As with any new business, a lot of work is needed for it to kick off, before you know if it will be a success. Recent studies show that the growth rate of selling second-hand items online is increasing much faster than that of brand new items. With the resale industry booming, it seems like the prime time to create your own reseller business.
When getting started, it is beneficial to draw up a business plan to stay on track with a clear vision of how to make your business a success. Conducting market research will give you insight and clarity to determine particular aspects of your business, such as deciding what products to sell, and where you will source them from.
Research will help you predict the profit margin and profitability of the products you wish to sell. You will also need to consider how and where you will store inventory, and create a system to keep on top of what has been sold and what has not.
The next thing to think about is finding the right platform to suit your needs. With many options, most resale platforms specialise in selling certain types of products, so naturally using one that aligns with your intended product will help you reach your target audience.
Ecommerce resale platforms will often offer a business account to sellers, which will help you setting up your profile, listing your products, and processing sales. At this stage, it is worth checking to see if there are any product listing fees, or if there is a limit on how many listings you can have on the site.
In order to be able to process your orders, you will need to decide on which payment gateway to use, also taking into account any transaction fees. Learning about the local and international postage costs, including packaging, will equally be important to know when it comes to pricing your products. It is also useful to set up an account system and keep track of all income and expenses, as well as any income and sales tax.
Let’s take a look at some best practices and advice from successful resellers to see how these steps contributed to their success.
Case Study #1
Justin, who sells roughly $5300 worth of items on eBay per month
- He began by buying one used motorbike, dismantling it, and reselling the parts. Using the money made from the first sales, he gradually increased his earnings and inventory each month, reaching around $39,000 in inventory online.
- Justin learned that negotiation and respectful bargaining was crucial to getting a good deal on his purchases in order to make a good enough profit on his sales, while maintaining a good relationship with his suppliers.
- He makes use of assisting systems like eBay Labels and the Global Shipping Program to make the shipping process easier and less work.
- When interacting with customers, he is upfront in his listings and makes it easy for buyers to return items if they do not meet their expectations.
Case Study #2
Marvin, who made $10,000 reselling on Amazon in 4 months
- He started by choosing his product niche in the grocery sector, initially spending $500 on inventory.
- With a background in finance, he quickly deduced that focussing on selling cheaper items with around 20% ROI and just $2.00 profit. The lower margins meant he was able to have a higher turnover, which increased his income quickly.
- Over time, he built up a good relationship with his suppliers, so much so that they often offer him deals in order to clear their shelves quicker.
- To keep track of everything, Marvin built an inventory spreadsheet, which enabled him to have an overview of the profitability of each item each month.
Case Study #3
Oliver, who made a £70 000 profit in 2017 by reselling on Depop
- After conducting market research, he found he could sell an item of clothing on Depop for double the price he paid for it.
- By sourcing authentic, unique, limited edition items that are in high demand, he discovered buyers were willing to spend more and he was able to put prices up.
- Using studio lighting enables Oliver to take high-quality photos, which he knows to be important when creating listings and marketing on social media.
- Oliver has developed his reseller business and now sells pre-owned designer products and streetwear from his own ecommerce platform.
As we can see when looking at these examples of successful reseller business owners, by doing meticulous market research and planning, they were able to scale up their businesses.
Final recap: Do’s and Don’ts
|Don’t jump in blindly!||Do market research to learn about the landscape and competition, to determine what product to sell and where you will be sourcing it from.|
|Don’t expect to see results without putting a detailed plan in place.||Do formulate a business plan and obtain a reseller business license.|
|Don’t think you have to do it alone.||Do create a business account on a platform that offers you support with reselling.|
|Don’t withhold information about the origin and condition of the product.||Do include a detailed, honest product description with your product listings.|
|Don’t use stock photos or small, low resolution photos that are difficult to see.||Do add real, quality photos from all angles of the product as this will help consolidate the buyers expectations.|
|Don’t charge too much for posting. Also don’t charge too little, otherwise it will eat into your profits.||Do make sure you package items properly so nothing is damaged.|
|Don’t disregard communication with your customers, or the importance of customer reviews.||Do set up a customer service system to answer buyers’ questions, and always be upfront, fair, and responsive.|
|Don’t expect customers to always find you.||Do create a marketing plan to reach your intended audience.|