Skip Product Development: Learn the Steps to Starting a Reseller Business (Plus 5 Opportunities for 2021)
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. There are many business models you can adopt which put product development, manufacturing, and even fulfillment into others’ hands—and profits into your pocket.
Reselling is one such model. Becoming a reseller is a great way to start selling online without starting from square one.
What is a reseller?
A reseller is a person who purchases products from manufacturers, liquidators, or other retailers and then sells them to their own customers. The permit—also known as a resale license, resale certificate, and tax exemption certificate—allows resellers to purchase certain items free of sales tax:
- Items to sell at wholesale
- Items to sell at retail
- Ingredients or components to manufacture and sell things
Reselling is a form of dropshipping, where companies source products and materials from a variety of suppliers and make them available to consumers in one place. This business model makes it easier for the average consumer to find and purchase products.
Resellers also often add some sort of value-add in terms of the customer experience. Buying directly from a supplier isn’t necessarily easy and often requires minimum purchase quantities. Resellers can sell individual units 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 business 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. If you can come up with effective marketing strategies, you’re more likely to have success with this type of dropshipping.
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 get a reseller permit: 4 steps
Generally speaking, you’ll follow these steps to get your reseller permit:
- 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.
- Get a resale permit. File for one in each state where you buy and sell goods. You might also have to pay associated fees.
The 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, all 46 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. But the reseller does have to collect the sales tax from customers and send it to the state.
Like a business license, you take out your resale permit where your resale business operates. If you incorporate in, say, Florida but have a store, online shipping location, or factory in Delaware, you need a Delaware reseller’s permit. If you buy and sell goods in multiple states, you need a valid permit in each.
Note: Many states allow you to use an out-of-state sales tax permit when completing resale certificate documentation, so before you go out getting a permit for each state, so check before re-applying.
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 as a distributor, providing wholesale products to you, or like a dropshipper, supplying products and taking care of order fulfillment.
To search for suppliers, you can look at online directories, do a Google search, or ask for referrals from within your network. Oberlo is an example of a product sourcing app perfect for Shopify merchants. It serves as a directory that makes it easy to find products to sell online.
With Oberlo, you can access a variety of products across all kinds of categories, such as electronics, toys, and cosmetics.
You can also work with well-known dropshipping suppliers like Worldwide Brands, SaleHoo, Doba, and 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 idea to start as a side gig and grow as you see fit.
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 an ideal low-risk business model because it doesn’t require investment in inventory, not to mention the costs associated with holding that stock. Plus, the supplier ships products for you, so you don’t even have to deal with the logistics associated with that.
2. Sneaker business
Shoes offer 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 start your own shoe business.
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, Packer Shoes sells more than shoes, including their own designs and reselling others, like sneakers from household name brands like Adidas.
3. Vintage boutique
The used goods resale industry is huge: in the U.S. 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 reselling business idea to take advantage of this opportunity. And there are so many ways you can take it.
You can go by the technical 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 their vintage clothing collection.
You can sell vintage clothing, antique furniture, or any knick-knacks you can find. The key to a successful vintage reselling business is to know what items people look for. For example, vintage Corningware is in high demand for a niche market of customers.
4. Consignment
Similar to the opportunities that come with a vintage boutique, you can also open 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 an online consignment shop. Though they resell high-quality designer bags for less than brand new, they’re more expensive than bags you might find at a vintage shop.
5. Subscription box
Subscription boxes reached peak popularity when brands like Birchbox hit the ecommerce scene. It’s a flexible business model that lends itself well to a reseller. 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.
How to choose a hosting plan for your reseller business
Your web hosting provider is what enables you to make your website accessible to internet users. It acts as digital storage for the information and content associated with your online store. If you use Shopify for your reselling business, web hosting is included. But some ecommerce platforms (like WooCommerce) require third-party hosting, in which case you’ll need to set that up with a separate hosting provider.
Start your reselling business today
Resellers purchase products at discounted wholesale prices and then sell them directly to consumers. This business model is a low-risk way to dip your toes into owning and operating a product-based business. You don’t have to invest in product development or inventory upfront inventory, and your supplier ships products for you.