Do you intend to start a business? Are you intending to venture into a low-risk, high-value business that can quickly generate impressive returns? If so, it might be time you consider a reseller business model.
But before you get overly excited over that business idea, there’s good and bad news for you.
The bad news first: 10% of all startups fail within the first year. Even worse, 80% more collapse later along the way, with most of those that sink attributing their downfall to issues related to lack of a proper solid foundation.
And now, the good news: With a proper blueprint and determination, you can easily sneak into the 10% of entrepreneurs with successful businesses.
In this article, we'll walk you through a step-by-step process of building a successful reseller business in the long term — whether starting a small or a big one. From market research and niche selection to scaling your business, we've put together a reliable startup guide to building your business as a reseller.
And by the way, just so you know, this beginner's guide focuses on general reselling business and not SEO reseller programs. But if you want to be an SEO reseller, take a look at this white label SEO service.
So, without further ado, let's get started with our topic!
Understanding The Basics Before You Start A Business: What Is a Reseller?
A reseller is simply a middleman who connects manufacturers or wholesalers with end consumers. It is a business or an individual who buys commodities from a manufacturer or a wholesaler and sells them to end consumers at a higher price.
One of the benefits of running a reselling business is that it allows you to pursue your entrepreneurial ambitions without investing heavy capital upfront or bearing the risk that comes with manufacturing your own goods.
Plus, with a reseller venture, you have greater flexibility to switch products, markets, and even channels, liberty you usually don’t enjoy readily when manufacturing your products.
9 Steps Every Entrepreneur Should Follow When Setting Up A Reseller Business
A reseller business can be a profitable venture when you do things right. And doing things right has to start with laying the proper foundation for your business.
Here are nine essential steps to follow when setting up a reseller business:
Step 1: Market Research & Niche Selection
Before you dive into selling products, know what to sell. Extensive market research is needed to know what products are in demand.
Get it right at this stage, because any misstep could seal the fate of your business even before you roll it out. The goal is to find products that are high in demand with a decent profit margin and low competition.
Google Trends, Amazon or Alibaba Best Sellers list, and Social Media insights are some of the best tools to use for this task. They’ll provide information as to what's trending.
But in most cases, some of the most profitable niches you need to know include:
- Beauty
- Fashion
- Electronics and accessories
- Baby products
In addition, research your target audience to get insights into their pain points and preferences. It will help you know what area of weakness you can capitalize on when offering your services.
Step 2: Understanding the Reseller Model & Fulfillment
Once you've discovered what products you should resell, choose the type or reseller fulfillment model that best suits your business.
There are several of them:
- Dropshipping: In this model, you enter into a prior agreement with the supplier of the products you want to resell to supply the products to your customers. You then market the products like your own. Once you get a customer, the supplier delivers the product to them, takes their cut, and pays you the remaining amount.
- Retail Arbitrage: In this case, you procure products at discounted rates and store them ready for resell at a profit.
- Online Marketplaces: In this model, you can sell your products on platforms like Amazon, eBay, or Etsy.
When choosing the model to use, ensure that the pros and cons of each are evaluated. It will help you know what will help you run a successful business.
Step 3: Find Reliable Suppliers
Once you've decided what business model to run, look for suppliers. Internet, trade shows, and industry conventions are all great avenues for meeting product manufacturers.
Identify several suppliers of your product before narrowing down the list to get the best.
Here are some factors to guide you when choosing a supplier that can help you reach your goals:
- Product Quality: Choose a supplier who offers high-quality, original products. Do a background check to see what the people they've previously done business with are saying.
- Product Brand: Dealing with products from a reliable brand will increase the chances of business success.
- Pricing: Check the pricing and the minimal order number for each supplier. The goal is to get one that will allow you to resell the products at a profit without the inconvenience of overstocking.
- Terms & Conditions: Check out each supplier's terms of service. This includes payment terms and delivery time frames.
- Customer Service: Choose a supplier you can easily reach and who is ready to listen to you should any issues arise.
Step 4: Create A Business Plan
Creating a business plan may sound obvious, but did you know that 16.8% of businesses operate without one?
