Things to know Before You Start a Reseller Business in 2019
Starting a business is always better than working for a fixed salary because there is huge scope for expansion as you grow. You can start as a Reseller. In theory, it is simple. You buy at a lower cost and sell at a higher price and the difference is your profit but it is not that simple.
There are things you should know before you start a Reseller business in India (or anywhere else in the world, for that matter).
You must have a business identity. You cannot grow or sell more on a person-to-person basis. Obtaining a business identity involves registering a company as a proprietorship, limited partnership or private limited company. You would have to obtain PAN card in the company name, GST certificate and a bank account. Privately limited company formation involves other Compliances. You must also have an address. This can be your home address or you can rent office space. Reseller Model
You have various options:
-> Buy from a local or national distributor and sell in your city or region
-> Buy from small producers of products and sell in your own brand
-> Go online and join marketplaces like Flipkart, Amazon and Snapdeal
-> Sell branded products or sell generic apparel and fashion accessories
-> Sell refurbished items
-> Sell odd lots and remaindered goods
-> Sell in a local area where you live or sell across India through ecommerce platform
There are pros and cons to each. You must examine each in detail to know which one you are comfortable with.
You need to do a bit of research before taking the plunge into Reseller business. This involves:
-> How fast a product is selling and competition (mobiles may be hot items but there are thousands of sellers so margins are slim)
-> The margin on a product – if you sell on ecommerce platform you should know that they charge their commission and applicable taxes which could be between 10 % and 30%.
-> If you are buying from a supplier, their policy on returns, timely delivery and delivery mode (prefer a seller who will ship directly to the buyer so you do not have to stock and ship).
-> What do customers want? Do you have something different to offer that others do not?
-> Investment needed. It is expensive to invest and stock items because you invest in the products and in storage as well as associated costs – select a supplier who ships directly to end buyer)
-> Your operational costs – cost of maintaining an office, accounting and other costs of selling.
-> Find out for how much the products you propose to sell are selling and the margin you will get on each product. Branded products have fixed MRP so it is better to select apparels where there is no such restriction and you can add a good margin.
Sourcing and selling
These are two very important factors. The right source is indispensable to ensure you have timely access to products. Most distributors will sell to you and you have to ship to buyers which entails additional costs, eroding profits. Better select a source that will keep products in inventory and ship direct to a buyer as you specify. Selling is the other important factor. E-marketplaces are out of question in such case since they need you to maintain inventory, pack products and hand over to their courier. You would need to explore other avenues for sale such as messaging, chat and social media to find buyers and create a pyramidal sales network.