Reselling is a business model that includes buying products and intending to sell them for a higher price. The difference between the buying and selling price is the profit for the reseller.
Whether you want to work full-time or keep it as a side hustle, reselling offers many opportunities; with many established online marketplaces, selling products is easier than ever.
How do you become a reseller in a dynamic market? We share detailed information about the business model, product sourcing, marketing strategy, and more!
Table of Contents
- The Growing Trend of Reselling
- The Reselling Business Model
- Identifying Your Niche
- Conducting Market Research
- Setting Up Your Reselling Business
- Sourcing Products
- Pricing and Profit Margins
- Creating Product Listings
- Selecting Sales Platforms
- Implementing Marketing Strategies
- Providing Excellent Customer Service
- Scaling Your Reselling Business
- Monitoring Market Changes and Embracing Innovation
The Growing Trend of Reselling
Reselling is a popular business model among individuals and businesses. Various factors drive popularity, and the development of the e-commerce world is the most significant.
Online marketplaces establish a connection between the seller and buyer, ensuring a trustworthy purchase process. Websites like Amazon and eBay provide the tools for a streamlined listing and buying process.
Reselling revolves around limited edition products and rare releases in high demand. Scarcity increases the popularity of an item and its value, which is an opportunity for resellers to profit.
Another great advantage that makes reselling popular is the low risk. Individuals can start this business with minimal investment and continue growing at their own pace. What begins as a side hustle can grow into a profitable business.
Sustainability is another important aspect that makes reselling more popular. As customers are more conscious of the environment, they prefer to give products a second life and reduce the waste in landfills.
The Reselling Business Model
The reselling business model includes buying products at a lower price and selling for a higher profit. Often, the resellers capitalize on limited edition products and collectibles.
The reseller mediates between the source and the end consumer, taking a cut from the final price as profit. They buy the products from one party and sell them to the last customer.
The profit margin ranges between 10% to 50% and may go higher for luxury goods. Resellers can sell pre-owned or new products depending on their business concept.
Retailers don't have to think about creative ideas, manufacture the products, or have a significant initial investment. They need to focus on finding the right products and establishing their brand.
Identifying Your Niche
From electronics to fashion and vintage items, there are many product categories. Resellers should focus on the niches that suit their interest, giving them a competitive edge.
Identifying a niche helps you specialize in a particular market segment and cater to a specific target group. This could be clothing, sneakers, home good, or any other category of products. Analyze the market to discover potential opportunities and look for underserved areas.
Choosing the Right Products to Resell
Choosing the right products that appeal to your target audience is crucial for your success as a reseller. The right products should fit your customers' demands but also be profitable.
One of the ways to offer a successful product is to solve the customer's pain points. Your products can resolve a specific problem or provide a better customer experience than the current ones.
A great way to assess this is to read product reviews. This helps you understand the customer's frustrations and complaints.
Selling hobby products is another way to cater to a niche audience. Hobby enthusiasts and collectors are willing to pay more for a specific item, so this is an excellent chance to capitalize.
Combining know-how and your interests is another recipe for a successful reselling business. Also, you can turn your professional experience and expertise into a venture.
Assessing Market Demand
The first step in choosing a profitable product is to do keyword research, which requires you to have technical SEO skills. By analyzing the search volume and competition, you can understand which products are in high demand.
Marketing studies and research reports provide valuable insights about the market. While most are paid, you can download iTunes for free online.
Conducting Market Research
Market research helps resellers make better decisions. The first step is identifying your target audience and their characteristics, such as demographics, preferences, and behavior.
Google Trends, keyword research tools, and social media analytics can help you conduct your online research. The social media discussions reveal the customer's perspective, while the keyword volume can tell a lot about a product's popularity.
While most keyword research tools are paid, you can use the free Google Trends if your marketing budget is limited.
Researching your competition is another crucial step. How to become a reseller with a successful business? Be better than the competition in the market. Analyze the competitors' pricing, products, and customer reviews to understand their operations better.
