So you want to start a reselling business? That’s great! Reselling is a fantastic way to make extra money, and it’s something that anyone can do with the right information.
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In this guide, I will share everything you need to know about starting a reseller business. You’ll learn the answer to “what is a reseller?” and what an online reselling shop is. I’ll also let you know the benefits and some pitfalls of running an online reselling business.
Selling on places like eBay, Poshmark and Mercari has given me freedom like no traditional job could, and I’d love to share my experience with you. Are you ready to learn more? Let’s get started!
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What is a Reseller?
A reseller is a person or business who buys products from a manufacturer or supplier and then sells them to customers, usually at a higher price.
To start a reselling business, you’ll need to find products you can sell. After you decide on the types of products you sell, you can look for suppliers (including thrift, retail and your own home!) or other marketplaces to buy them at a good price.
Once you figure out what to sell and where to get the products from, you’re on your way to starting a reselling business.
Buy low, sell high – it’s a simple business model that almost anyone can do.
What Does a Reseller Do?
Basically, a reseller buys products from suppliers or manufacturers (or raids your own closets) and sells them to customers at a higher price.
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To be successful as a reseller, you’ll need to find reliable inventory from suppliers who offer good prices on the products your buyers want. This can be as simple as shopping at your favorite thrift store or garage sale for inventory.
When I started, I chose items from my closet and I bought a mix of items (clothes, shoes, dresses, office supplies, home decor, etc.) at a local Goodwill just so I could test things out and learn what actually sells.
You’ll also need to create a system for marketing and selling your products so that you can reach your target market.
The nice thing is, in some cases, you don’t have to keep a lot of inventory on hand or pay much to market your product, especially if you start a dropshipping business. And you can start reselling clothing and accessories on platforms like Poshmark and eBay with very little money invested up front.
Online resellers are similar to retail stores, except they don’t have brick-and-mortar locations. They simply sell to customers online instead of in-store.
What Type of Business is a Reseller?
A reseller business model is a type of eCommerce where you typically sell products online, usually through a platform like Amazon, eBay, Facebook, Poshmark, Etsy, Mercari, your own website or many other platforms.
There are many reselling opportunities out there, like selling sneakers, fashion, vintage items, jewelry, home decor, comic books or other collectibles. Or you could even start a consignment store or vintage boutique.
What Are Examples of a Reseller?
RETAIL ARBITRAGE: One example of a reseller is an Amazon FBA seller. Amazon FBA (fulfilled by Amazon) is a program where you can sell products on Amazon, and they will store, ship, and provide customer service for your products. Many of these sellers utilize retail arbitrage to secure inventory to sell (Reseller Nikki Kirk has some great tips on this strategy).
NOTE: Some sellers (like me) also sell as Amazon FBM (fulfilled by merchant), which means the seller handles storage and shipping.
WHOLESALE: Another example is a seller who buys products from wholesalers, manufacturers or authorized dealers and then sells them on eBay at a higher price. This type of seller typically buys in bulk or larger quantities.
THRIFTING/GARAGE SALES: Some sellers who buy and sell clothing, accessories and other products on places like Mercari or Poshmark, frequently shop at thrift stores, garage sales, yard sales, flea markets, consignment shops and the like. You can also source online at auctions or even on your selling platforms. You typically buy individual or a small number of items but can sometimes work out deals for larger quantities depending on the situation (reseller MsTaffy often shops at Goodwill clearance centers aka The Bins).
DROPSHIPPING: Dropshipping is another type of reselling business, and the best thing about it is that you can use platforms like Amazon or Shopify to sell products without keeping any inventory in stock.
A dropshipping business uses a unique method of order fulfillment in which you buy inventory as needed from a third-party manufacturer or wholesaler, who typically ships it directly to the buyer. The dropshipper or reseller acts as the middleman coordinating between the buyer and the manufacturer.
How Does a Reseller Make Money?
Resellers make money by buying products at a certain price and then reselling them at a higher price (consider when you should list items as “price is firm“). Most resellers sell products online, but some open physical brick-and-mortar shops.
It’s a fine balance to make a profit as a reseller. You must consider the cost of the item AS WELL AS any fees you pay to sell that item.
You also must regularly research the current value of items, which change depending on seasons and buyer opinions. As such, many say the profit is in the purchase, because the lower the cost of the item, the higher the potential profit even when you must lower prices to incentivize sales.
How Much Do Online Resellers Make?
This is a difficult question to answer as resellers can make different amounts depending on the products they sell, how much they sell, how much they work, their profit margins and other factors.
Just look at any reselling influencer that shares their income and you will see ranges from a few bucks a month to hundreds a month to 6-figure annual incomes and even higher (The Nurse Flipper makes a full-time income by reselling).
Some resellers make a full-time income while others only supplement their income with their online reselling business. But really the sky is the limit with the income you can make with a reseller business. And once you get the hang of it, you start making more money.
