Let’s talk reselling…
We are focusing on eCommerce reselling, which is a different industry than other industries.
We will be discussing what it means to become a reseller, the reasons why it is legal and how to go about it. We get many questions about the topic of retail arbitrage (reselling).
We want to help you fully understand this topic. Online reselling will be our main focus.
Let’s start by explaining what reseller means.
What is an eCommerce reseller?
Resellers are individuals or businesses that purchase a product and mark up its price to make a profit. It acts as a middleman between customers and manufacturers.
There are 4 types of resellers:
- Distributor:Purchases product directly from manufacturer, and then resells it to a wholesaler/retailer.
- WholesalerDistribute the product to a retailer.
- RetailerTo sell the product to the customer, the wholesaler purchases the product.
- Arbitrage (Flipping):A customer who finds a deal, and then sells the product at a modest markup on an internet marketplace.
Every reseller will find a way for the product to be more valuable. This can be done by repackaging the product or creating bundles.
How can resellers make money?
There are three ways to make money by selling products online.
- Retail Arbitrage:You can also buy clearance items by shopping at Target, Walmart, Big Lots, and Home Depot. After you find items on clearance racks, check out their prices on FB Marketplace and Craigslist. You can make a profit by buying those products.
- Private LabelThis is where you source products directly from manufacturers in smaller quantities. You can then add your branding and packaging to sell the products under your brand. The products can be sold on sites like eBay, Amazon, your personal website or flea markets.
- DropshippingDropshipping can be done entirely online. Dropshipping allows you to source products directly from the manufacturers and then sell them online to your customers. All of the processing is done using technology or middlemen.
- WholesalingBuy directly from the manufacturer in large quantities and resell it on platforms such as Amazon or eBay.
Reselling is also known by the term “reselling”, which includes garage sales and selling items you don’t use. Although it’s not a business model, reselling items you don’t need for quick cash falls under the “retail arbitrage” category.
Why start a resale business?
Because you aren’t creating or manufacturing your own products, there is a low barrier of entry for resale business owners. The products are in high demand and you have to make them available to the public.
It takes dedication to create your own products, brand them, package them, and market them. If you love the business model and want your online business to grow, it is a good idea to create your own products.
Online platforms such as Amazon and eBay are used by reseller businesses. If you are looking to grow, it is a good idea to create your own website and invest in advertising. Instead of selling it to Amazon and eBay, you will be able to keep more of the sale.
Advantages of a Resale business
One major problem with resale business is retail arbitrage
Control is impossible. It’s impossible to control the availability of products in stores, nor can you control their quality. If a product sells well, there’s a possibility that it won’t be available at the same price in another store.
You can’t control branding either. It doesn’t matter if you are the seller, it’s not your product. And it’s illegal for you to claim it is. The popularity of the brand is what makes the sale. Because the product isn’t unique, you might come across other people selling the exact same product or brand as you. This means that you can’t control the price of your product.
Reselling is a popular way to make quick money and start an online business. Although this business model is a great success, it can also be a step towards something more permanent.
Is it legal to resell products?
Reselling products you’ve purchased from a shop is allowed. This topic is covered in numerous online communities like Poshmark, Craigslist, and Facebook marketplace. Brick and mortar stores can also resell items such as Plato’s Closet, which purchases gently used brand name clothes.
There is a market out there for everything. The marketplace where you sell your products will dictate what you can and cannot do. Amazon, for example, has very strict policies regarding reselling products. It is illegal to resell Nike and Disney merchandise. Reselling on large marketplaces is not allowed by corporations with huge legal departments. Amazon has an entire section of restricted brands.
It is generally legal to resell products. Usually, restrictions are placed on the platform and not by the company. Most brands are safe to resell. It is not permissible to claim that a brand is “brand new” or “straight form the manufacturer”. This would be false.
There are some things you should consider if your goal is to start a reselling company.
- Do your research. Each platform has its own requirements and legal requirements. Most well-known brands have restrictions. Lululemon and Nike are two good examples. Both companies have strict policies regarding reselling and require that all resellers apply for and pay for authorization.
- Never claim that you invented the product. When reselling, make sure to say “Used – Never Opened” and similar. It can be costly if you claim you have access. It’s generally okay to resell something, provided you are upfront about who you own it.
- Sales tax may be required depending on where you live. If you choose the right settings, platforms such as Amazon will automatically collect sales tax. This article here covers Amazon sales tax. If you sell on other platforms, the steps will be similar. You need to determine if their sales tax settings are available. TaxJar software can assist you in filing correctly.
Although it may seem like there is a lot to do before you can start reselling, this is only the cost of admission. You won’t have any problems if you do it right the first time. Once you have found a few products and signed up on a few platforms, you will see that it is a step-by-step learning process.
Let’s wrap it up…
There are many ways to sell, but it is best to research the business model that you want to pursue and then to start moving.
There are some disadvantages, but there isn’t anything in the world that’s perfect. We have the resources below to help. It’s your responsibility to get started on the business you have always wanted to start.
Send us an email if you have any questions or need additional guidance. bros@startupbros(dot)com.
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