You don’t need a revolutionary new product idea to sell things online. In fact, you don’t even have to manufacture your own products to start your own ecommerce business.
Various business models put product development, manufacturing, and order fulfillment into the hands of others—and profits into yours. One of these models is the resale business model.
Becoming a reseller is a great way to launch a small business and start selling online without beginning at square one. Read on to learn how to become a reseller, and get some tips and ideas for running a successful reseller online shop.
Table of contents:
- What is a reseller?
- How to become a reseller
- Best places to find suppliers for your resale business
- Five reseller business opportunities
- Start your reselling business today
What is a reseller?
A reseller is a business that purchases products from manufacturers, liquidators, or other retailers and then sells them to its own customers. A reseller business permit—also known as a resale license, resale certificate, or tax exemption certificate—allows resellers to purchase certain items free of sales tax, including:
- Items to sell at wholesale
- Items to sell at retail
- Ingredients or components to manufacture and sell things
Reselling is essentially a form of dropshipping, where companies source products and materials from a variety of suppliers and make them available to consumers via an online store. This business model makes it easier for the average consumer to find and purchase products.
Many resellers also provide a value-add for the customer experience. For instance, buying directly from a supplier isn’t necessarily easy, and often requires minimum purchase quantities. By contrast, resellers can sell items individually to customers (at a markup), as well as create a branded customer experience. Those elements may be as simple as in-depth product descriptions and reviews, a customer loyalty program, and customer support.
A reselling business has a number of benefits and can be a profitable business model, especially if you have niche expertise. You can launch an ecommerce store faster when you don’t have to go through all the steps of product development and building an audience.
Reselling is also a viable business pursuit for people who like and have success with marketing.
Because product reselling is a common type of dropshipping, it can be difficult to attract customers when you’re starting out as a reseller. If you can plan and execute effective marketing strategies, your reselling business is more likely to achieve success.
Straight product reselling is great for someone who has specific expertise or knowledge of an industry or demographic. For example, someone who knows about animal behavior could create a dropshipping business around the different toys that are best suited for pets.
How to become a reseller
- Register your business. Get a business license where your business operates and/or is incorporated. In states outside of where a business is registered, you’ll need to have foreign qualification.
- Research state laws and regulations. Many states will let you use an out-of-state reseller’s permit to avoid paying sales tax on resale items. However, some won’t honor out-of-state permits. Research state law before buying across state lines, both for in-person and online sales.
- Gather your application materials. Once you know what you need to register and submit your application, prep all the necessary documentation for your reseller business.
- Get a resale permit. File for a reseller business permit in each state where you buy and sell goods. You might also have to pay associated fees.
Sales tax laws vary by state, and each state has its own sales tax rates. In some states, local sales taxes must be collected, too. According to the Tax Foundation, 45 states and the District of Columbia collect statewide sales taxes, and 38 states collect local sales taxes. To find out your specific requirements, it’s best to check with your local jurisdiction.
In the United States, a business with a reseller permit doesn’t pay sales tax on the products it purchases for sale. However the reseller does have to collect sales tax from its customers and send it to the state.
Like a business license, you take out a resale permit wherever your resale business operates. So, if you incorporate in Florida, but have an online store, shipping location, or factory in Delaware, you’ll need a Delaware reseller’s permit. If you buy and sell goods in multiple states, you’ll need a valid permit in each.
Best places to find suppliers for your resale business
To find a supplier for your resale business, start with identifying what types of products you want to sell and what kinds of customers you want to sell them to. Then you’ll need to determine if you want to find a supplier that operates like a distributor, providing wholesale products to you, or like a dropshipper, supplying products and handling order fulfillment.
To search for reseller business suppliers, you can browse online directories, do a Google search, or ask for referrals from within your network. Here is a list of product sourcing apps perfect for Shopify merchants. Each serves as a directory that makes it easy to find products to sell online. You can access a variety of products across all kinds of categories, such as electronics, toys, and cosmetics.
You can also start a reselling business by partnering with well-known dropshipping websites like Worldwide Brands, SaleHoo, Doba, and AliExpress (see our complete guide to AliExpress). Browse their websites to see what kinds of products are available for resale.
Five reseller business opportunities/ideas
Reselling opens the doors to a lot of new business opportunities, as you don’t have to invest in product development and manufacturing. These qualities also make reselling a great home business or side hustle, which you can eventually turn into a full-time job.
Here are five ideas to get you started with a reselling business.
1. Dropshipping business
You can start a dropshipping business, which gives you the ability to offer a wide range of products without stocking any inventory. In a dropshipping business model, all you have to do is market and sell the products. Your dropshipping supplier handles everything product-related, from product development to warehousing and tracking, and even through to order fulfillment.
Dropshipping is a low-risk business model because it doesn’t require investment in inventory, not to mention the costs associated with storing that stock. Plus, the supplier handles the fulfillment process for you, so you don’t need staff or a space to ship goods to customers.
2. Sneaker business
Shoes offer resellers a wide range of niches—from athletic shoes to stylish heels to trendy sneakers and everything in between. People always need shoes, and you can keep things fresh by launching seasonal designs. There’s ample opportunity to resell shoes and make a tidy profit doing so.
New Jersey–based Shopify merchant Packer Shoes started as a small neighborhood custom shoe shop. The company has grown since its humble beginnings in 1907, largely thanks to its omnichannel approach. Now, in addition to reselling sneakers from household name brands like Adidas, Packer Shoes offers its own designs as well.
3. Vintage boutique
If you’re thinking about how to start an online boutique for reselling, you’re on the right track. The used goods resale industry is huge: in the US alone, there are more than 20,000 stores that sell used goods, amounting to a combined annual revenue of about $17.6 billion. A vintage boutique is a great way to take advantage of this reselling business opportunity.
When sourcing vintage goods for your reseller business, you can go by the traditional definition of goods that are older than 50 years and younger than 100, or you can take inspiration from vintage trends. COAL N TERRY does the latter with its vintage clothing collection.
You can resell vintage clothing, antique furniture, or any knick-knacks you can find at garage sales, yard sales, thrift stores, or donation centers. The key to a successful vintage reselling business is to learn what items people look for, and the price points they’re willing to pay. For example, vintage Corningware is in high demand for a niche market of customers.
If an online business selling vintage goods sounds appealing, consider taking this idea to the next level by opening a consignment shop. Consignment shops sell upscale or luxury used goods, and not everything is antique or vintage—some items are newer.
Love that Bag etc, for example, is a Shopify merchant that operates a consignment shop from its online store. Though Love that Bag etc is selling high-quality designer bags for less than they cost brand new, they’re more expensive than bags you might find at a vintage shop.
5. Subscription box
The subscription box reached peak popularity with brands like Birchbox, and remains a flexible business model for a reseller looking to establish a more predictable revenue stream. You can curate an assortment of goods and package them into a single box.
To start your own subscription business, first determine your target market and then look for goods that fit their wants and needs. You can assemble the goods in themed boxes and launch a new one each week, month, quarter, or whatever cadence you want to hit.
Start your reselling business today
Now that you know how to become a reseller, consider starting your reseller journey today. Because you don’t have to invest in product development, upfront inventory, or fulfillment, this business model is a low-risk way to dip your toes into operating an ecommerce business and owning your own shop.
We at ShopShipShake have been working with businesses like yours with fulfilling experiences. We offer one-stop services, including an efficient supply chain, over 10 thousand of China’s suppliers, over 1,000,000 SKU and more. With a successful track record of over 100,000 clients, we are sure to deliver your orders requirements.
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This article originates from: https://www.shopify.com/blog/reseller-business