Resale involves first purchasing an asset from a wholesaler, then selling that asset to a retail purchaser at a higher price.
To run a successful business as a reseller, you need to:
- Purchase a product for as low of a price as you can, usually in large quantities.
- Ensure that the product is in good condition until it’s sold.
- Find potential buyers of the product as soon as you can, in order to keep inventory costs low.
- Sell the product for as high of a price as you can, preferably a multiple of your purchase price.
Resellers add value by helping wholesalers sell their products without having to find individual buyers. For a farmer, selling oranges to millions of people is both labor and time-intensive. A more productive use of time would be to sell all of them to a grocery chain, and focus on growing more oranges. The grocery stores then take the oranges and sell them to individual buyers at a higher price.
Retailers such as The Home Depot, Target, J. C. Penney, and Ralph’s work in a similar way: they buy products at low prices directly from manufacturers, then sell them at a higher price as soon as they can.
Finding quality products at low prices and managing inventory levels are the keys to successful reselling. Without a regular supply of sellable product at a low enough price to earn a profit, you’ll have difficulty staying in business. As a result, most successful resellers build strong relationships with their suppliers to make sure they keep getting good products at low prices.
To learn more about resale as a form of value, check out The Personal MBA by Josh Kaufman.
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