How to exploit Amazon trade-in credit arbitrage to identify underpriced books you can sell for quick cash (and skip trade-in credit altogether)
Update: Amazon discontinued their textbook trade-in program in 2020. This article remains relevant as a case study in the creative possibilities of making money on Amazon.
Does Amazon trade-in arbitrage even make sense?
Why would you trade a book in for credit when you can sell it for even more cash?
I did address this point, but not very well. So let’s make this totally clear:
Amazon trade-in credit arbitrage appeals to a certain kind of risk-averse seller who wants quick results and minimal risk.
That may not be you (it’s definitely not me), but I’ve been talking about trade-in because I realize there’s a ton of Amazon sellers who simply can’t stand the uncertainty of Amazon price volatility and often long turnaround times. They want quick results.
What’s more, there are tons of people who don’t want to bother with being Amazon sellers at all: They want something fast without the infrastructure of a Amazon seller’s account.
This article is about how Amazon trade-in can work for both types. This is another trick (one of many) I’m talking about this week that I haven’t talked about anywhere before.
Do you roll your eyes at the prospect of hunting for Amazon trade-in? This trick is for you.
Price Proximity: How to use trade-in credit to get quick cash
Let’s get into a simple formula for using trade in credit tactics to identify severely underpriced books, and sell them for quick cash (either FBA or merchant fulfilled). This involves what I call “Price Proximity.”
Here’s the general formula (we’ll get more specific in a moment):
- Hunt for trade-in credit opportunity just like you would if you wanted trade-in credit.
- But instead, use the trade-in amount as baseline value which indicates you sell the book at a significantly higher number than the trade in amount.
- Sell the book and get paid in cash.
We have to re-establish an important point:
Trade-in value is always less than the true market value of the book. Otherwise, the amount Amazon is offering for a book would be lower.
How “Price Proximity” works
Anytime you find a book in the trade in store that you can buy on Amazon or 3rd party site for close to the trade in value (say, within 20%), that’s a very strong indication it can be sold at a much higher value for quick cash.
In other words, a selling price that is within close proximity to Amazon’s trade-in price is strong indicator that book significantly underpriced. I.e. artificially low.
So as someone who wants to sell books for cash, what you’re doing here is using the tactics of the Amazon trade-in hunter to find these underpriced books, and convert them into extremely low-risk cash transactions.
The Amazon trade in value is generally more than 30% below the average selling price
I did a quick search in Zen Arbitrage for books with trade in value. Here’s a screenshot to illustrate the point (trade in value is the far right column, used prices on the left):
How do we know historically what a book’s “real” value is?
Of course, no one can predict the ultimate selling price. But we can look at historical data to make a calculated estimation about the lowest amount that book is ever likely to sell for, and hedge our bets using that as a baseline.
The answer to the question of a book’s “real” value is the Keepa browser extension. Keepa shows historical pricing data, including six and twelve month averages.
Let’s do a quick example to illustrate. What follows took me about 5 minutes to find (I cheated a little and used Zen Arbitrage to find this book. You don’t need fancy tools to do this. You can do it manually in the Amazon trade-in store.)
Step One: Look for trade-in prices close to purchase price
I skimmed books with Amazon trade-in value and looked for books that are selling for “close” to the trade in amount.
Let’s define “close” as within 20%.
I quickly found this book (screenshot from Zen Arbitrage):
Here’s the book on Amazon:
Trade-In Value: $125.
Lowest priced used copy: $109.63
Yes, this is lower than the trade in amount, and would be a prime candidate for old-fashioned trade-in credit arbitrage, except the $109 copy is described as having highlighting, and would likely be rejected by Amazon’s trade in criteria.
But this is absolutely a book we can sell for cash.
Step Two: I confirmed its price history
Here is the price chart from Keepa:
From this 12-month chart, we can confirm this book spends virtually 100% of its time above the price we can currently buy it for, and the vast majority of its time above $130.
Step three: Decide whether to sell Merchant Fulfilled or FBA
I don’t sell anything merchant fulfilled, so I already know my answer. But if this were you, you’d have to run the numbers and decide for yourself.
Obvious pros and cons are: MF has lower fees, FBA allows you to sell at a higher price.
Either way, with this book you’re making money no matter what. As we’re about to see…
So just to cover all our bases, let’s examine what our profits would be selling merchant fulfilled, and Fulfillment by Amazon (FBA).
Pricing option #1: Price at the six-month merchant fulfilled average.
Keepa delivers again. We can see the six-month average price for this book is $147.97.
Sales price: $147.97
Net profit: $13.79
Super-low returns here, but again, this is a move for people who want extremely low risk and quick turnover. I would say quickly selling this book for at least $147 is pretty close to a certainty. Not the option I would choose, but I’m just giving you all your options.
Pricing option #2: Price-match the current lowest merchant fulfilled offer.
This would be the most sensible move: Pricing the book at $154.95. The price may go down (or up), but it makes it a strong possibility you’ll be among the next few sales (even if the book does have some highlighting).
Sales price: $154.95
Net profit: $19.73
The average rank for the this book is about 260,000, which means this book averages a little less than one sale a day. This should mean a quick sale and quick $20 profit.
Pricing option #3: Match the lowest FBA price.
Sales price: $164.98
Net profit: $20.36
So you see here the FBA fees make the net profit roughly the same. Should still result in a quick sale.
There you go. By utilizing trade-in arbitrage search tactics, I was able to get some quick and low risk cash.
What just happened?
Very quickly, I used trade-in as a baseline figure, then looked for books selling within range of that figure (either a little more or a little less), knowing that anything priced close to the trade-in amount is severely undervalued.
So I used used “price proximity” and trade-in arbitrage tactics to find books to sell for cash – skipping trade-in altogether.
Amazon trade-in value has two values – one explicit and one implicit.
Explicit value: “The amount Amazon will give you in trade-in credit for this item.”
Implicit value: “An amount that is significantly below the true market value for this item.”
So again, for those who want to skip trade-in and go for cash, the trade-in value still functions as a an anchor price, allowing us to know that any book selling for close to that amount is artificially low and significantly underpriced.
The “price proximity” arbitrage process, step-by-step
For people who love bullet points, here’s the process:
- Mine Amazon’s trade in store.
- Find underpriced books (or anything) by looking for a sales price close to the trade-in value.
- Optional: Search for even cheaper copies using BookFinder.com.
- Determine the historical average price for the item using Keepa, confirm the book is underpriced.
- Determine your potential net profits.
- Buy the book and sell for quick cash.
The tools and tactics of trade-in credit arbitrage is not just for trade-credit – they work for low-risk cash sales too.
Fun for the whole Amazon family.