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How to Start a Reselling Business

Written by:

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by:

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

How to Start a Reselling Business

Fast Facts

Investment range

$1,500 - $28,800

Revenue potential

$75,000 - $250,000 p.a.

Time to build

1 – 3 months

Profit potential

$45,000 - $100,000 p.a.

Industry trend

Growing

Commitment

Flexible

Do you want to be an entrepreneur but lack the funds for a manufacturing facility? Don’t worry, there are other options available. You could buy goods wholesale and resell them at a reasonable markup. An even more affordable option is to buy and resell used goods, like cars or vintage clothing. 

The US resale industry is worth nearly $180 billion, so there’s real opportunity in this market. But you’ll need to do more than just find great products. Resale success requires hard work and some real business savvy. 

Lucky for you, this guide provides all the business insight you need to become a reselling mogul. 

Step 1: Decide if the Business Is Right for You

Pros and cons

Pros

  • Countless product options
  • Excellent profit potential
  • Work from home with an online store

Cons

  • Inventory management can be difficult
  • Startup costs of a physical store are high

Reselling industry trends

Industry size and growth

Reselling industry size and growth

Trends and challenges

Reselling industry Trends and Challenges

Trends

  • GenZ and millennials are the top resale buyers, with 8 of 10 buying used in 2021
  • Resale apparel makes up the largest share of the market

Challenges

  • As consumers curb spending, resale revenues may decline
  • In recent years the market has become highly competitive

Consumer spending

Reselling Business consumer spending

How much does it cost to start a reselling business?

Startup costs for a reselling business range from $1,500 for an online store to about $30,000 for a brick-and-mortar store, with the main cost for the latter being the space rental, preparation, and inventory.

You’ll need a handful of items to successfully launch if you open a physical store, including: 

  • Shelving or clothing racks
  • Check out counter
  • POS system
  • Pricing tools
Start-up CostsBallpark RangeAverage
Setting up a business name and corporation$100 - $500$300
Business licenses and permits$100 - $300$200
Insurance$100-$500$300
Initial Marketing Budget$200 - $500$350
Inventory$1,000 - $20,000$10,500
Space rental deposit and preparation$0 - $7,000$3,500
Total$1,500 - $28,800$15,150

How much can you earn from a reselling business?

Reselling Business earnings forecast

How much revenue you make depends on the type of items you sell. If you start an online store, you should have a profit margin of about 60%. 

These calculations assume an average product price of $50. In your first year or two, you could work from home and sell 1,500 items online in a year, bringing in $75,000 in revenue. This would mean $45,000 in profit, assuming that 60% margin. 

As you gain traction, sales could climb to 5,000 items a year. At this stage, you’ll need to hire staff and open a physical space to store and package inventory, reducing your margin to around 40%. With annual revenue of $250,000, you’d make a tidy profit of $100,000.

What barriers to entry are there?

There are a few barriers to entry for a reselling business. Your biggest challenges will be:

  • Funding startup of a physical store
  • Choosing suitable products and finding reliable partner 
  • Competing with the growing number of resellers

Related Business Ideas

If you’re still not sure whether this business idea is the right choice for you, here are some related business opportunities to help you on your path to entrepreneurial success.
How to Start a Reselling Business

How to Start a Thrift Store

How to Start a Reselling Business

How to Start an Antique Store

How to Start a Reselling Business

How to Start an Online Auction Business

Step 2: Choose Your Niche

develop a business idea

Now that you know what’s involved in starting a reselling business, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research could give you the upper hand even if you’ve got the perfect product. Conducting robust market research is crucial, as it will help you better understand your customers, your competitors, and the broader business landscape.

Analyze your competitors 

Research reselling businesses in your area and online to examine their products, price points, and what sells best.

  • Make a list of reselling businesses that offer similar products. 
  • Review your competitors’ products – their features, pricing, and quality – and marketing strategies
  • Check out their online reviews and ratings on Google, Yelp, and Facebook to get an idea of what their customers like and dislike.
  • Identify your competitors’ strengths and weaknesses.  