That's right — as per a research report by Good Firms.
Being a newbie in this category can be a direct ticket to your downfall. A well-crafted business plan will help you keep track of all the important aspects of your business.
You can go with a simple one, but ensure that it captures:
- An overview of your venture
- The product or service you're offering
- A list of suppliers
- Your financial projections
- Your marketing and sales strategies
- Growth plan
- Your operations and logistics plan
Step 5: Register Your Business
You don't want to fall victim to legal consequences. So, before you begin your operations, first register your business with the pertinent authorities in your area.
There isn’t a fixed procedure for doing this, as it varies from country to country. However, more often, you must select a business name and then register it with the local government authority or applicable regulatory body.
You'll also need to state the type of business (what you'll be selling) and whether you intend to run a sole proprietorship, limited company, partnership, or corporation. It's important that you find out more about the different types of structures and the applicable licenses and permits for the one you choose to avoid legal repercussions.
Of course, an Employer Identification Number (EIN) is also mandatory, so obtain it from the Internal Revenue Service (IRS) if you’re in the US. You will need this number to file your taxes and open a business bank account.
Step 6: Step 6: Setting Up Your Business
Currently, more people opt to purchase things online. Backlinko projections show that eCommerce sales could hit a staggering US$6.86 trillion by the close of 2025, having been at US$4.98 trillion in 2021.
This means if you want to remain relevant in the current competitive landscape, online presence is a prerequisite — even when running a physical store. In fact, do you know that 81% of people who still shop in physical stores will conduct online research before walking into one?
One recent study has revealed this. So, create a nice website and optimize it for user friendliness and search engine visibility. At this point, remember also to choose a nice logo.
Also, remember to set up social media accounts and get all the necessary equipment to run your business. Of course, if you intend to have a physical store, you should have your physical facility well set up at this point.
Step 7: Procurement of Products
If your reseller model requires you to hold inventory, then it's now time to procure your products. Factor in the minimum order number of the supplier you're dealing with and the capacity of your facility when procuring the products.
But for the initial batch, it's highly recommended that you keep it lean. You can increase the order number of items with time as the business picks up.
Step 8: Market Your Reselling Business Online
Once your physical or virtual store is equipped with the products, let the world know what you're selling. It's at this point where marketing comes in.
Proceed and use the marketing channels earlier outlined in the business plan to promote your business. Some of the effective marketing avenues include:
- Social Media: Leverage social media to boost your startup visibility. Facebook, X (formerly Twitter), Linkedin, Instagram, and TikTok offer the best chance to meet and interact with potential buyers.
- Email Marketing: Send weekly newsletters to subscribers detailing your products and offers.
- Influencers: If possible, use celebrities who've built solid reputations in the niche to enhance your brand identity.
- Paid Advertisements: Google Ads and Facebook Ads are other options that can help you reach a wider audience for a fee.
- Content Marketing and SEO: This marketing strategy involves using well-optimized content to help drive organic traffic into what you're selling.
Step 9: Scaling and Growth
You now have your reselling business up and running! Congratulations! But it's every entrepreneur's wish to expand their venture.
As time goes by, you'll get to know what's working for your business and what isn't, making it easier for you to do that.
You may choose to expand your product range, increase marketing efforts, or set up additional stores in different locations. Whatever strategy you decide on, ensure that it aligns with the goals outlined in your business plan.
Pros & Cons of Reselling Business
Before becoming a reseller, know the benefits and drawbacks of running that kind of business.
Pros:
- Low start-up costs
- Wide range of products to choose from
- High profits if you do your market research well
- No manufacturing or production costs
- Flexibility for running it part-time or full-time.
Cons:
- High competition
- Little control over product quality and prices
- Reliance on suppliers for timely delivery of products
- Potential legal issues if you don't follow regulations.
Conclusion
A reselling business can be rewarding as long as you've set the right foundation and are doing everything else correctly. But then, like any other business, patience, time, and effort remain prerequisites for success.
Keep in mind that with the changing landscape, you must recognize the importance of constantly monitoring the market. This will help you know where to update your business. Your entrepreneurship journey can yield great rewards with the proper strategies in place.
