The Tricky Business of Reselling — and How You Can Get Good at It
Close to half of Americans considered taking on a side gig after the pandemic began, according to an October 2020 LendingTree survey. And side hustlers believe the key to making money is spending money. According to the survey, 45% of those with a side gig took on debt to finance it. So if you’re planning to start a reselling business, you should have some funds on hand.
Because reselling can equal a lot of upfront costs and effort, how can you come out ahead? To find out, GOBankingRates interviewed the experts. Here’s everything you need to know.
How To Get Started
At first, you may not have a lot of money to invest in a reselling business and that’s OK. There’s a workaround.
Tegan Phelps, personal finance expert and author of The Blissful Budget, runs a full-time eBay business from her home with her husband and had this advice: “The key to growing a successful reselling business is to start small,” Phelps said. “For instance, instead of trying to buy a ton of inventory upfront, consider selling some of your own household items that you no longer use. Then use that money you already earned to buy more items to resell.”
What Sites To Use
When it comes to listing your items for resale online, there are plenty of sites to choose from — from eBay to OfferUp. So which ones should you use?
Phelps has some firsthand insight: “As a reseller, you will want to choose one or two platforms to use and stick with it. EBay is the most profitable place to resell for smaller, easy-to-ship items, while Facebook Marketplace is the best place to locally resell large, heavy items. If you list your items on too many platforms, you will quickly become unorganized and will forget where you have items listed. It’s important to keep track of what you are selling and where you are selling each item.”
Time Commitment Involved
If you’re doing this business as a side gig at first, you likely don’t have unlimited time to invest in it. The good news is that you can put as much or as little time as you want into it.
“Reselling is a job that can be done completely part-time, however the more time you put into it, the more potential profits you can earn,” Phelps said. “Keep in mind the time it will take to drive around to garage sales and thrift stores, search for items to resell, and then come home to clean them up for photos. It also takes time to successfully research each item to understand how much to list it for. Then you need time to list the item correctly so that customers are tempted to click on your listing and buy your product.”
Alene Laney, personal finance expert at Pennies to Paradise, spent a summer reselling items as a new stay-at-home mom. She offered some advice to keep in mind if you buy items to resale that need repairing.
“Be wary of the amount of time it will take to repair an item you want to resell,” Laney said. “Refinishing furniture, for example, takes a lot of time and practice to get right. Plus, your tastes are going to be very different from a buyer’s, so you might as well just fix the drawer for $7, save yourself 10 hours of work, and call it good.”
Rob Stephenson, owner of Flea Market Flipper, has been reselling for 25 years. He said that while reselling doesn’t have to take a huge time commitment, one of the most valuable lessons he’s learned is to be consistent with sourcing items and listing them.
Here’s a look at the potential costs you’ll run into when you start a resale business. Unfortunately, there’s no way around it — you will have to spend money to make money.
“This business can get tricky because you need to continuously set money aside to buy more products,” Phelps said. “How much you set aside for inventory strongly depends on how much you plan to sell and where you are looking for items. If you are visiting garage sales or thrift stores to find products to resell, you should try to keep at least a few hundred dollars in your pocket just in case.”
But buying items for resale isn’t the only cost you’ll have to factor in.
“Additionally, you will need to make sure you are setting aside extra money for fees and taxes,” Phelps said. “For example, eBay takes a percentage of every sale you make.”
Stephenson said that on eBay the selling fee is roughly 10% per item, but you can build those fees into your selling price to offset them.
“You also need to be mindful of shipping costs,” Phelps said. “If you offer free shipping on your items, you need to determine the weight and measurements of the items you purchase to determine how much you will need to pay in shipping fees.”
Phelps offered this final nugget of wisdom when it comes to reselling costs: “All of these costs and fees will eat into your profits,” she said. “So to make sure you are profitable on each sale, it’s important to keep track of all your costs and understand how much you will earn on each sale.”
Potential Financial Gain
Of course, the reason you’ll start this business is to earn money. Here’s what you can expect.
“After some experience, it’s typical to earn anywhere between $500-$1,500 per month in profits if you are reselling part-time,” Phelps said.
Stephenson said that back when he resold items as a side hustle, he invested five to 10 hours per week and made $40,000 per year, which would equal about $3,300 a month in profits.
How much you’ll make reselling depends on various factors, such as what you sell, the fees you pay and your profit margin.
Jim Pendergast, senior VP for AltLINE Sobanco, recommends aiming high and sticking to the 1-4 rule to maximize profits and defray expenses, “For any item you purchase, sell it for four times your purchase price, and any gadget that you can’t sell for four times the amount, put aside,” he said. “Though you (ultimately) may not get the amount you want, by charging four times as much, you’ll have wiggle room for your new expenses.”
- Jaw-Dropping Stats About the State of Retirement in America
- Big Personal Goals That You Should Put Your Money Toward
- 20 Home Renovations That Will Hurt Your Home’s Value
- 27 Things You Should Never Do With Your Money