How to Become a Reseller

Understanding Reselling: What It Is and How to Get Started If you’re curious about what a reseller is and how to become one, this guide will provide insights into launching a resale business, along with valuable tools and tips to help it flourish. What Is a Reseller? A reseller is an individual or business that buys products in bulk from manufacturers, liquidators, or retailers with the intent to sell those items rather than use them personally. Most resellers operate through retail outlets, selling goods directly to consumers. The Resale Business Landscape The small business sector is thriving, with the number of small businesses in the U.S. reaching 32.5 million by the end of 2021, reflecting a 2.5% increase from the previous year. Small businesses account for 99.9% of all U.S. businesses. Discount stores have particularly seen success, with sales reaching $95.1 billion in 2019. However, the COVID-19 pandemic led to many small business closures, with approximately 163,735 shutting down in 2020, creating potential market opportunities as the economy recovers. Steps to Start Your Resale Business To launch your resale business, you need to follow several key steps before making your first purchase: 1. Register Your Business Establishing a business requires meeting legal requirements that can vary by state. Here’s how to get started: Choose a Legal Structure: A sole proprietorship is often the best fit for individuals starting small businesses. Be aware that this means you’re personally responsible for any debts incurred. Obtain a Federal Employer Identification Number (EIN): If you plan to hire employees, this number is essential for tax purposes. Some states may allow you to use your Social Security Number (SSN). Understand Your Tax Obligations: Familiarize yourself with local, state, and federal tax requirements. 2. Apply for a Resale Certificate A resale certificate permits you to buy goods without paying sales tax, as long as those items are for resale. Check local guidelines for obtaining this certificate. Finding Merchandise Sources To stock your inventory, seek out wholesalers, distributors, and liquidators. Generally, ordering in larger quantities results in lower prices per item. Here are some resources to help you locate wholesalers and liquidators: Guides on where to buy liquidation pallets Tips for finding local liquidation sales Resources for identifying the right wholesale suppliers Considerations for Purchasing Merchandise Interest and Knowledge: Choose products that you’re passionate about or knowledgeable about, making sorting and pricing easier. Storage Space: Be mindful of how much space you have; purchasing large quantities may not be practical if you’re limited in storage. Shipping Costs: If selling online, avoid bulky items that incur high shipping fees. Minimum Order Requirements: Be aware of any minimum order requirements set by suppliers. Proximity: Source products locally to save on transportation costs. Selling Locally Many consumers prefer to shop in person, as it allows them to examine items and interact directly with sellers. Here are some effective ways to sell locally: Facebook Marketplace This platform is free to use for local sales, allowing you to reach a wide audience. You can choose to use Facebook’s Commerce Manager, which charges a 5% fee on sales and helps you manage your listings and payments across Facebook and Instagram. Facebook Groups Utilize buying and selling groups on Facebook to connect with potential customers. Ensure that your posts comply with group rules to maintain posting privileges. OfferUp This user-friendly app allows you to list products easily by uploading photos. While posting is free, some transactions may incur service fees, and there are paid promotional options available. Craigslist A popular local classifieds site with millions of users, Craigslist allows you to post ads for free. Registration isn’t mandatory but can simplify managing your listings. Local Advertising Consider using flyers or ads in community newspapers to promote your business. The effectiveness of this approach will depend on local demand and demographics. Garage Sales Hosting garage sales is a quick way to clear out inventory and engage with the community. Check local regulations for guidelines on conducting sales. Flea Markets Participating in flea markets can be a cost-effective way to reach local customers without the overhead of a permanent retail space. Selling Online You can also run your resale business online, which allows for a broader audience and market reach. Here are some popular platforms: eBay Ideal for casual sellers, eBay offers an easy-to-use interface, though volume sellers will need a business account. Fees vary by product category, generally around 12.55% plus a PayPal processing fee. Amazon As the largest online marketplace, Amazon offers significant selling opportunities but comes with strict guidelines, especially for electronics. You can choose between Individual and Professional seller accounts, each with different fee structures. Your Own Website Creating your own website provides complete control over the sales process, though it involves additional costs for hosting and marketing. Platforms like GoDaddy can help you get started. Essential Tools for Resellers Investing in tools designed for resellers can streamline operations and enhance efficiency: Amazon Tools: JungleScout: Analyzes Amazon data to help you stay competitive. Helium 10: A comprehensive suite for managing listings and optimizing sales. eBay Tools: 3Dsellers: Helps create consistent product listings. CrazyLister: Simplifies listing inventory across platforms. Multi-Channel Sales Integration: ChannelAdvisor: A robust tool for managing sales across numerous platforms. Lengow: Automates product feeds and integrates with major eCommerce platforms. Sourcing Merchandise from Direct Liquidation Direct Liquidation provides access to a vast range of merchandise, including customer returns and surplus stock from leading retailers, making it a valuable resource for resellers.