You don't need an innovative new product idea to sell things online. In fact, you don't even need to manufacture your own products to start your own e-commerce business.
Various business models put product development, manufacturing, and order fulfillment in someone else's hands, and the profits go to you. One such model is the resale business model.
Becoming a reseller is a great way to start a small business and start selling online without starting from scratch. Learn how to become a reseller and get tips and ideas for running a successful online reseller shop.
What is a reseller?
Resellers are businesses that purchase products from manufacturers, liquidators, and other retailers and sell them to their own customers. A reseller license (also known as a reseller license, resale certificate, or tax exemption certificate) allows resellers to purchase certain products without sales tax, including:
- Products sold wholesale
- Items sold at retail stores
- Raw materials or parts for manufacturing and selling things
The resale business model makes it easier for the average consumer to find and purchase products.
Many resellers offer added value to the customer experience. For example, purchasing directly from suppliers is not always easy and often requires minimum purchase quantities. In contrast, resellers can not only sell items to customers individually (at a markup), but also create a branded customer experience. These elements can be as simple as detailed product descriptions and reviews, customer loyalty programs, and customer support.
A resale business has many benefits and can be a profitable business model, especially if you have niche expertise. You can launch your e-commerce store faster because you don't have to go through all the steps of product development and audience building.
For those who like marketing and are successful, reselling is also a viable business pursuit. If you can plan and execute an effective marketing strategy, your resale business is more likely to be successful.
Straight product resale is best suited for those with specific expertise or knowledge of an industry or demographic. For example, if you're into vintage apparel, you could start a resale business focused on vintage concert T-shirts.
How to become a reseller
- Register your business
- Research state laws and regulations
- collect application documents
- Obtain resale permission
Register your business
If you want to operate and/or incorporate a business, obtain a business license. Foreign certification is required in states other than the state where the business is registered.
Research state laws and regulations
Many states allow you to use an out-of-state reseller permit to avoid paying sales tax on resold items. However, some do not accept out-of-state permits. Check your state laws before making purchases across state lines, both in-person and online.
collect application documents
Once you know what you need to register and submit your application, prepare all the necessary documents for your reseller business.
Obtain resale permission
Apply for a reseller license in each state where you buy or sell products. You may also have to pay related fees.
Sales tax laws vary by state, and each state has its own sales tax rate. Some states also require you to collect local sales tax. According to the Tax Foundation, 45 states and the District of Columbia collect a statewide sales tax and 38 states collect a local sales tax. We recommend checking with your local jurisdiction to determine specific requirements.
In the United States, companies with reseller licenses do not pay sales tax on products they purchase for sale. However, resellers must collect sales tax from customers and remit it to the state.
Similar to a business license, you will obtain a resale permit wherever you conduct a resale business. Therefore, if you are incorporated in Florida but have an online store, shipping location, or factory in Delaware, you will need a Delaware reseller permit. If you buy or sell products in multiple states, you will need a valid permit in each state.
How to find suppliers for your resale business
To find suppliers for your resale business, start by identifying what kind of products you want to sell and what kind of customers you want to sell to. Next, you need to decide whether to look for a supplier that operates like a distributor, offering wholesale products, or a supplier that supplies products and handles order fulfillment, like a drop shipper.
To find reseller suppliers, you can browse online directories, perform a Google search, or request referrals from within your network. Here is a list of the best product sourcing apps for Shopify sellers. Each acts as a directory where you can easily find products for sale online. You can access a wide variety of products in all categories, including electronics, toys, cosmetics, and more.
You can also start your reselling business by partnering with famous dropshipping websites like Worldwide Brands, SaleHoo, Doba, and AliExpress (see our complete guide to AliExpress). Browse our website to see what types of products are available for resale.
5 ideas for reseller business
Resale opens the door to many new business opportunities because there is no need to invest in product development or manufacturing. These qualities make reselling a great home business or side hustle that can eventually be turned into a full-time job.
Here are five ideas for starting a resale business.
1.Dropshipping business
You can start a dropshipping business that allows you to offer a wide range of products without having any inventory. In a dropshipping business model, all the products you resell are shipped by your suppliers. All you need to do is market and sell your product. Dropshipping suppliers handle everything product-related, from product development to warehousing and tracking to order fulfillment.
Dropshipping is a low-risk business model because it not only requires no investment in inventory, but also the cost of storing inventory. Additionally, your supplier handles the fulfillment process, so you don't need staff or space to ship items to your customers.
2. Sneaker business
Shoe resellers offer a wide range of niches, from athletic shoes to stylish heels to trendy sneakers. People always need shoes. By introducing seasonal designs, you can always keep things fresh. There are plenty of opportunities to resell your shoes and make a good profit.
New Jersey-based Shopify retailer Packer Shoes started as a small neighborhood custom shoe store. The company has grown since his humble beginnings in 1907, thanks in large part to its omnichannel approach. Now, in addition to reselling sneakers from famous brands such as Adidas, Packer Shoes also offers its own designs.
3. Vintage Boutique
If you are thinking about how to start an online boutique for resale, you are on the right path. The used goods resale industry is huge. In the United States alone, there are more than 20,000 stores selling used goods, with combined annual revenue of approximately $17.6 billion. Vintage boutiques are a great way to take advantage of this resale business opportunity.
When sourcing vintage items for your resale business, you can follow the traditional definition of items that are at least 50 years old but less than 100 years old, or you can take inspiration from vintage trends. COAL N TERRY achieves the latter with its vintage clothing collection.
You can resell vintage clothing, antique furniture, and other decorative items you find at garage sales, yard sales, thrift stores, and donation centers. The key to running a successful vintage resale business is knowing what kind of items people are looking for and the price range they are willing to pay. For example, vintage Corningware is in high demand by customers in niche markets.
4. Consignment sales
If an online business selling vintage items sounds appealing to you, consider taking this idea to the next level and opening a consignment shop. Consignment stores sell high-end and pre-owned items, but not all of them are antique or vintage, and some items are newer.
For example, Love that Bag is a Shopify merchant that operates a consignment shop from its online store. At places like Love that Bag, high-quality designer bags are sold for less than new prices, but more expensive than bags sold in vintage stores.
5. Subscription box
Subscription boxes peaked in popularity with brands like Birchbox and remain a flexible business model for resellers looking to establish a more predictable revenue stream. He can carefully select various products and pack them in one box.
To start your own subscription business, first determine your target market, then find a product that fits their wants and needs. You can collect products into themed boxes and release new products weekly, monthly, quarterly, or at any pace you choose.
Start your resale business now
Now that you know how to become a reseller, consider getting started today. This business model is a low-risk way to step into running an e-commerce business or owning your own shop, as you don't need to invest in product development, up-front inventory, or fulfillment.
Illustration: Gracia Lam
Frequently asked questions about how to become a reseller
Can resellers make money?
A resale business can be very profitable if you understand your target audience and products. Depending on your niche, you can buy used items and sell them at a significant markup.
Where do resellers get their products?
Resellers source inventory from a variety of sources, including wholesalers, liquidators, secondhand stores, and even local real estate sales.
How much does it cost to start reselling?
Starting a resale business is surprisingly affordable. All you need is a source of used and discounted products and an online store to resell your products to waiting users.
Is it illegal to be a reseller?
It is completely legal to operate a reseller as long as you follow local tax laws and have the necessary permits. When you purchase an item, you own it and are free to resell it anywhere and to anyone.
