Everything You Need to Start an Online Reseller Business
Everyone wants to start a business but not everyone has the budget nor the ingenuity to come up with an original product (and the means to manufacture it). However, aspiring entrepreneurs can still use other business models that’ll allow them to sell goods and earn a profit. One of the most popular and easiest business models to get into today is reselling. Reselling is the act of buying goods from a supplier and selling them again at a higher price for profit.
Resellers are categorized based on who they buy their products from and how much they buy them for: distributors are often bound by a contract and work directly with manufacturers to sell their products, usually getting exclusive deals and lower prices as a result; wholesalers buy products in bulk for a lower price but are not bound to manufacturers and can buy from anywhere; retailers are businesses that buy products from distributors and wholesalers and sell them to consumers; and lastly, casual resellers do not necessarily have a registered business but sell products bought from retailers or items they already own.
In the Philippines, reseller businesses have become very popular with the boom of online marketplaces like Shopee and Lazada. This is hardly surprising as 31% of Filipinos surveyed in 2020 by Rakuten Insight said they had shopped online multiple times each month. Reselling has become a flexible and affordable way for many home-bound individuals to earn income, especially at a time when physical businesses have closed due to the pandemic.
“Reselling has become a flexible and affordable way for many home-bound individuals to earn income…”
The best thing about reselling is that no matter your budget, you can start a reseller business. Take for example, Audrey Sale of wearThalia who was able to start her own online business reselling accessories on a modest student budget. Like most students during the pandemic, Audrey was stuck at home taking classes online and found herself with some extra time and a business idea in mind. She started a small curated accessories business where she procured fashionable products that fit her brand’s aesthetics and sold them at a profit online. Gradually, her business grew and she ended up creating her own website and has so far gained over 2,000 followers on Instagram.
If you have a larger budget and want to go big, you can choose to partner up with multiple local and international brands like what BeautyMnl has done. With over 45,000 beauty, health, and lifestyle products available through their website, they have become one of the most popular providers in the beauty industry in the Philippines.
Whether you want to start big or small, anyone can create a successful business through reselling.
Reseller essentials
If reselling is something you’re interested in then read on for our list of essentials for starting a reseller business.
1. Capital
Reselling has a relatively low overhead (i.e. a business with low fixed operation costs), but as with all businesses, you’ll still need some capital to get started. Depending on your starting capital, you can begin small by buying and selling cheap products like trinkets and accessories, or go big by reselling expensive products like appliances and other machinery. Always make sure to research all the expenses involved with the products you’re planning to resell. Some products will require you to pay for specific storage, maintenance, shipping, and possible loss should they not be sold within a certain period of time (due to deterioration). All these factors may cost you more in the long run, so be sure to check everything beforehand.
2. Product sourcing
Since you’ll be reselling products that have already been manufactured (also known as finished goods), product sourcing will be one of your biggest concerns. To find suppliers or manufacturers, you can look through newspapers and printed ads, use your personal network for possible leads, research the market using the internet search engines and social media platforms, or join government programs that provide advice and financial help for new entrepreneurs. If you’re just starting out on a small budget, you can resell old or unused personal items or buy discounted goods from retailers and sell them at a higher price. Sourcing products is easy if you know where to look.
3. Storage
As a reseller, you’ll need space to store your inventory. If you’re a small-time reseller then finding an empty nook or room at home should suffice but for larger businesses with more inventory or bigger products, you’ll need to buy or rent a warehouse for storage. If neither fits your business model, then consider dropshipping. Dropshipping is an order fulfillment method where the reseller enters into an agreement with a supplier so that the reseller does not directly handle or store the inventory. Instead, the supplier will store and send products directly to customers when they are notified by the reseller. This model will also help businesses from overbuying unnecessary inventory. However, dropshipping often involves contractual tie-ups and minimum order quantities.
4. Shipping and packaging
You can open a physical store or go online to sell your products. Should you choose the online route, then you’ll have to find ways to get your products safely to your customers. This is where shipping and packaging come into play. When deciding on a shipping carrier for your business, consider the scope of each carrier’s service. Find out their limits in terms of weight capacity, shipping schedules, vehicle types, area coverage, eligible cargo, performance history, and rates.
For packaging, choose materials that will secure your products throughout the whole journey. If you’re shipping fragile items, make sure to allocate additional budget for bubble wrap or styrofoam. For food and beverage, choose spill-proof packaging that will keep your products at an ideal temperature. Tape, boxes, waybill printers, stamps, and even weighing scales are some of the packaging essentials you’ll most likely need.
Choosing the right shipping carrier and packaging will help you avoid disappointed customers and unflattering reviews that could negatively affect your business in the long run.