This should identify areas where you can improve your business and gain a competitive edge to make better business decisions.

Why? Identify an opportunity

You’re looking for a market gap to fill. For instance, maybe the market is missing a reseller of vintage jewelry or foreign auto parts. 

You might consider targeting a niche, such as home goods.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your products

You could sell a wide array of products. You could specialize in one product or offer a variety of goods based on what you find. You might look at garage sales, yard sales, estate sales, thrift stores, and charity shops, and you could also research the online resale market. 

Here are some profitable reselling business ideas:

  1. Clothing Resale: The resale of designer and vintage clothing is a profitable business. Source items from thrift stores, yard sales, or estate sales and resell them online through platforms like eBay, Poshmark, or Depop.
  2. Sneaker Resale: High-demand sneakers can often be sold for significantly more than their retail price. Use apps like StockX, GOAT, or Grailed for these sales.
  3. Technology Resale: You can buy used smartphones, laptops, or other tech gadgets, refurbish them if necessary, and resell them on platforms like eBay or Amazon.
  4. Book Resale: Books, especially rare or out-of-print titles, can bring in a good profit. Online platforms like AbeBooks and Amazon are suitable for this business.
  5. Antique & Collectible Resale: From coins to stamps to vintage toys, there is a large market for collectibles. Online auctions, eBay, or specialist websites can be used to sell these items.
  6. Furniture Resale: Upcycling and selling old furniture can be quite profitable, especially with a growing interest in sustainable and vintage home goods. Etsy, Facebook Marketplace, or local flea markets can be effective sales channels.
  7. Car Resale: Buying used cars, refurbishing them, and reselling them can be profitable if you have knowledge in this field. Autotrader, Craigslist, and local dealerships could be platforms for selling.
  8. Domain Name Resale: Buy unique, catchy, or industry-specific domain names and sell them at a higher price. Websites like GoDaddy or Sedo can be used for these transactions.
  9. Stock Photo Resale: If you’re a photographer, you can sell your photographs on stock photo platforms like Shutterstock or Getty Images.

How much should you charge for used items?

Prices will depend on the market and competitor prices, but they’ll also depend on your cost of the items you find. You should aim for a profit margin on those costs of about 60%. 

Once you know your costs, use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will depend on the items you sell. If you’re selling trendy used clothing, your target market is likely to be younger, so you should focus your marketing on TikTok and Instagram. 

Where? Choose your business premises

In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out an inventory storage and packaging facility. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.

When choosing a commercial space, you may want to follow these rules of thumb:

  • Central location accessible via public transport
  • Ventilated and spacious, with good natural light
  • Flexible lease that can be extended as your business grows
  • Ready-to-use space with no major renovations or repairs needed
Reselling Business idea rating

Step 3: Find a Supplier

Choosing the right supplier is critical to the success of a reselling business. Here are some steps and considerations to help you make an informed decision:

  1. Product Quality: This should be your number one concern. High-quality products attract customers and encourage repeat business. The reputation of your business heavily depends on the quality of the products you sell. Insist on product samples before making any commitments.
  2. Reliability: A reliable supplier will deliver the right products in the right quantity and at the right time. Reliability can be determined by checking their track record, reading reviews from other businesses they supply, and asking for business references that you can contact.
  3. Pricing: The supplier’s pricing should allow you to sell at a competitive price and still make a profit. You should understand their pricing structure, minimum order quantities, and any potential discounts for buying in bulk.
  4. Location: Consider where your supplier is located. While overseas suppliers might offer cheaper rates, they might also come with longer delivery times and higher shipping costs. A local supplier may be able to deliver more quickly and cheaply.
  5. Communication: Effective communication with your supplier is key. You need a supplier who is responsive to your needs, transparent about their abilities and constraints, and able to work with you to solve problems when they occur.
  6. Adaptability: Look for a supplier who can adapt to changing circumstances. If your business grows quickly or changes direction, you want a supplier who can scale up or adjust their offerings to meet your new needs.
  7. Financial Stability: You don’t want your supply chain to be disrupted because your supplier is having financial difficulties. If possible, try to understand their financial stability. This might include checking their credit rating or asking for financial references.
  8. Ethical Standards: If your business values ethical sourcing, look for suppliers that share these values. This might include ensuring their workers are treated fairly, they have environmentally friendly practices, and they source their materials responsibly.
  9. Contract Terms: Make sure you understand and are comfortable with the terms of any contract with a supplier. This might include terms related to payment, delivery, product returns, and resolution of disputes.
  10. Scalability: As your business grows, your needs will change. It’s important that your supplier has the ability to meet your demands as they increase.

