How to become a reseller: A beginner’s guide for aspiring entrepreneurs 

Starting a business can be both exciting and daunting, especially when you’re on a tight budget. The more money you have, the easier it is to get started. But let’s face it, sometimes we’re always just a little short on the financial side. In fact, many aspiring entrepreneurs have limited capital to develop their own products. 

However, there’s a solution that allows you to enter the market without hefty costs – becoming a reseller. In this guide, we’ll explore how to become a reseller and strategies for success in the ever-evolving world of reselling. 

What is a reseller? Understanding the reselling market 

A reseller is a middleman or middlewoman in the business world. It’s someone who buys products from manufacturers or wholesalers and then sells them to end consumers at a higher price. This business model connects suppliers and customers. 

It’s a straightforward process that deals with: 

1. Identifying products that are in demand, things that people want to buy. 

2. Finding reliable suppliers who can provide those products to you at a reasonable price. 

3. Setting your own prices, making sure to add a little extra so you can make money when you sell them. 

4. Promoting and selling these products to your target audience. 

But before you can start reselling, it’s important to understand the market you’re entering. You might even have questions like “Is being a reseller profitable?”, “is the reselling market growing?” or “Is starting a reselling business sustainable?”. 

You don’t need to worry. The global resale market is expected to grow to $64 billion by 2024. It’s one of the fastest-growing markets, especially with the rise of eCommerce and online shopping. 

9 steps to setting up your online resale business 

Starting a resale business might sound a bit intimidating, but it’s actually straightforward. Follow these steps to start your reselling business: 

Step 1. Register your business and get a license 

You want to establish your business as legitimate so your customers can trust you. It also allows you to collect and remit sales tax (if applicable), which simplifies your accounting and tax reporting. But before you can register your business, you’ll need to decide on its legal structure. The most common options for resellers are: 

• Sole proprietorship. This is the simplest structure, where you and your business are considered one and the same. You report your business income on your personal tax return. 
• Limited liability company (LLC). An LLC offers a degree of personal liability protection and flexibility. It’s often a good choice for small businesses. 
• Corporation. Corporations provide the most significant liability protection but involve more administrative requirements. They’re typically suited for larger businesses. 

Next, you need to choose a business name. The more unique and meaningful it is, the better. Make sure it’s not already in use by another business in your state. Otherwise, you may stumble on some copyright or trademark issues. Plus, it will confuse your potential customers. 

Depending on your chosen structure and where you live, you may need to register your business with the appropriate government authorities. This typically involves filing paperwork, which can often be done online. You also need to pay a registration fee. 

Once you’ve registered your business, consider an Employer Identification Number (EIN). It’s like a Social Security number for your business. It’s not always required for resellers, but it can be useful, especially if you plan to hire employees or open a business bank account. You can obtain an EIN from the Internal Revenue Service (IRS) for free. 

Step 2. Comply with state law 

Your location and the type of products you plan to sell might also need specific licenses or permits. For example, if you plan to sell clothing, you may need a retail sales license. If you’re selling food products, you might need a food handler’s permit. 

Each state within the US has its unique set of rules and criteria you need to follow. These regulations encompass various aspects of operating a business, such as: 

• taxation 
• permits 
• licenses 
• other legal obligations 

Non-compliance with state law can lead to legal repercussions, fines, or even the forced closure of your business. So, research your local and state requirements to identify which licenses and permits apply to your business. Consult with your local authorities or regulatory bodies. 

Step 3. Apply for a resale permit 

A resale permit is a reseller’s golden ticket. In the US, it allows you to buy products from suppliers without the need to pay sales tax. However, resellers are responsible for collecting sales tax from their customers and remitting it to the state. 

Check whether you meet the eligibility criteria for obtaining a resale permit in your state. Usually, your registered business needs to involve selling taxable goods. If your business doesn’t operate in other states, you only need to apply for your home state, otherwise include all other states your business operates in. 

Once you’ve done that, prepare the necessary documentation and information for your application. This may include: 

• your business’s legal name 
• business structure 
• federal employer identification number 
• contact information. 

Then, identify the relevant state agency responsible for issuing resale permits. In many states, this is the IRS. You can usually find this information on your state’s official government website. Obtain the resale permit application form from the agency’s website or by contacting them directly. Fill out the application form accurately and completely. Be prepared to provide details about your business and its activities. 

Note that some states may require you to pay a fee when applying for a resale permit. Ensure that you include the required payment with your application. Check the agency’s website or guidelines for fee details. 

Recheck your forms and be sure all the information is accurate before submitting your completed application, along with any supporting documents and the application fee, to the designated state agency. You can typically do this online, by mail, or in person, depending on the agency’s procedures. 

