A reseller is a critical link in the commerce chain, purchasing items from manufacturers, dealers, and other businesses and individuals, and offering them for sale to consumers. Resellers may do business on major platforms like Amazon and eBay or via smaller outlets.
There are real profits to be had by setting up a resale ecommerce platform. However, it requires taking the right steps professionally, such as finding initial capital, establishing a supplier network, and marketing your services as a reseller. Read on to discover if this career could be right for you.
Key Points
• Reselling involves purchasing goods from manufacturers or wholesalers and selling them to consumers, often online, with flexibility and scalability as key benefits.
• Startup costs include sourcing inventory, storage, marketing, and shipping, with significant capital needed for high-end items.
• Reselling differs from dropshipping as it requires owning inventory, offering potentially higher returns but also higher risks.
• Success in reselling depends on building a reliable supplier network and managing costs effectively.
• Reselling can be a side hustle or full-time job, with income potential varying based on market demand and business strategy.
What Is a Reseller?
Resellers buy merchandise, such as clothes, shoes, toys, electronics, jewelry, and appliances, and resell it on online marketplaces or physical discount stores for profit. Online resellers often buy merchandise in bulk and at a discount from wholesalers and manufacturers. They then resell items individually on digital platforms like eBay and Poshmark.
Because the reseller does not manufacture the goods they sell, they typically have no production costs. However, they can face steep marketing costs. Depending on how well a seller manages these costs, they could see a steady stream of profits flowing into their checking account.
Another factor to consider is that resellers in the luxury goods or collector markets, such as watches, jewelry, or high-end fashion items, often have decades of industry experience and are experts in their field. They use this expertise to ensure the products they trade are authentic and not fake.
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How Does Reselling Work?
Resellers first have to source their merchandise or inventory. Some may seek liquidation pallets of customer returns or overstocks from big retailers. E-commerce resellers then market their inventory on their platform.
Once customers purchase products, the reseller ships packages and manages returns. Other than buying inventory, shipping and managing returns may be the biggest expenses for resellers, so they build these costs into their markups on the items they sell.
For luxury goods, like collectibles, watches, jewelry, and high-end fashion, resellers must authenticate the products to show that they are not fakes. Some buyers may only buy these items from dealers they know are trustworthy.
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Common Reselling Industries
Practically any item you need or want can be found on the secondary market, except for perishables like food. Here are some common examples.
• Apparel
• Shoes
• Luxury goods (high-end fashion, handbags, jewelry, and vintage jewelry)
• Collectibles (wine, art, watches, whiskey, vintage cars)
• Household goods (exercise equipment, household appliances, furniture)
• Technology goods(smartphones, tablets, and tech accessories)
• Electronics (stereo components, home entertainment systems)
• Video games, DVDs, and Blu-ray discs
• Vehicles
• Baby products (toys, strollers, accessories)
• Musical instruments
• Power tools and garden equipment
Depending on what product you select to resell and how much time, energy, and investment you put into your business, reselling could be a job that pays daily or one that provides only occasional income.
Types of Resellers
Resellers assume various positions in the supply chain. To better understand what “reseller” means and what one does, here’s a look at the different types: wholesalers, retailers, and distributors.
• Wholesalers: This involves buying products in bulk and at a discount from manufacturers or distributors. Wholesalers sell the products to retailers or resellers at a markup and in smaller quantities. They typically don’t sell directly to consumers.
• Retailers: These professionals are further down the supply chain. Retailers buy from the wholesaler or distributor and sell directly to the consumer. They usually have a range of products and sell in small quantities.
• Distributors: This involves buying products from manufacturers and selling them to others in the supply chain, usually wholesalers. Distributors tend to have close relationships with manufacturers who feature buying and marketing contracts with free samples and discounts.
Common Startup Costs for Resellers
Startup costs for resellers mainly involve sourcing inventory, storage, marketing, and shipping.
• Inventory: The costs for inventory will depend on what you are selling. You will need significant capital if you plan to resell high-end items like designer handbags or jewelry. Clothing resellers will need capital to buy oversupply or liquidation pallets from big retailers like Nordstrom Rack or Costco or other wholesale clubs.
• Storage costs: Resellers need to store their inventory, particularly if they buy in bulk from wholesalers.
• Marketing: Marketing costs run high for resellers and focus on email outreach and ads, often on social media platforms like Facebook, Instagram, and TikTok.