As long as you have products that paying customers want, the reseller business model is a smart one. It’s a great type of business to make money reselling online.
How Do Resellers Get Their Products?
There are a few ways resellers can get their products. They could source them from wholesalers, manufacturers, other retailers, or even online marketplaces like Amazon or eBay.
Another option is to source products locally at garage sales, thrift shops, or even on clearance at stores like Dollar Tree, Target or Wal-Mart. Once you find a product, you can research it online and see if it’s selling for more than you paid for it. If it’s enough to cover ALL of your expenses AND leave you profit, then you’ve found yourself a winning product to resell.
Running a successful reseller business means you have to research what to charge for products and services.
If you don’t know how much customers will pay for something, then you could price items too high, and they won’t sell. Or, if you’re reselling things too low, you won’t make enough profit to make it worth the work involved.
What is the Difference Between Wholesale and Retail?
The difference between wholesale and retail is that wholesale is the sale of goods or services in larger quantities at lower prices. While retail is the sale of these same goods or services in small quantities directly to consumers.
Many resellers like to use wholesalers to source inventory or other places where they can buy things at low costs so they can increase profitability. Finding products during good sales helps you increase your profit margin so you can earn more.
Where Do Resellers Sell Their Products?
Resellers can offer products online at many places, including:
- Amazon
- eBay
- Poshmark
- Mercari
- Facebook Marketplace
- Etsy
- Shopify
- eBid
- Tradesy
- Bonanza
- Curtsy
- OfferUp
- GOAT
- thredUP
- Kidizen
- Depop
- Grailed
- The Real Real
- StockX
And many more.
Is it Legal to Resell Products?
YES: In general, it is legal to resell products that you have lawfully acquired. You are allowed to resell products you bought at a store, and there are entire online communities dedicated to reselling on the secondary market, like Facebook Marketplace and Poshmark.
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NO: There are exceptions, however, such as copyrighted material, trade secrets, guns (though you can sometimes sell gun parts on certain platforms), counterfeit or imitation designer goods, foods and drugs. But detailed exclusions depend on the marketplace.
MORE LIMITATIONS: Also, some brand names may have limitations when reselling their products online and may explicitly say that reselling is not allowed. Meanwhile, some brands may allow reselling, but they may not allow you to use their promotional materials or copyrighted photos in your listings.
EVEN MORE LIMITATIONS: eBay has a specific VeRO (verified rights owner) list to see its brand limitations. A great example is the brand VELCRO. You can’t use that trademark as a description in your listing unless you are referring to the genuine fastener. Many manufacturers have rules about using their trademarks as descriptions as well as selling certain brands.
I CANNOT STRESS THIS ENOUGH: You must abide by the rules of the marketplaces where you sell! They are all different, and if you do not follow the rules, your store can be suspended or shut down completely (find out why eBay permanently suspended this prominent reseller).
Do You Need a Business License to Resell?
Generally speaking, you do not need a business license to resell items online. But each state and city is different, so check with your local municipality to be certain.
You also don’t necessarily need an LLC or something similar to resell. But you may choose to create one for liability protection or other reasons.
Either way, you are generally allowed to deduct business expenses, but check with a tax professional and your local guidelines to confirm specifics.
Separately, most states offer what is called a resale certificate or a seller’s permit. This is a special document you can apply for that allows certain resellers to make purchases without paying taxes to avoid paying taxes twice.
However, if you’re just starting out, it’s probably not worth getting a business license unless you have to. There can be a significant cost or time to get any state or local license, and you want to first confirm you actually plan to continue reselling.
What are the Benefits of Being a Reseller?
Selling products as a reseller has many benefits!
Flexibility
Starting a reselling store is a flexible business you can do from home. It allows you to pick from a wide range of products and manufacturers, and you don’t need a huge inventory to start. Many people start with items in their own closets and attics.
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Dropshipping businesses require even less space for product inventory.
Best of all, you determine your own schedule! This allows you to choose when, how often and how long to work on any given day. That means more freedom for you to do what you choose.
You Can Expand Fast
The profitability and flexibility of reselling make it easy to scale your business and grow quickly, if you choose. If you use smart online marketing tactics and build strong relationships with suppliers, you can grow even faster.
Reselling Businesses Don’t Require Much Money to Start
You can start a resale business with very little to no monetary investment. You can start by selling things around your house and even get items from friends and family who want to get rid of items. Then you can reinvest the money you make into buying more inventory. You’ll also need some shipping supplies (check below for some tips on what to spend).
Pro-tip: I recommend buying a good scale to manage shipping costs (find more details below under “what tools you need”).
How Do I Become an Online Reseller?
The process of starting a resale business is simple.
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Do you want to get started on Poshmark? Sign up with code THRIFTYIQ and get $10 toward your first purchase!