Now all you have to do is wait while the state agency reviews its accuracy and completion. Processing times may vary, so be patient. Once your application is approved, you will receive your resale permit. This permit typically includes a unique permit number, which you’ll use when making tax-exempt purchases from suppliers. 

Be sure to keep your resale permit in a safe and easily accessible place to avoid paying sales tax. Since resale permits may need to be renewed periodically, stay updated on any renewal requirements. 

Step 4. Source your products 

When you source your products, you’re finding items to sell to your customers. It’s the heart of your reselling business. You’ll want to partner with wholesalers and distributors. They buy goods in bulk from manufacturers and then sell them in smaller quantities to businesses like yours. Consider these factors when you’re picking your wholesalers: 

• Variety. Wholesalers and distributors often have a vast and diverse product selection, allowing you to explore different product categories and niches. 
• Competitive pricing. Buying in bulk can result in lower per-unit costs, enabling you to maintain healthy profit margins when reselling these products. 
• Reliability. Established wholesalers and distributors typically offer reliable and consistent access to products, helping you meet customer demand. 

By forming good relationships with wholesalers and distributors, you can get better prices and access exclusive products. Communicate well, deliver orders on time, and be dependable. 

However, not all products make the same profit. Research the market to find products in high demand and follow trends that customers are interested in. Don’t forget to keep an eye on the competition! It’s often better to enter a niche with moderate competition rather than one oversaturated with sellers. 

Step 5. Set your margins 

Let’s assume you’ve got your preferred product. It’s niche enough that you have little competition and you’ve found the perfect wholesaler as your source. One other crucial factor to consider is your profit margin. 

Decide how much extra money you’ll add to the cost of the products when you sell them. You want to make a profit, but you also want to be competitive. Finding that sweet spot can be a bit tricky, but it’s essential for your success. Think about: 

• how much the product costs 
• how much similar products are selling for 
• how much you want to earn. 

Start by calculating the total cost associated with acquiring and selling a particular product. This includes the purchase cost from your supplier, shipping fees, any applicable taxes, and other expenses related to the product’s procurement. 

Then, research the current market prices for similar products. You need to understand the price range within which customers are willing to pay and assess your competitors’ pricing strategies. If you go beyond this range, your customers will rather buy from your competition. 

Then, decide on the amount of profit you want to earn from each sale. Your profit margin should cover not only your product costs but also your business expenses and desired income. Consider the following factors as you set your prices: 

• Product quality. If you offer higher-quality products or unique features, you may be able to charge a premium price. 
• Customer perceptions. Consider how customers perceive the value of your products and whether they are willing to pay more for certain benefits. 
• Shipping and handling. Account for any additional costs associated with shipping and handling, as these can affect your pricing strategy. 
• Competitor analysis. Continuously monitor your competitors’ prices and adjust your margins accordingly to stay competitive. 

Now, businesses have different pricing strategies, and these also depend on their product offerings. Consider these strategies and determine which fits your resale business best: 

• Cost-plus pricing. Calculate your profit by adding a specific percentage (markup) to the product’s total cost. For example, if your cost is $10 and you want a 40% profit margin, you’d set the price at $14. 
• Value-based pricing. Set prices based on the perceived value of your products to customers. If your products offer unique benefits or solve specific problems, you can justify higher prices. 
• Competitive pricing. Price your products in line with or slightly below competitors’ prices to attract price-sensitive customers. 
• Dynamic pricing. Adjust prices based on market demand, seasonal factors, or inventory levels. 

Step 6. Establish a web presence 

Nowadays, customers prefer to shop in the online marketplace so having a place on the internet is a must. By 2025, US online shoppers are projected to reach up to 285 million. That’s a demographic you can’t afford to miss. 

Consider creating your own eCommerce store for your reselling business. It allows customers to explore your product catalog, learn about your business, and make transactions — anytime, anywhere! 

Launching your website sounds complicated, especially when you’re not tech-savvy. Thankfully, there are reliable online tools that make website creation convenient. We’ve laid down the steps in a simple list: 

• Choose a domain name. Select a memorable and relevant domain name like: www.yourbusinessname.com for your website. Make sure it reflects your business and is easy to remember. You can use our AI Domain Generator tool if you’re having trouble picking. 
• Select a website builder. Utilize a website builder provided by your chosen web hosting company. Web.com offers pre-designed templates for various industries with simple drag-and-drop features, making it easy to create a professional-looking website without coding skills. 
• Design your website. Customize your website’s appearance by adding your logo, brand colors, and product images. Ensure that the design is user-friendly, with clear navigation menus and product categories. 
• Add your product listings. Create detailed product listings that include product descriptions, prices, high-quality images, and any relevant information to push customers to buy your products. 
• Set up an online shopping cart. Integrate an online shopping cart system that lets customers add products to their cart and proceed to checkout seamlessly. Ensure that the payment process is secure by adding a secure sockets layer (SSL) certificate. 
• Optimize for mobile devices. Make sure your website is responsive and optimized for mobile devices, as many customers browse and shop using smartphones and tablets. 

