A reseller business can be a great option for first-time entrepreneurs. With this business model, you don’t need a revolutionary new product idea to start your own ecommerce business. In fact, you don’t even have to manufacture your own products, meaning it’s less of a hassle to get the business started.
Interested? Then read on to learn the meaning of “reseller,” why you should become one, and how to start a reselling business online.
What is a reseller?
A reseller is a person or company that buys products from different suppliers and sells them to their own customers (usually at a profit). Resellers often provide some value-add in terms of the customer experience, which enables them to mark up the price of the items they sell. This could be something as simple as an in-depth product description, a customer loyalty program, or live chat support.
Sourcing products isn’t necessarily easy and often requires a large capital investment. Resellers are able to navigate this by purchasing products only after they’ve made a sale and have been paid by the customer. Think of reselling as a form of dropshipping, where individuals source materials and products from a variety of suppliers but do not commit to selling through any purchased inventory upfront.
→ Click Here to Launch Your Online Business with Shopify
Reselling can be a profitable business model, particularly if you possess niche expertise. You can leverage your knowledge and skills to promote different products within your area of specialization. Curate a selection based on market trends and customer preferences and you’re likely to build a loyal customer base.
What are the advantages of being a reseller?
There are a number of benefits to starting an online resale business:
Launch your business sooner
Becoming a reseller allows you to start a business quickly. You don’t need to wait for inventory to arrive or wait for anything at all, for that matter. You can set up and launch the same day you build your online store. After you’ve added a few great reseller products and some content to your store, you can start marketing your business.
Carry no inventory
Another advantage of becoming a reseller is that you don’t have to carry inventory. You can source products from dropshipping suppliers, who allow you to resell without having to purchase inventory in advance. You only pay for goods as customers order them from your website, making it a great choice for new entrepreneurs. Even if you sell niche products or boutique clothing, you can still make a profit without holding stock.
Resell an extensive range
If you become a reseller, you’ll be able to sell a vast range of products. If you resell clothes, you can offer shoes, jewelry, accessories, handbags, lingerie, or related products as your business grows. Adding other products to your reseller online shop won’t cost more, as you only pay for goods that customers buy from your store.
Lower your financial risk
A benefit to starting a reseller business is that the financial cost is low. This is the perfect business for budget-conscious and risk-averse entrepreneurs. You won’t need to buy bulk inventory. Shipping fees aren’t sky high in a reseller business. You only pay for goods as customers order them through your reseller online shop. Thus, the financial risk of doing business is low.
Set your own margins
When you become a reseller, you’re free to set your own margins. You can choose to price your products however you want. Since the cost of goods is low, you can price your products to ensure your reseller business is profitable. The higher you set your price, the more you can make. Be sure to look at industry standards for product pricing.
How to become a reseller
1. Register your business
Get a business license where you do business and/or are incorporated. To resell in other states, you’ll need to file a foreign qualification.
2. Check into state laws
In most states, you should be able to use an out-of-state reseller’s permit that eliminates the need to pay sales tax on resale items. However, this won’t apply in every jurisdiction. Make sure to check the state laws on reselling before you open for business.
3. Get a resale permit
Apply for a reseller permit in each state where you buy and sell goods. Note that there might be fees associated with this permit.
Sales tax laws vary by state, with each state setting its own rates. According to the Tax Foundation, 45 states and the District of Columbia impose statewide sales taxes, and 38 of these also collect local sales taxes. To understand your obligations, it’s best to check with your local authorities.
In the United States, businesses holding a reseller permit don’t pay sales tax on products they purchase for resale. Instead, these businesses are required to charge and remit sales tax to the state from their customers’ purchases.
If your business operates across multiple states, such as having a headquarters in one state and a distribution center in another, you need a reseller permit for each location. For instance, if you’re registered in New York but also operate in New Jersey, you will need a permit for both states to legally charge and remit sales tax.
Additionally, you will need an employer identification number (EIN) to pay federal taxes and open a business bank account. Obtaining an EIN is free, and you can easily do so by visiting the IRS website and following the instructions provided there.
Choosing a fulfillment method for your reseller business
When starting an online reselling business, you need to decide how to fulfill customer orders. Here are three main options:
1. Third-party logistics (3PL)
You can employ a third party to manage your inventory, fulfillment, and shipping. This differs from dropshipping because you own the inventory and pay for its storage. This method suits those looking to resell bulk wholesale products without managing the distribution process. It’s vital to be aware of any high fees associated with your third-party provider.
