What is Reselling? How To Become A Reseller
LAST UPDATED: March 19, 2023 | By Conrad Golly
Are you tired of trying to come up with the next big thing? Look no further, because the reselling business model is here to save the day!
As a reseller, you get to skip the tedious process of product development and manufacturing and instead focus on finding and selling products from manufacturers, liquidators, or other retailers.
Not only is it a quick and easy way to start an ecommerce business, it can also be highly profitable if you have niche expertise or know how to become a reseller after reading this article.
What Is Reselling?
Reselling is the act of buying products from one source and then selling them to another party for a profit. This can be done through a physical storefront or online through an ecommerce platform.
Obtaining success in a reselling business requires identifying high-value products at cost-effective prices and then strategically marketing them to the proper target market.
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Is it Legal to Resell Products?
It is legal to resell products that you have legally acquired.
This means that you are allowed to purchase products from a manufacturer, wholesaler, or other retailer and then sell those products to your own customers.
However, there are some limitations and restrictions that you may need to be aware of, depending on your location and the products you are selling.
For instance, a variety of goods could be protected by intellectual property laws including copyrights, patents and trademarks.
Thus, it is crucial to get authorization from the rights holder before selling such items.
It might also be necessary for you to acquire certain licenses or permits in order to run your business legitimately based on the law applicable in your area as well as depending upon what particular product you are attempting to vend.
It’s essential to take the time to research and comprehend the legislative regulations that concern your company in order to ensure you’re acting lawfully.
This could involve reaching out for counsel from an attorney or other legal experts, as well as keeping up with any adjustments made in law which may influence how you manage your business.
Ultimately, so long as all products are acquired legally and operations abide by what is legislated, reselling goods is commonly lawful.
How to Start a Reselling Business
Starting a reselling business involves a number of steps, including choosing a name, developing a business plan, and selecting the right legal structure.
Here are the key steps you’ll need to take to start your own reselling business:
1. Choose the name for your business
The first step in starting a reselling business is to choose a name that accurately reflects your brand and resonates with your target audience.
Consider factors such as the products you will be reselling, the type of customers you hope to attract, and the overall image you want to convey.
2. Develop your business plan
A business plan is a crucial document that outlines your goals, target market, and strategies for achieving success.
Your business plan should include details such as your financial projections, marketing plan, and operational processes.
3. Choose the legal structure for your business model
There are several legal structures to choose from when starting a reselling business, including sole proprietorship, partnerships, limited liability company (LLC), C corporation, and S corporation.
Each type has its own benefits and drawbacks, so be sure to research the options and choose the one that best fits your needs.
Its very normal to start with an LLC since you can later change it to a S corporation, but you cant go the other way from an S corporation to a LLC.
4. Secure startup funding
Depending on the size and scope of your reselling business, you may need to secure funding to cover startup costs such as inventory, equipment, and marketing expenses.
There are several options for funding a small business, including loans, grants, and crowdfunding.
I personally recommend not going into debt until you can prove the concept of use to yourself and know that you will be making a profit.
5. Secure a location
If you plan to operate your reselling business from a physical location, you’ll need to secure a suitable space.
This could be a storefront, warehouse, or home office, depending on your needs. Consider factors such as location, size, and cost when choosing a location for your business.
6. Register your business with the IRS
Once you’ve chosen a legal structure for your business, you’ll need to register with the IRS to obtain an Employer Identification Number (EIN).
An EIN is used to identify your business for tax purposes and is required to open a business bank account, hire employees, and file tax returns.
There are many ways small business owners can do many of the steps themselves.
7. Open a business bank account
It’s important to separate your personal and business finances, and one way to do this is by opening a separate bank account for your business.
This will make it easier to track your income and expenses and can also help to protect your personal assets.
8. Get a business credit card
A business credit card can be a useful tool for managing your business expenses, especially if you plan to purchase inventory on credit.
Just be sure to carefully review the terms and conditions before signing up, as business credit cards can have higher fees and interest rates than personal credit cards.
9. Resale license
Depending on your location and the type of products you plan to sell, you may need to obtain various licenses and permits to operate your business.
This could include a business license, sales tax permit, and any other licenses or permits required by your state or local government.