Don’t forget to regularly update your website with new product arrivals, promotions, and informative content. Then, monitor website traffic and customer behavior using analytics tools to make improvements based on data. 

But if you’re still confused about the website creation process, you don’t need to worry! You can partner with professional web developers to help you set up your online store without hassle. 

Step 7. Market your reselling business 

Once you have products to sell and a website to sell them on, you’ll need to let people know about your business. This is where marketing comes in. Tell the world who you are, what you sell, and why they should buy from you. There are several ways to do this: 

• Social media. Platforms like Facebook, Instagram, and Twitter are great places to share your products and connect with potential customers. You can post pictures, videos, and updates about your business to get people interested. 
• Content marketing and SEO. Content marketing helps customers understand why your products are special. Search engine optimization (SEO) is a bit technical, but it’s about making sure your website shows up when people search for products like yours on Google. The more content you make, the easier for search engines to rank you. 
• Email marketing. Email marketing lets you keep in touch with your own customers. You can send them emails about new products, special deals, and helpful tips. It’s a great way to build a relationship with your customers. 
• Pay-per-click ads (PPC). PPC advertising is a targeted approach where you create online ads and pay only when someone clicks on them. This means you reach potential customers who are actively interested in products like yours, making it a cost-effective way to drive traffic to your website and boost sales. 

You can check out Web.com’s suite of online marketing tools. It consolidates these tools and services in a single place, making digital marketing quick and easy for your reselling business. 

Step 8. Manage your operations 

Now that you’ve got everything set up, it’s time to run your business. Smooth operations keep your customers happy, and the happier they are, the bigger the chances they’ll come back and make more purchases. 

Keep track of how many products you have in stock and reorder them when you’re running low. This way, you can avoid running out of products and disappointing your customers. If you’re constantly running low on your stocks, they’ll lose trust in your business and go to other retailers. 

Besides your inventory, smooth order processing and timely delivery can affect your business’s reputation and your customers’ trust. Think about your product’s packaging, shipping costs, and shipping method. Make sure it arrives on time and in good condition. 

Finally, treat your customers well by providing excellent service. Answer their questions, help them if they have issues, and be polite and professional. As we previously discussed, happy customers are more likely to come back and buy from you again. To reward your regular buyers, you can create a customer loyalty program and provide incentives. This also encourages more customers to your shop. 

Step 9. Scale your business 

You’ve got everything set! As your reselling business grows, you can explore ways to make it even bigger. 

If you’re doing well with one type of product, consider adding more products to your catalog. Diversify your product offerings. It’s best to add complementary products that align with your niche. You can also explore dropshipping as an option. This lets you offer a more extensive range of products without the need to hold inventory. Partner with suppliers who handle inventory and shipping to reduce your operational workload. 

You can also expand your presence by selling on multiple online marketplaces, such as Amazon, eBay, or Etsy. These platforms let you reach beyond your local market with plenty of international customers using them. Research and tailor your offerings to meet the preferences and demands of global consumers. 

When your market grows, your responsibilities become more demanding. With artificial intelligence (AI) and automation tools currently on the rise, they’re the perfect solution to your growing tasks. Implement them into your systems to streamline your operations. This can include automated order processing, inventory management, and customer support. 

Continuously monitor your business’s performance and evaluate the effectiveness of your growth strategies. Be prepared to adapt and refine your approach as market dynamics change. Top it off by building strong relationships within your industry and networking with other resellers.  

Collaborate with fellow entrepreneurs to share insights, trade products, or even join forces for marketing campaigns. You’ll want as many connections as you expand, and networking can open up more opportunities for growth and collaboration. 

Start selling online with your own reseller business 

Becoming a reseller is a smart way to start your own eCommerce business when you have limited resources. It requires less initial investment, offers product variety, and allows for quick entry into the market. But the world of reselling is constantly changing, so keep an eye on future trends and emerging technologies to stay ahead. 

As you embark on your reselling journey, consider partnering with Web.com to achieve your entrepreneurial goals. Create a successful online store and kickstart your reselling business’ success with our online solutions.