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Perhaps you have some free time on your hands that you’d like to make some money with, or perhaps you’re bored of your desk job and fancy running your own show. Many people start reselling as a way to earn easy money on their own terms.
Is it really as easy as it seems to start your own reseller business? We’re here with the lowdown on what reselling entails, the types of different reselling models, tips to make money as a reseller, and some questions to help you decide whether reselling or retail is the best option for you.
Generally, a reseller is considered to be someone who purchases goods with the intention of reselling them for a profit. The benefits of reselling include not needing to make or manufacture products yourself and few inventory management requirements.
Levels of reselling sophistication can vary. Anyone can start at home, picking up stock from thrift stores or department stores, storing them at home, and listing them on platforms such as Amazon or social media marketplaces. Other reseller companies are more vast and list products virtually once they’ve sourced products from a wholesaler.
There are multiple types of reselling business models, and confusingly, some of them include sales models we explored above. Let’s take a look at four of the most common and explain their role in the reselling world.
A retailer is technically a reseller, but when it comes to “reseller vs retailer,” what’s the difference?
A retailer owns an established business, either a brick-and-mortar store or an online store, and buys products and sells them directly to the end user.
A reseller, on the other hand, is often the “middle man.” Resellers buy stock and sell products however they see fit. They can sell them to end users, but also sell them to retailers.
Here is a good illustration of the contrasts:
Wholesalers purchase discounted products in bulk in order to resell at higher prices to consumers or other retailers. Most of the time, wholesalers offer retailers bulk quantities of goods at a lower price than if they had bought them as single items.
A distributor is another type of reseller, but when it comes down to the difference between resellers and distributors, distributors have a different place in the supply chain. Distributors buy products directly from manufacturers and then resell them to wholesalers or retailers.
Arbiters likely most closely resemble the idea of reselling you already have in mind. Those who practice retail arbitrage purchase products at brick-and-mortar stores such as Walmart or Target, and then sell those products for a higher price -- usually via Amazon.
The internet offers unlimited ways for you to make money as a reseller. Here are the three most common methods of making money as a reseller:
Retail arbitrage is probably the most common type of reselling. This consists of purchasing products from stores and reselling them on Amazon. To do this, you’ll need to follow a few simple steps:
Read our full guide to getting started with retail arbitrage here.
Private labeling is the practice of buying products directly from a manufacturer, and thereafter putting your own label or logo on the product. This is most common where manufacturers sell a very generic product and resellers are able to brand the products themselves.
Dropshipping is done exclusively online. Online resellers source products directly from manufacturers, and sell them online to customers without storing their own inventory.
The biggest difference between dropshipping and retailing is that no inventory is owned. Resellers purchase inventory from a third party -- usually a wholesaler or manufacturer.
Still can’t decide between resale and retail? Let’s take a look at some scenarios that will help you decide.
Here are a few scenarios where reselling makes sense:
Let’s consider when the retail model might be a better fit for you:
If you’re set on reselling, here are our top three tips to help you succeed:
Before investing in inventory or deciding which reselling method you want to use, research the reseller market and business model extensively. Think about the following questions:
As mentioned previously, reselling carries low overhead, but you need to think about your reselling business plan, too.
If you plan to sell on marketplaces such as Amazon and eBay, be prepared to offer the same level of customer service as you would if you were an in-store retailer. Good ratings from your customers will help propel your success and help you get recommended to other customers.
If you’re turning a certain amount of profit, your accountant needs to know about it. Start tracking your expenses and income from day one so that you don’t get stung by taxes. Plus, make sure you have your resale certificate that allows you to make purchases for resale.
Reselling can be a great way to empty your garage of the useless but valuable items you’ve had in storage for years, or a way to start a legitimate and scaling business without needing to invest in a storefront.
Our advice is this: Start small and scale up. Once your reselling business gets going, and depending on which reselling route you go down, you might find yourself with more inventory and customer orders than you can keep track of. Retail management software can easily help you take care of your stock and your customers.
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