Analyzing industry reports and studies gives you a glimpse into your niche market. Info such as current market size, value, and expected growth is available through market research companies and industry associations.
A SWOT analysis is essential for your reselling business. This analysis showcases your strengths, weaknesses, opportunities, and threats. This allows you to understand your business and environment to make better decisions.
The market research isn't done here. Since the market is dynamic and the demand is prone to changes, you must keep up with the latest market updates.
Setting Up Your Reselling Business
How do resellers work in a dynamic marketplace? Nowadays, every business operates online, so you need to set up a website.
Pick your domain and design a professional website that aligns with your brand. WooCommerce and Shopify are popular e-commerce platforms for setting up an online store.
A business with a solid social media presence looks reputable in the eyes of consumers. Build a strong profile on the social platforms used by your target audience.
How do resellers work? They establish connections with reliable suppliers that can meet their demands. Quality, price, and shipping times are the most important aspects of sourcing inventory.
When building your inventory, remember to start small. Get a manageable number of products so you can test the market. With this, you can understand the market demand for specific products.
Managing the inventory is a challenge when you have your products in stock. Implement an inventory management system that tracks your business's sales and restocking needs.
Finding Reliable Suppliers
Wholesale platforms and distribution centers offer a vast range of products, but you can also source directly from the manufacturers. Shop around to find the best offers.
Platforms like Alibaba, WholesaleCentral, and ThomasNet connect you with established suppliers. They offer a wide range of products and are easy to use. However, remember that the shipping costs will be higher, and it will take longer for the products to reach you.
Local wholesale suppliers will provide you with the needed products quickly. With lower shipping costs, you can offer cheaper products. Exhibitions and trade shows are an excellent way to connect with local or regional suppliers.
Dropshipping platforms are another option for resellers. The drop shipping model includes shipping the products directly to the customer, eliminating the need for inventory.
Doba, Sprocket, and Oberlo are some platforms that connect you with suppliers. Worldwide Brands and Salehoo are platforms where you can find wholesale and dropshipping suppliers.
Establishing a direct relationship with manufacturers reduces the middleman, allowing you to source cheap products. You can meet manufacturers when attending industry-related events or contact them directly.
Liquidation auctions offer retired goods, overstock, and surplus and are a great way to source goods at a discounted price. Liquidation.com and B-stock are platforms for online liquidation auctions.
If your business model includes unique products that showcase craftsmanship, you can source them directly from artisans. Artisan events and craft fairs are great places to connect with local artisans.
Negotiating Deals and Building Relationships
At this time, your negotiation skills are essential. You must discuss terms with the suppliers and ensure they work in your favor. Shipping fees, delivery date, price, and minimum order quantity are the details to define.
But also keep in mind that your suppliers become your business partners. As your demand rises, you will want to look for reliable and trusted companies to meet your requirements.
Pricing and Profit Margins
The right price should maintain profit margins and be competitive. First, calculate the total product price, including the fixed costs.
The total cost includes product price, packaging, shipping, and other direct costs. However, remember that each product price must contain a small portion of the overhead costs, such as marketing, utility, rent, and salaries. These fees are individual for every resale business.
Consider the competitors' prices for similar products when shaping your pricing strategy. This way, you can understand the market situation and offer a more competitive price.
In addition, compare the value you offer vs the competitors. Offering diverse products, unique product features, faster shipping, or better customer service position you ahead of the competition.
The price strategy depends on the nature of your product. For unique or premium products, the price should reflect the perceived value. Dynamic pricing works for products of seasonal character and those strongly impacted by current demand.
To increase your profit, you should consider product bundling and upselling. Product bundling offers many related products at a discounted price, motivating customers to buy more.
Upselling refers to offering complementary products during the purchase process to increase revenue. Also, consider implementing discounts to clear excess inventory or to boost sales during slow periods.
Creating Product Listings
Well-crafted product listings make a considerable difference in sales. When purchasing online, customers can't assess the physical product and depend on the info provided.