5. Permits
Apply for the necessary permits to legitimize your business. Having the proper accreditation improves customer trust, which in turn increases sales. Check the list below for government institutions from which you’ll need to secure your permits from. Complete the necessary requirements as indicated and you’re ready to go!
- Department of Trade and Industry (DTI)
- Securities and Exchange Commission (SEC)
- Bureau of internal revenue (BIR)
6. Platform
You can have lots of great products to sell, but if you don’t have the right platform to sell them on, they won’t be going anywhere. Business is all about being seen by the right audience after all. You can open your reseller business in your front yard if you’re a casual reseller, or open shop in a market square or mall, maybe even rent your own standalone store somewhere with good foot traffic, especially if you’re a retailer or wholesaler. You can also enter into a consignment agreement where you’ll let a third party sell your goods and in turn receive a percentage of profits for every product sold. However, selling in front of your home is limiting, renting a physical stall or store can cost a lot, and consignment only works if you’re willing to leave your entire inventory to someone else’s business strategy.
Thankfully, we now have the technology to open a business without the need for a physical store. Through online marketplaces and ecommerce platforms, resellers can earn money quickly and easily, even without having to contract a third party. All you need is a smart device, an internet connection, and some ecommerce know-how (something we can definitely help you out on!). With a platform and a few ecommerce tools, resellers can post their products online where everyone can see them, keep track of inventory and orders easily, and get accurate data analyses to help them market products more effectively.
Tips for success
Now that you’ve read about the essentials of starting a reseller business, here are some tips on how to let your business grow and thrive.
✅ Check out the competition
See what the competition is like (i.e. how many there are and who they are), find out how they’re marketing themselves, and note down their prices. As a reseller, you’ll have other stores selling the exact same products, so you’ll have to stand out using any means (other than product originality) like price, promotions, and user experience (UX). It’s also good to check if there are already too many sellers with the same product. It’s very hard to penetrate an already overly saturated market, and if that’s the case, you might find more success by reselling a different product altogether.
✅ Market and promote your products like a pro
Use good quality product photos that will immediately catch customer attention, utilize promotions and discounts, optimize your website for search engines, and allow users to post reviews and share your product pages online.
✅ Communicate effectively
As a reseller, you will most likely be coordinating with various groups of people including suppliers, shipping carriers, and customers. Communication here is very important as a simple mistake can lead to huge losses, especially when the error involves numbers. Make sure to be clear and concise. When communicating with your customers, be professional but also helpful. Customers do not have direct access to the products for inspection so many will resort to asking you for details. Remember to manage their expectations. If you’re selling thrift products, indicate any flaws and be honest with the items’ condition to maintain customer trust.
✅ Manage your time well
Take note of delivery dates and shipping schedules and stock up before your inventory is completely sold out. Doing these simple checks will ensure that your business runs smoothly and help avoid any long waiting times for both you and your customers. Managing time properly builds up your reputation and improves your business operations.
✅ Be consistent
By consistency, we mean regularly adding products to your store and making sure that customers have something to look forward to. Doing so will keep your brand at the top of their mind when they’re shopping. If you don’t plan on selling a variety of products, make sure to maintain interest through visibility campaigns and promotions. Schedule social media posts and use ads accordingly.
✅ Resell products that are in demand
Do your market research for products that will sell. For example, in 2021, athleisure clothing, home improvement items, gym equipment, essentials, and medical supplies have become high in demand due to the increased amount of time people are spending at home.
Use a smart, user-friendly platform
Here’s our biggest tip yet: Use a platform that can offer your customers the best user experience.
As a reseller, you’re constantly vying for the top spot among competitors in the market. And if you’re not developing your own original product, that means you’re going to have to offer additional perks like a fast website, hassle-free checkout, promotions, and overall great service. Fortunately for you, you can do all of that with Cafe24.
Cafe24 is a free web-hosting platform that lets you create your own online store for any kind of business. It offers various responsive themes that will work on both PC and mobile devices, and if you want to design and code your own, it also has Smart Themes that lets you edit the HTML while also optimizing your pages to load faster.
But wait, there’s more! An all-in-one dashboard allows you to see relevant store data at a glance including sale status (orders, payments, refunds), order fulfillment details (awaiting payment, preparing for shipment, awaiting shipment, in transit), cancellations, exchanges, returns, and refunds. This results in better and more efficient order management, fewer mistakes, and happier customers. You can also install additional apps for every need, whether it be a sticky checkout button that’s always visible so customers can make a quick purchase or a smart display that shows the most popular products and variants on your website.
Luckily for every business-minded Filipino, Cafe24 is now available in the Philippines through its global platform. Now you can stand out from other resellers and be at the top of your game.