way to profit on Amazon. If I said “mostly,” what is the limited risk?
Number one, when you’re buying books outside of Amazon (less so on Amazon), there’s a ton of unscrupulous sellers selling the dreaded “international editions.” Without going into the details, these can’t be sold on Amazon, and can’t be traded into Amazon. Anytime you find a book for sale that is cheaper than the trade in value, you have to scrutinize closely to insure it is not an international edition.
Related to this, similarly unscrupulous sellers will list older editions or custom editions under the ISBN for the current edition. This can be determined in a couple ways: One, the cover will look different (older edition) or will mention the name of a specific school. Two, if there’s no photo, check the description to be sure the edition number matches with the one Amazon is offering trade in credit for, and that there is no mention of it being a “custom edition.”.
Both of these can usually be assessed at a 1.5 second glance.
Second is shipping Amazon a damaged book. Amazon will not accept a book for which any of the following applies:
- Library copy
- Custom edition textbooks (typically has a school name listed)
- Water damaged (wavy, swollen or discolored, crinkled, stains, rings)
- Broken spine or binding
- Books with torn or taped cover
- Missing, torn, or loose pages
- Burns, fire, or smoke damage
- Strong odor of any kind (including musty odor, cigar or cigarette odor)
- Marked “Not for Resale” (or is otherwise marked not for sale) anywhere on the cover or inside
You can’t protect against every seller who may not grade their books accurately. But this risk can be significantly mitigated by scrutinizing conditions descriptions closely and avoiding any that look ambiguous or outright sketchy.
Next-level: The ultimate hands-off trade in arbitrage formula
We talked about how trade in arbitrage works, and how to find it. A (mostly) risk-free business with online sourced inventory is pretty elegant. How could this get better?
You may have had heard of “prep services.” These are companies who receive inventory on behalf of Amazon sellers, inspect it, and ship to Amazon for you. As a Fulfillment by Amazon seller who sources inventory online, you can run that business without ever seeing or touching inventory. An entirely virtual business.
Only one problem: Its almost impossible to find a prep service who will take books for Amazon trade in. The reason is that so many sellers are careless about ignoring the two most common mistakes (described above), that rejection rates by Amazon are high. Prep services decide its more trouble than its worth, and refuse to deal with trade in books.
(I’ve scoured the earth and only found one who will take books for trade in.)
But if you can find one (and avoid common mistakes), you have an entirely virtual, and (virtually) risk-free business.
We covered a lot of ground. Here are the takeaways:
- Amazon trade in credit arbitrage is laborious, but extremely low-risk.
- Prices within Amazon’s trade in store fluctuate one-million-plus times daily.
- These price fluctuations create opportunity to buy on Amazon and trade in on Amazon (perhaps 10,000+ opportunities daily)
- Opportunities are more abundant using BookFinder.com to scour 40+ other bookselling sites.
- Timing your trades to coincide with historical data and peak values is a big part of this game.
- Best opportunities are in the $75+ trade in value range.
- Chances of finding cheaper copies on non-Amazon sites go way up when lowest Amazon price is within 30% of trade in value.
Are the gears turning right now? They should be.
PS: This is Part One in a 4-part series on trade in (its about to get interesting). Coming up over the next 7 to 10 days:
- How To Profit Off Trade In Price Fluctuations: Exactly when trade in prices are highest, and lowest (I poured over the data, and I’ll give you the exclusive).
- Top Secret Update: Not revealing this one yet, but lets just say I’ll be giving an update to an older trade-in related article that randomly was the most highly-trafficked article I’ve ever posted.
- How To Turn Trade Credit Into Cash: I’ll give a simple formula for Turning $100 in Amazon trade in credit into $500 (or $1,000). I know this sounds ridiculous, but I will deliver.
PPS: Also next week: A cool Amazon trade-in-related announcement.
PPPS: Questions about Amazon’s trade in program? Post in the comments below.