Remember, it’s often wise to have more than one supplier, even for the same product. This is called supplier diversification and it can protect your business from supply chain disruptions if one supplier can’t deliver for some reason.

However, managing multiple suppliers can be more complex, so you’ll need to balance the benefits of diversification with the costs of added complexity.

Step 4: Brainstorm a Resale Business Name

Here are some ideas for brainstorming your business name:

  • Short, unique, and catchy names tend to stand out
  • Names that are easy to say and spell tend to do better 
  • Name should be relevant to your product or service offerings
  • Ask around — family, friends, colleagues, social media — for suggestions
  • Including keywords, such as “second-hand” or gently used”, boosts SEO
  • Name should allow for expansion, for ex: “EverShift Emporium” over “Vintage Vogue Resale”
  • A location-based name can help establish a strong connection with your local community and help with the SEO but might hinder future expansion

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead and reserve your business name with your state, start the trademark registration process, and complete your domain registration and social media account creation. 

Your business name is one of the key differentiators that sets your business apart. Once you pick a name, reserve it and start with the branding, it’s hard to switch to a new name. So be sure to carefully consider your choice before moving forward. 

Step 5: Create a Reselling Business Plan

Here are the key components of a business plan:

what to include in a business plan
  • Executive Summary: Summarize the key aspects of your business plan, including the products you plan to resell, your target market, and your business goals.
  • Business Overview: Provide an overview of your reselling business, including the types of products you intend to resell (e.g., electronics, clothing, vintage items), your business location (online or physical store), and your unique selling proposition.
  • Product and Services: Detail the specific products or categories you will resell, your suppliers or sourcing methods, and any additional services such as packaging, quality assurance, or customization.
  • Market Analysis: Analyze the market for the products you plan to resell, including demand trends, consumer preferences, and potential growth opportunities.
  • Competitive Analysis: Identify and evaluate competitors in the reselling market, highlighting your competitive advantages, such as pricing strategies, product quality, or niche markets.
  • Sales and Marketing: Explain your strategies for selling products, which may include online platforms, social media marketing, partnerships with suppliers, and customer outreach.
  • Management Team: Introduce the key members of your team, emphasizing their expertise in product selection, pricing, and marketing within the reselling industry.
  • Operations Plan: Describe the day-to-day operations of your reselling business, covering aspects like inventory management, order processing, customer support, and shipping logistics.
  • Financial Plan: Present financial projections, including revenue forecasts, pricing strategies, expense budgets, and cash flow analysis, to demonstrate the financial viability and potential profitability of your business.
  • Appendix: Include any supplementary materials, such as product catalogs, supplier agreements, market research data, or marketing samples, to support your business plan.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 6: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to reselling businesses. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your reselling business will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

types of business structures
  • Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
  • General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
  • Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts. Here’s how to form an LLC.
  • C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation. Read how to start a corporation here.
  • S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have. 

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Step 7: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist, and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 8: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

types of business financing
  • Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
  • SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
  • Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
  • Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
  • Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
  • Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a reselling business. You might also try crowdfunding if you have an innovative concept.  