This is not typically how most resellers start a reselling business though, they normally start a reselling online business model, then later you might become a large operation with a needed license.
Always check with your local legal experts.
10. Get business insurance
It’s important to protect your business against potential risks, and one way to do this is by obtaining business insurance.
This can include liability insurance to cover accidents or injuries that may occur on your property, as well as insurance to protect against property damage or loss.
As with the last section on getting a license to resell, this might not matter if you are just selling small time from your home (under 30 sales a day I would say).
11. Buy or lease the right equipment
Depending on the type of products you plan to sell, you may need to purchase or lease various types of equipment to run your business.
This could include things like display cases, shelving, and computer equipment.
12. Try marketing emails and SEO
Marketing is an essential part of running a successful reselling business, and you’ll need to develop various marketing materials to promote your products and attract customers.
This could include a website, social media accounts, and promotional materials such as business cards and brochures.
13. Software options to make business easier
Depending on the size and complexity of your business, you may need to purchase various types of software to manage your operations.
This could include an ecommerce platform to host your online resale business, accounting software to track your finances, and inventory management software to keep track of your stock.
14. Open your reseller business
Once you’ve completed all of the above steps, you’re ready to open your reselling business and start selling products to your customers.
Be sure to regularly review and update your business plan to ensure that you’re meeting your goals and staying on track.
Tips for Running a Successful Resale Business Model
When starting a reselling business, strategies for success are key. Here are several points to keep in mind as you construct and expand your online business:
Know your target audience
Understanding your target audience is crucial to success in a reselling business. Be sure to research your customers and identify their needs, preferences, and purchasing habits. This will help you choose the right products to sell and effectively market your business to the right people.
Find reliable suppliers
The quality and reliability of your suppliers can have a big impact on your business. Be sure to research potential suppliers and carefully evaluate their products, prices, and delivery times to ensure that you’re getting the best value.
Build a strong brand
Building a strong brand can help you stand out in a crowded market and attract loyal customers. Consider factors such as your business name, logo, and website design when developing your brand.
Provide excellent customer service
Providing excellent customer service is essential to building a successful reselling business. This includes responding promptly to customer inquiries, offering helpful product information, and handling any issues that may arise in a professional and timely manner.
Stay up-to-date with industry trends
Staying up-to-date with industry trends can help you identify new opportunities and adapt to changing market conditions. Be sure to regularly review industry news and research new products and services that could be a good fit for your business.
Best Places to Find Suppliers for Your Resale Business
Running a successful resale business depends significantly on finding dependable suppliers with exceptional products at competitive rates.
Wholesalers are the ideal go-to for retailers who want to purchase products in bulk at a discounted rate.
Find one that matches your industry, this could be electronics, apparel, or home décor – and watch as you save big money!
On the other hand, manufacturers can provide excellent options too if they stock items that aren’t commonly found with wholesalers.
And even better, you may get some especially generous deals on quantity purchases directly from them!
Trade shows are the perfect opportunity for manufacturers and wholesalers to present their products to potential buyers.
Attending these events is a great way of unearthing fresh merchandise, as well as networking with trusted suppliers.
On top of that, online marketplaces such as Alibaba or eBay offer various options so you can resell them afterward.
Nevertheless, it’s important you look into every single supplier before doing business with them in order to guarantee reliability!
Essential tools
There are a number of essential tools that can help you run a successful reselling business. Here are some of the most important ones to consider:
Ecommerce platform
An ecommerce platform is a software solution that allows you to create and manage an online store. There are many different options available, including Shopify, WooCommerce, and Magento. Choose a platform that is user-friendly, has the features and integrations you need, and is scalable as your business grows.
Accounting software
Accounting software is essential for tracking your income, expenses, and profits. Options like QuickBooks and Xero allow you to create invoices, process payments, and manage your finances in one place.
Inventory management software
If you are selling a large number of products, inventory management software can help you keep track of your stock and ensure that you have the products your customers want. Options like Stitch Labs and TradeGecko allow you to monitor your inventory levels, create purchase orders, and generate reports.
Marketing tools
Marketing is an essential part of any reselling business, and there are many tools available to help you reach and engage with your customers. Options like Hootsuite and Mailchimp allow you to manage your social media and email marketing efforts, while Google Analytics can help you track and analyze your website traffic.