• Shipping: Shipping and returns may be the highest cost for resellers. Vendors need enough capital to ship items and cover returns costs.
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Reselling vs Dropshipping: What’s the Difference?
Reselling is different from dropshipping because the former requires owning and storing inventory, while the latter is more of a middleman. Here are the key differences between dropshipping and reselling.
• A reseller buys stock from wholesalers or distributors to sell at a profit.
• Dropshippers don’t ever take physical ownership of products. They accept orders from customers and then buy the products from suppliers who package and ship the products to the customers.
• Dropshippers require less capital than resellers because they do not buy or stock significant inventory.
• The potential returns for resellers are higher than for dropshippers. Because resellers buy in bulk, they pay less per unit to their supplier and add more mark-up. Dropshippers often may buy single items, which can be more expensive.
• Reselling is riskier because merchants may be left with inventory that they cannot sell but that they have paid for and still need to store. In this situation, it could put a strain on money in your traditional or online bank account.
Pros of Reselling
The beauty of reselling is flexibility in the products offered and the ability to run one’s own business. However, the success of a reseller largely depends on the relationship between the reseller and the suppliers. If you can succeed at that, you may well be taking a step towards making quick cash.
• Resellers can make money without having to manufacture a product.
• Once a reseller has established suppliers, they can scale and acquire new customers and find new products to sell.
• Reselling is flexible. Merchants can change the products they offer according to market demand and depending on how much inventory they carry.
• Resellers can scale quickly if they have reliable suppliers and market demand.
• Reselling can be a way to make money from home.
Cons of Reselling
The disadvantages of reselling are that merchants must work hard to build a network of reliable suppliers, and a steady income is not guaranteed.
• Finding inventory at the right price could be difficult until a reliable supply chain is established. This could drain funds in your savings account if you haven’t planned adequately.
• Resellers must work hard to negotiate deals with suppliers and build relationships.
• Quality control may be difficult because sending products back to manufacturers will mean delays for customers.
• Shipping and storage costs can be considerable.
• Your earnings may fluctuate, especially if you sell seasonal products, requiring you to create an irregular income budget.
• Resellers are self-employed and have no health or retirement benefits from an employer.
Do Resellers Work from Home?
Whether you can work from home depends upon your particular situation and the kind of items you are hoping to resell. If working from home is an important consideration, it might make sense to focus on small goods, such as fashion accessories, that don’t require much storage space.
Whether you can work from home depends upon your particular situation and the kind of items you are hoping to resell.What are ways I can make money from home.
Reselling Alternatives
Becoming an entrepreneur and achieving financial freedom by reselling can often involve starting with eBay. While eBay is a popular and successful platform, it’s not the only game in town. Some alternatives to consider include:
• Craigslist
• Etsy
• Facebook Marketplace
• Poshmark
• Rakuten
• DePop (clothing)
• The RealReal (fashion)
• Mercari (home goods)
• Ruby Lane (vintage items)
The Takeaway
Reselling involves purchasing goods from a manufacturer, wholesaler, dealer, or other source and then selling it to consumers. Typically, the selling happens online. This is a broad industry and a competitive one, but the flexibility of the work and ability to scale quickly can be major benefits. The disadvantages are similar to any entrepreneurial venture. New resellers must find capital to set up their business, buy inventory, and market that inventory.
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FAQ
Is reselling best as a side hustle or full-time job?
Reselling can be a replacement for a full-time job, but it will take time to establish sourcing and learn how to make reselling profitable. It’s best to resell on the side until you are confident that your income is sufficient and you can afford to leave your full-time or part-time job. Remember, you will not receive employer benefits and contributions as an entrepreneur.
Is reselling considered “scalping”?
Scalping is a type of reselling where the seller takes advantage of an inelastic market (meaning one where there’s always demand, even if the price is high) to make a profit. For example, scalpers often resell tickets for a popular sporting event at a major markup. Because the tickets are scarce, people are willing to pay a lot to attend. While some resellers are scalpers, many charge a reasonable markup on goods.
Do you need to have a college education to resell?
You don’t need any qualifications to resell. Succeeding as a reseller takes hard work, an ability to negotiate and find suppliers, and good business sense. That said, a business degree would be an advantage and provide knowledge that would help you with accounting, budgeting, inventory management, and marketing.
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