Create a Small Business Reselling & Flipping Retail Products
Extremely profitable businesses or side hustles can be created to resell or flip retail products online. There are many different places where you can buy new and/or used goods at really cheap prices. You then resell these products online through online marketplaces like Etsy, Ebay and Amazon or through your own website.
This is a business model that almost anyone can do. It is a home-based business, but it still involves going out in the world on a regular basis, which can be appealing to those that enjoy shopping or talking to a lot of people. I’ve created this post to teach you how can you start your own small business reselling and flipping retail products online.
Reselling Business Basics
The basic strategy behind this business plan is to buy retail products for cheap prices and resell them for more, usually online. However, the real secret to make this a successful business is research.
If you blindly buy products, it’s really easy to end up with a massive amount of inventory that you have trouble selling. Instead, you want to individually research products online before you buy them to help reduce the odds of this happening.
Try to find a product online and see what others sell it for to figure out a rough potential profit. I also highly recommend using certain online marketplaces, like eBay, to research successful sales on products. When you search on eBay, there are filter options that allow you to search sold items instead of active listings. Anyone can list a product for sale at any price they want, so others trying to sell your item for a certain price doesn’t really mean anything. However, when you can base this price on what other people have actually paid for this item recently, that is much more reliable info you can use.
Inventory Storage & Shipping
Before I dive into talking about how a product reselling business works, there’s one thing for you to consider that is extremely important. Where will you operate this business in your home? You’ll need storage space for inventory that you buy, somewhere to take pictures of the items, and then an area to package and ship sold goods to customers.
For the average household, there is often not this amount of extra space available to use for this type of business. It can really disrupt your house to have a storage and shipping area set up in the middle of your living room. If space is extremely limited, you may need to restrict yourself to buying and selling very small items.
Another potential option if you own your house is to consider buying some type of additional building. This could even be something like a storage shed, as long as you’ll have enough room for storage and working in it. You also want to ensure that your goods will stay free from bugs, dirt, water, pets and smoke. Anything that gets damaged before selling it will simply be lost profits.
See a related article for more information: How to Ship E-Commerce Goods.
Where to Buy Products
One of the best things about this type of business is that no matter where you live, you likely have a lot of nearby options that you can use to buy items to flip online. Most of the places you’ll want to shop for items will be in your local area. Thrift shops / secondhand stores, yard sales, flea markets and liquidation auctions will be the most common options you can find almost anywhere.
It’s possible to even find the items to buy online, such as on Facebook Marketplace. However, these purchases will typically still involve meeting the seller in person to complete the transaction.
Sometimes you can even buy items from retail stores. Deeply discounted products can potentially be resold online for standard retail prices. Products with limited availability are also great choices when you can find them. When demand outpaces supply, people will buy the items online when they can’t find them in local stores.
Business Expense Deductions
I’m not aware of how income tax laws work in other countries, but in the United States, small business owners really need to put extra effort here to help save money on a potentially big tax bill at the end of the year. The income that you make from reselling and flipping products is taxable. If you simply report that income on your tax return, you’ll pay much more in income taxes that you should pay.
This applies to all businesses, but a reseller business in particular has a lot of expenses. When you sell a product online, you had to spend money in numerous ways to be able to offer that product. First you drive in your car to various stores to find the items – that costs gas and wear and tear on your vehicle. Then you buy the products. You also spend money on shipping supplies, like boxes. You pay more money to ship the packaged item and spend money again to drive that box to the post office. You’re even spending money using a portion of your home as a home office.
All of those expenses that go into a business are tax deductible. The one exception is vehicle costs. You want to track the mileage you drive doing work for your business and not actually track what you spend on gas and maintenance. All other business expenses and your vehicle mileage should be tracked religiously. These expenses are then reported to the government on your tax return. They will drastically reduce your income tax liability, so you only end up paying taxes on the profits from your business.
Online Marketplace Selling
Once you have bought inventory, you just need somewhere to try to sell the items. One of the easiest methods to do this, especially when you’re first getting started, is by using various online marketplace websites.
Ebay, Etsy and Amazon are the most commonly used since they have large audiences that already look for items to buy on those sites. Even brand-new sellers can post items on a site like eBay and still get sales.
When you’re first getting started, I recommend using eBay and Etsy. Amazon does have a lot of traffic, but their marketplace is much more complicated. With eBay and Etsy, you get your own product listings and can even have an online shop of your own. With Amazon, you share listings with other sellers, so it’s much more competitive and requires a lot of experience to navigate the system successfully.
Your own website can also be a great place to list your items for sale. It may take you a while to build up an audience on your site so you can get regular sales from it, but I still highly recommend making this a part of your marketing plan for a reseller business.
Set up an email newsletter list that you can build using your website. If you sell on various marketplaces, include a note with each box directing people to join that newsletter to get notified when you release new items. You can then list products on your own website to sell, and send out an email blast to let your customers know when you restock.
There are numerous advantages to selling from your own site. You actually own the site, so your business doesn’t solely rely on third-party companies to exist. You also get to build your own audience to help grow sales over time. It’s also simply more profitable too. Online marketplaces can charge hefty fees to sell on their sites, but you won’t pay that fee at all on your own website. You only pay fees with your payment processor, like PayPal, when you sell on your own site. That can mean 3%-4% transaction fees per sale instead of 12% that you’ll likely pay for eBay sales.
Certain types of items may be able to be resold locally. However, this will often depend on you getting an amazing price to buy the product or having a product that is in high demand. If you buy goods in bulk through liquidation auctions like a storage locker auction, you may be able to sell some of your products locally.
You may be able to sell a product for more money online, but there can be some cases where it’s simply easier and preferrable to try to sell something locally. Larger items that have higher shipping costs are much easier and cheaper to sell in person.
Some people may even decide to set up a local retail store eventually, especially if they end up with a really large amount of inventory that they’re unable to sell fast enough online. This likely won’t work for people that buy single items locally to resell though. However, it can work if you buy lots of items in bulk from auctions.