2. Dropshipping
Dropshipping allows you to run the front end of an ecommerce platform without holding any inventory. When customers place orders on your online shop, you pass these orders to a supplier who owns the products and fulfills them. Starting a dropshipping business is cost-effective as it requires no initial stock. However, you may face challenges such as less control over product quality and higher per-unit costs, which can lower your profit margins.
3. In-house fulfillment
If you choose this method, you store all inventory and oversee the packing and shipping yourself. This approach works well for small, unique, or specialty item inventories. Managing your inventory in-house helps maintain control over the entire process.
Finding suppliers for your resale business
DSers is a great tool for those seeking reliable suppliers for their resale business. While DSers is a dropshipping solution, the same principles apply to a reseller product dropship program. You’ll be able to resell goods from a manufacturer without carrying inventory and more.
Here are a few other great reasons to consider DSers:
- One-click product import. You can choose to add hundreds of items to your store with one simple click. You can sort through order volume, high reviews, and seller rating to find the right products for your reseller online shop.
- One-click order processing. DSers’ reseller dropship app allows you to process orders in one click. Rather than manually typing in the customer’s address, you can click a button and all of the customer details will be sent directly to the corresponding supplier.
- Choose from millions of products. As someone selling reseller products, variety allows you to find the best products to sell to your customers. You can choose from millions of great products to sell to your customers. By offering customers variety, you’ll be more likely to land a sale.
- Suppliers ship products for you. In a reseller business, you won’t have to package or ship goods to customers. Your suppliers will do that for you. This saves you time and money from fewer labor costs. You’ll have more time to focus on marketing and growing your store’s sales.
- Automatic price changes. When a supplier changes its price, you can have your store automatically update your product pricing. This allows you to maintain a profitable business or offer special discounts.
- Track shipments. You can easily track your customers’ shipments in the DSers app. When customers ask questions about their package, you can give them specific information, as tracking information is easily accessible.
- Easily find products with affordable shipping. With DSers, reseller businesses can sell products with affordable shipping costs. You can choose to sort items with free shipping or ePacket shipping. This allows you to send customers their products quickly and affordably.
- You can earn more money. You’ll be able to set your own margins and keep your reseller business costs low. This type of business model gives you a better chance to earn more money than many competing brands. With low product pricing, you’ll be able to offer market pricing, which still allows you to run a profitable business.
To use DSers, you’ll need to have a store on Shopify. Learn how to create a Shopify store in less than 30 minutes.
5 reseller business ideas/opportunities
In a reseller business, you can sell virtually anything. You can start a clothing store or resell shoes or even vintage products. The fact that you don’t have to invest in manufacturing and product development makes reselling a great home business idea to start and grow as you see fit.
1. Clothing business
Clothing is a huge opportunity, as you can resell to women, men, and children of all ages. When running a reseller clothing business, you can test a few different clothing niches at a time and decide which ones work the best for you. You can remove low-performing styles without incurring any cost and add new items as they come into fashion.
When setting up a reseller business idea like clothing, it is important to plan ahead, because clothing lines are cyclical depending on seasons and popular holidays.
2. Pet supplies store
Pet supplies offer a wide range of choices—from clothing to food to leashes and everything in between. Pet parents always need supplies, so there’s ample opportunity to turn a profit by reselling.
Dog and cat parents are the most popular audiences to target, but you can also resell products that appeal to owners of niche pets like rodents, pigs, or fish. Use social media to share your products and get customers to show off their purchases online in order to gain traction.
3. Cosmetics business
Selling cosmetics online can be a great way of making money, as shipping is relatively low and order volume is normally larger than the average.
Cosmetics don’t just mean makeup, though. It can mean skin care creams and hair care products also. This means you can start a reseller business that caters to men and women of all ages in one store.
4. Car accessories business
Starting a reseller business for car accessories can be very profitable if you understand the market. People spend a lot of time in their cars nowadays and want to make them as comfortable as possible.
Research what your customers want and source them from reputable resellers to ensure your reviews are always positive. Some product ideas are car seat storage bags, car seat back hooks, luminous car parking cards, radio receiver tuner with FM transmitter, and car Bluetooth speakerphone.
