NEW YORK (TheStreet) --Retail arbitrage is a process in which a third party seller acquires goods from one retailer and resells them for a profit. For example, one may buy an item from Walmart (WMT) to re-sell on a platform like  (AMZN) - Get ReportOnce purchased, a percentage of the seller's profit goes back to Amazon.

CNBC's Courtney Reagan discussed the process of retail arbitrage and its impact on the likes of Amazon, Target (TGT) and Walmart.

"We did a test. We ordered the same set of eight goods, all virtually identical from Amazon, Target, and Walmart. We shipped those to San Francisco, Lincoln, NE, Dayton, OH, and Rockville, MD. We used standard shipping and no memberships," she said.

The test revealed multiple instances of retail arbitrage.

"The bookshelves we ordered on to all four cities, from three different third-party sellers, arrived in packaging with Walmart labeling. The Amazon seller's prices were on average $15.22 more than Walmart. When two of the Tide detergents ordered from an third party seller arrived in Dayton and Lincoln, one came in Target packaging and the other in Walmart packaging," Reagan explained.

She said that once she had placed an order from Amazon the seller most likely purchased the items from either Target or Walmart and then shipped the goods to her. "We paid the Amazon seller an average of $10.26 more than Walmart and Target," she added.

Her test ultimately revealed that retail arbitrage benefits all the parties involved. Walmart and Target's attractive lower prices entice third-party sellers to buy goods from those stores to turn around and sell them on Amazon to earn a profit. Walmart and Target get the original sale, and Amazon gets a percentage of the seller fee.

Shares of Amazon were lower in mid-morning trading on Monday. 

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