Step 9: Apply for Reseller Business Licenses and Permits

Business Licenses and Permits

Starting a reselling business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You’ll need a sales tax permit if you’re selling in states that have sales tax. You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 10: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your reselling business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 11: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

types of business insurance
  • General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
  • Business Property: Provides coverage for your equipment and supplies.
  • Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
  • Worker’s compensation: Provides compensation to employees injured on the job.
  • Property: Covers your physical space, whether it is a cart, storefront, or office.
  • Commercial auto: Protection for your company-owned vehicle.
  • Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
  • Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 12: Prepare to Launch

Launching a Business

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.  

You may want to use industry-specific software, such as RBMS, Vend, or lightspeed, to manage your inventory, orders, pricing, and purchases.

Accounting

  • Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero
  • If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Create a website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

Your customers are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. 

Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Buy Now” or “Order”. This can sharply increase purchases.

Marketing

Here are some powerful marketing strategies for your future business:

  • Leverage Social Media Influencers: Partner with influencers in your niche to showcase your products, tap into their audience, and build credibility for your brand.
  • Create Engaging Content: Develop high-quality, engaging content showcasing the value and versatility of your products through videos, blog posts, or visually appealing graphics on platforms like Instagram and Pinterest.
  • Offer Limited-time Promotions: Create a sense of urgency by running limited-time promotions, discounts, or exclusive deals, encouraging customers to make quick purchasing decisions.
  • Customer Testimonials and Reviews: Encourage satisfied customers to leave positive reviews and testimonials, building trust and credibility for your reselling business.
  • Cross-Promotions with Complementary Products: Collaborate with other resellers or businesses offering complementary products to cross-promote each other, expanding your customer base.
  • Optimize Product Listings: Use effective keywords, clear product descriptions, and high-quality images to optimize your product listings on reselling platforms, making them more discoverable.
  • Email Marketing Campaigns: Build an email list and regularly engage your subscribers with targeted email campaigns, showcasing new arrivals, promotions, and exclusive offers.
  • Attend Local Events and Markets: Participate in local markets, trade shows, or pop-up events to connect with customers face-to-face and create a memorable brand experience.
  • Create a Loyalty Program: Implement a loyalty program to reward repeat customers, encouraging them to choose your reselling business over competitors.
  • Utilize Retargeting Ads: Implement retargeting ads to bring back potential customers who have visited your product pages but haven’t made a purchase, keeping your brand top-of-mind.

Focus on USPs

unique selling proposition

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your reselling business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your reselling business could be:

  • Gently used books for your home library
  • Second-hand fashion for your sustainable lifestyle
  • Go back in time with gorgeous vintage jewelry

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a reselling business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in reselling for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in resale items. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.

Step 13: Build Your Team

Building a Team for a New Business

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a reselling business include:

  • Packers – prepare items for shipping
  • General Manager – scheduling, inventory management, accounting
  • Marketing Lead – implement marketing strategies

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 14: Run a Reselling Business – Start Making Money!

Running a Business

Vintage and used goods are hot these days! So the opportunity for a reselling business is ripe and the product options are nearly endless. Whether selling online or from your own shop, you can grab a share of this fast-growing market and make a fine living.

Now that you’ve gained valuable business insights, you’re ready to embark on your entrepreneurial journey!

Reselling Business FAQs

Is a reselling business profitable?

Yes, a reselling business can be very profitable. You just need to find quality items that you can buy cheaply and mark them up for resale.

What is the growth potential of a reselling business?

A reselling business has limits in terms of growth potential unless you start an online marketplace like thredUP, where people send you their used items and you list them for sale.

Can you start a reselling business on the side?

A reselling business makes a great side hustle. You can find and list items on the weekends, and do your marketing and packaging in your other free time.

Is it legal to resell items as a business?

Yes, you can buy items at garage or estate sales, and sell them online or at your own store. It can actually be a very profitable business.

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How to Start a Reselling Business