- Decide the type of resale business you want to start (selling clothes, vintage goods, books, comics, etc.).
- Choose the platforms you want to sell on and create accounts
- Pro-tip: I recommend starting with one or two marketplaces max so that you can get comfortable with the process.
- When you’re ready, try a cross-listing tool like List Perfectly to help you quickly share listings to multiple platforms.
- Review all the selling rules on these platforms.
- Find items to sell, including from your own house; do some research on the specific items by checking similar items that have recently sold on those marketplaces (i.e. check the comps)
- Prep the items if needed, including cleaning, pressing, taking measurements, etc., and then take clear photos in good lighting.
- Whenever someone asks a question, reply. And if they make a purchase, package the item neatly and professionally and follow the shipping rules (check out this guide on Poshmark shipping).
- Try to invest profits into more inventory or resources to improve your efficiency.
Common Reselling Strategies
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The less you pay for items to sell, the more you will make reselling them. Here are a few helpful strategies you can use:
Thrifting
Thrifting is going to thrift shops, garage sales, flea markets or other places that sell pre-owned products. These can be great sources of highly sought-after vintage fashion, games, tools, electronics and more.
Retail Arbitrage
Retail arbitrage is taking advantage of discounts or sales at a retailer like Wal-Mart, Target or the Dollar Tree and then reselling them for a profit.
Online Arbitrage
Online arbitrage is similar to retail arbitrage, except you buy from a store online like eBay, Walmart, etc. The online arbitrage process is one of the most popular ways to resell, and you can sometimes find other resellers looking to get rid of their inventory (Reseller Steve Raiken has lots of video tips (Reseller Steve Raiken breaks down his Top 3 Strategies to Grow).
Wholesale
This strategy involves obtaining products from a wholesaler and then reselling them. It’s often less expensive per item to buy in bulk, but may require a larger upfront expense.
What Tools Do You Need to Get Started?
Beyond the items you are going to sell, I mentioned a scale to help you manage shipping costs.
There are huge differences among costs to ship 4 oz, 8 oz, and 16 oz, and this can be a dealbreaker for a customer – or a profit buster if you offer free shipping. You can purchase a good scale for as low as $25. This is the first one I ever bought and it still works great.
You’ll also need shipping supplies, which you can get free at the post office if you are shipping Priority Mail. For First Class (typically less than 1 pound), you can get supplies at warehouses and other places that throw away their boxes. You can also recycle boxes from deliveries you or your family gets or buy ultra low-cost supplies at discount stores or on eBay or Amazon.
Pitfalls and Other Things to Consider
If being a reseller sounds perfect to you, then there are some things to consider and avoid.
Sales Slumps
Sometimes sales slow down, which is sometimes called as a sales slump. One of the most talked about stalls among resellers is the summer slow-down, and often, it’s beyond your control which can be frustrating. Meanwhile, sales may be better at certain times of the year, like Q4 (October-December). And certain items sell better at specific times of the year as well.
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Seasonality
Sales slumps lead me to seasonality. Q4 (October-December) is typically a major money-making season for most retail, including resellers. And holidays like Memorial Day and the 4th of July can mean fewer sales because more families are doing outside activities instead of shopping. At the same time, notable dates such as Halloween, start of summer and Black Friday
Trends
If you’re selling clothing and accessories like I do, trends play a huge part in sales. Fashion trends change all the time, and it’s the same with other items too (check out this Pinterest board for some popular items to sell). This directly affects the price you could potentially earn.
So, pay attention to what’s popular and try to jump on trends as soon as possible so you can take advantage of them. If you sell the right things at the right time, you can make excellent profits.
Economic and Societal Issues
Changing habits and issues like inflation can have a significant impact on shopping in-person or online. The COVID-19 pandemic is a perfect example when people did the vast majority of their shopping online. This created a huge business opportunity for resellers.
Just a couple years later, as restaurants, stores and entertainment venues reopened fully, more people wanted to break free of their homes. As such, online sales declined, creating a major slump for many online resellers.
Similarly, during inflation the prices of nearly everything rise – gas, groceries, housing, etc. As a result, many people don’t have additional funds to shop for non-essentials as much (get the best reselling tips from Pinterest).
Final Thoughts on What is a Reseller
Now you know the ins and outs of becoming a reseller and starting a reselling business. It’s fairly simple to start with very little upfront costs, and the process isn’t too complicated. But it does require work, especially if you plan to sell secondary clothing and shoes.
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The sky is the limit with the amount of money you can make as long as you identify profitable inventory and make adjustments as you go. Don’t forget to follow each platform’s rules. And pay attention to photos, marketing, shipping, customer service and other areas that can impact sales.
I’d love to hear about you! Are you a new reseller? Thinking about taking the dive? Is there anything else you would add to this list? Let me know in the comments!