The product title should include important info such as brand, model, color, size, and relevant keywords. The description should be concise while providing information about the product's benefits or how it solves the customer's pain points. The large chunks of text can be separated into bullet points.
Online retailers need to provide high-quality images that appeal to the target audience. Using a high-resolution camera and a consistent background makes the photos look professional. Shoot pictures from different angles to showcase the product's features.
The product description should contain accurate info about the product's weight, size, and dimensions. Also, be transparent about the shipping.
List the estimated delivery time shipping costs and offer multiple shipping options. If you have free shipping rules, list them.
Selecting Sales Platforms
The sales platform depends on your product, audience, and business model. The resellers that start small can sell their products on Facebook marketplace, eBay, and Amazon.
The advantage of these platforms is that you don't need to invest in setting up your website. Also, your product is placed in an already-built marketplace with many buyers.
Amazon is a great place to start, as it welcomes new sellers. They offer valuable insights and tips on being a successful seller on the platform. Even though Amazon charges fees, it is more feasible than starting your e-commerce website.
eBay is another excellent option to start a reselling business with 159 million active buyers. They charge you for submitting a listing and when the sale is finished.
Walmart has its marketplace catering to US businesses and customers. International dealers can participate if they are qualified.
Etsy is a global marketplace focusing on unique and handmade items. The site charges sealers for submitting a listing but also has additional costs for sales and marketing.
If your business model focuses on selling locally, the Facebook marketplace is ideal. There are no charges when selling products, only if you use specific services.
Implementing Marketing Strategies
When you have a detailed marketing plan, it is time to implement it. Your strategy should have precisely determined goals, such as boosting sales or raising brand awareness.
In one of the previous steps, you already determined your target audience. Tailor the marketing strategy to cater to the specific demographic.
One of the essential steps in implementing your marketing strategy as a reseller is to allocate your budget and resources. Whether you start big or small, using your resources effectively is necessary.
Once you have your action plan ready, it is time to create a marketing team. At a certain point in the beginning, it is okay to operate as an individual.
But as the workload grows, you will need marketing personnel such as graphic designers, SEO specialists, social media managers, and others who will contribute to your work process.
Providing Excellent Customer Service
Offering outstanding customer service is crucial for any business. As a reseller, you should be transparent about the purchasing condition. List the product specifications, pricing, shipping, and return policies.
Next, resellers need to provide various sorts of communication so customers can choose the most convenient one. Offering customer service through live chat, phone, email, and social media is a great way to increase brand loyalty.
Moreover, the contact information should be easy to find and not have customers scrolling through pages to find it. Customer service is still essential even if you operate as an individual on online marketplaces. You will need to answer the customer's questions about the products so they can make the final decision.
Scaling Your Reselling Business
As your customers and revenue grow, you must enable your business to support the growth. Introducing new products and markets, building strong relationships with suppliers, and increasing your online presence are some options.
Resellers should consider including complementary products to their offer or entirely new products to attract a broader target audience. Entering new markets is another way to grow your business, so explore new online marketplaces to increase sales.
When your reselling business experiences growth, you have more power to negotiate with suppliers. Renegotiate with your current supplier and look for new suppliers to reduce costs and enhance profits.
If you have social media, it is time to work on expanding your network—partner with influencers in your niche to gain new followers.
Monitoring Market Changes and Embracing Innovation
How to be a reseller in a competitive market? The solution is to keep up with the market updates and trends. Market research reports and industry publications provide insights into market trends, technologies, consumer behavior, and industry trends.
Monitoring your competitors and their strategies helps you understand which areas your reselling business needs improvement. Also, keep up with new product launches and innovations within your niche. The customer feedback provides valuable insights and directions for improvement.
Whether you want to resell to be a full-time job or an additional income, the scalable nature of this business model opens new opportunities. To build a successful reselling business, you need to assess the market demand, offer appealing products, provide excellent customer service, and keep up with the latest trends to adjust your marketing strategy.