Customer relationship management (CRM) software
A CRM system allows you to manage and track your interactions with customers, including sales, support, and communication. Options like Salesforce and Zoho CRff allow you to store and organize customer information, schedule follow-up tasks, and track customer interactions in one place.
Product sourcing tools
Finding reliable suppliers is an important part of running a reselling business, and there are many tools available to help you source the products you need. Options like Alibaba and eBay can help you find and compare prices from a variety of suppliers, while SaleHoo and Worldwide Brands offer directories of trusted wholesale suppliers.
Shipping and fulfillment tools
If you are selling physical products, you’ll need to have a system in place for shipping and fulfilling orders. Options like Shipstation and ShipBob allow you to manage shipping labels, tracking numbers, and other fulfillment tasks in one place.
Best Reseller Business Ideas
There are countless opportunities to launch a successful reselling business, but here are five that could be especially profitable:
Clothing resale businesses
There is a huge market for gently used clothing, and starting a clothing resale business can be a great way to tap into this demand.
You can purchase clothes from thrift stores, garage sales, or other sources and then resell them online or at a physical location.
Electronics resale businesses
Electronic products are constantly evolving, and there is always a demand for newer models.
This is my personal favorite niche market for a reselling business idea.
Starting an electronics resale business can be a good way to take advantage of this demand and offer customers a wide range of products at competitive prices.
It does require deeper technology understanding for many products.
Home décor resale
Home décor and furniture are popular items for reselling, and there is a wide range of options to choose from.
You can focus on a specific style or type of décor, or offer a variety of products to appeal to a wider audience.
Specialty products
If you have expertise or a strong interest in a particular niche, you might consider starting a reselling business that specializes in a specific type of product.
For example, you could focus on selling vintage collectibles, artisanal food products, or handmade crafts.
Subscription boxes
Subscription boxes are becoming increasingly popular, and starting a reselling business that creates and curates custom subscription boxes could be a lucrative opportunity.
You can choose a specific theme or type of products to focus on, and then source and package the products for delivery to subscribers on a regular basis.
Types of products that are popular for reselling
There are many types of products that can be popular for reselling. Some of the most common categories include:
Electronics
Products like smartphones, laptops, and tablets are often in high demand and can be profitable to resell.
Fashion and accessories
Clothing, shoes, and accessories are popular choices for reselling, especially if you can offer unique or hard-to-find items.
Home goods
Products like furniture, decor, and appliances can be popular for reselling, especially if you can offer high-quality or vintage items.
Toys and games
Children’s toys and games are popular choices for reselling, especially if you can offer a wide selection of products or focus on a particular niche, such as educational toys or collectible items.
Health and wellness products
Natural and organic products, as well as fitness and wellness products, can be popular for reselling, especially if you can offer high-quality or hard-to-find items.
The Bottom Line
Reselling is a powerful and profitable way to begin your own business, with the capability of flexing to suit customer’s needs.
If you take these steps and stay informed of the latest trends in your industry, there’s no reason why you can’t have a profitable business.
References
- Check out my guide on how to sell on eBay.
FAQs
What Is An ECommerce Reseller?
An eCommerce reseller is a business that purchases products from manufacturers, wholesalers, or other retailers and then sells those products to its own customers through an online store. Not only do resellers offer customer convenience and a user-friendly shopping experience, but they also provide valuable product information and support that customers can rely on.
How Do Resellers Make Money?
Resellers make money by purchasing products from manufacturers, wholesalers, or other retailers at a lower price and then selling those products to their own customers at a higher price. The difference between the purchase price and the sale price is the profit margin for the reseller. By providing customers with an enriched branded experience, such as product descriptions, reviews and customer support services, resellers can amplify their sales. Moreover, they may also make money through affiliate marketing programs by earning commissions for promoting products of different firms and guiding them to the digital store.
What Does Reselling Mean?
Reselling is a business model that involves purchasing products from manufacturers, wholesalers, or other retailers and then reselling them to customers through an online store. It is a form of eCommerce that allows entrepreneurs to become their own boss while earning significant profits with minimal effort. Resellers are able to purchase products at a lower rate than the market rate and then sell those products at a higher price to their customers, giving them the benefit of increased profits.
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