5. Sneaker business
Sneakers come in a wide range of styles, from high-performance sports models to trendy streetwear options. Resellers can introduce new styles each season to keep their inventory fresh and appealing.
Take Packer Shoes, for instance. This New Jersey–based business began as a small local shop and has expanded by adopting a multichannel selling strategy. It now offers both popular brands like Adidas and its own unique designs.
How to make money with a reseller online shop
You likely want to make money fast with your new reseller business. Fortunately, there are many strategies you can implement to ensure your reseller online shop grows and remains profitable.
Optimize your site
When looking for opportunities to improve the profit potential of your resale business, it’s a good idea to start with your own ecommerce store. Consider using tactics that would increase your conversions, such as:
- Optimize product listings. Include high-quality images and detailed descriptions to make each product page informative and appealing.
- Streamline checkout process. Ensure the checkout is quick and easy, with minimal steps and clear instructions to reduce cart abandonment.
- Offer promotions and discounts. Use limited-time offers or volume discounts to encourage larger purchases.
- Implement live chat support. Provide immediate assistance to answer product questions and resolve issues, enhancing customer confidence and satisfaction.
- Utilize customer reviews. Display positive feedback prominently to build trust and influence buying decisions.
By using these tactics, you’ll set up your site to capture more sales and improve customer engagement.
Price your products well
While marketing your products is important, pricing your products well is essential to ensure your business remains profitable. Take into account all expenses, including marketing, employee salaries, and platform fees such as Shopify. These factors should all influence your pricing strategy.
Pro tip: Use a pricing calculator to help determine the right prices. These tools consider your costs and desired profit margin, ensuring you set prices that are competitive yet profitable.
Sell authentic items
Authentic products typically sell at higher prices due to their guaranteed quality and brand assurance. However, distinguishing genuine items from counterfeits can be challenging. To assist you, here are some tips to identify authentic products and reliable suppliers:
- Check for quality and detail. Authentic items usually have superior craftsmanship, including even stitching, precise logos, and high-quality materials. Compare the product to official images from the brand’s website.
- Verify with serial numbers. Many authentic products, especially high-end items, come with serial numbers that you can verify with the manufacturer or through official brand verification services.
- Research the supplier’s reputation. Look for reviews and feedback about the supplier from other buyers. Established and reputable suppliers are more likely to sell authentic goods.
Run social media ads
In general, Facebook ads tend to be the most popular choice for resellers. But TikTok and Instagram ads are also gaining traction due to their growing user base and commerce features.
You’ll need to experiment with different platforms to see where your brand resonates best with the audience. Perhaps TikTok could be your best-performing marketing channel, especially if you’re good at making personalized short videos. Experiment, analyze, and double down!
Create content around your business
From video marketing to blogging, content creation can help elevate your brand’s presence. The more high-quality content you create, the more likely you are to drive traffic back to your store. By consistently creating content for your brand, you’ll find that, over time, your sales will grow.
Need more marketing ideas? In our post How to Market a Product, you’ll find 24 different effective marketing tips that can help you drive more traffic to your store. Using the tips in the article, you’ll be more likely to land your first few sales in your reseller business.
Start your reseller business today
Reselling is a low-risk way to dip your toes into launching and running an ecommerce business. Your website can be designed and styled any way you like, and you just need to add products without investing in inventory upfront. Promotions, sales, and product pricing will all be done by you. Follow the tips above to launch and grow your resale business today.
How to start a reseller business FAQ
Is being a reseller profitable?
In general, resellers earn anywhere from 15% to 40% profit on the products they sell. However, your exact profit will be determined by several factors, such as your markup and overhead costs.
What products are the easiest to resell?
The simplest products to resell typically include books, electronics, fitness equipment, and skin care products. These categories often see consistent demand and can offer good profit margins. To identify potential hot items, you might want to explore popular trends on various online marketplaces and tailor your ecommerce strategy accordingly.
How much does it cost to become a reseller?
The expenses involved in starting a reseller business depend on your product selection and how you plan to fulfill orders. If you opt for dropshipping, you can begin with less than $100, since you don’t need to hold any inventory. On the other hand, if you decide to buy products in bulk, your initial costs could range from hundreds to thousands of dollars, due to minimum wholesale order requirements.
How do you become a reseller?
- Get a business license.
- Research state laws and regulations.
- Prep all the necessary documentation.
- File for a resale permit.
Want to learn more?
