Explaining Reselling: What Is It and How Do You Do It?

by Alex Feldman

November 5, 2019

If you are looking to use your e-commerce platform for reselling, then you may be weighing up your options. If you’re looking to re-sell software or physical items, you might be wondering whether you are just a distributor for a brand, or if you could be considered as more of a middle-man. Despite appearances, resellers can work quite competitively as they often buy products at a wholesale cost and then pass it on to customers who are searching for more competitive prices.

What is reselling exactly? 

The first element of reselling that should be absolutely clear is that resellers should have a formal agreement with any manufacturer that requires a licence. They cannot and should not sell any products illegally.

The job of a reseller, simply put, is to sell products on behalf of the original manufacturer. It is likely that they will be working with the original creator to help sell this product and ensure that it falls into customers’ hands with ease.  A reseller could include the following type of vendor:

  • Shop chain
  • Independent seller
  • Affiliate company 

In fact, you don’t have to even be working in technology to be a reseller: this term exists outside of the software and hardware field. If you are selling a product that was not created by you, you are indeed a reseller. This could be anything from toys to clothes to collectable items. What makes you a reliable reseller is your relationship with the manufacturer and the ability to purchase products at a wholesale price, without the middle-man. 

Why are resellers so valued?

It is completely understandable to not initially understand what the value of reselling would be. After all, why would you hire someone else to promote your product for you, when the producer could sell it with the most relevant expertise? However, sometimes external retailers have a much more specific knowledge of what a particular audience wants. 

Finding the right reseller involves finding a retailer that can promote the product with expert depth and knowledge. Any company can benefit from excellent customer service, even if it’s a few steps down the chain. Resellers should aim to do the manufacturer justice by expertly selling their products and services, with the same level of professionalism that the original creator would themselves provide. 

Having a close relationship with a reseller is also incredibly important for legal reasons. There are nuances to legality, especially where software licences are concerned. If you are considering becoming a reseller, establishing a strong relationship with the manufacturer is very important for your own security. It helps to establish an arrangement between both your aims and the manufacturers. It will help to maintain your own safety, as you will have an established (and ideally written down) agreement between you on what the terms of reselling are.

What makes a great reseller?

The fundamental basics of a great reseller is someone who has a great grasp of what it is they are selling. Would you buy a product off someone who doesn’t have the expertise or conviction to really offer you the right product? Would you trust someone who had to keep double-checking the basics? Even though the product you’re selling was not originally produced by you, it is important that you are educated to the extent that you know just as much as the original creator. 

If the product you’re selling is hardware, then you need to ensure that it is in excellent condition. The product cannot be covered in scuff marks or dents, and the pictures need to be of an excellent quality. If you are selling products on your commerce website, you will need to invest in the technology to take professional photographs. A Lightbox is one efficient and seamless way of achieving product shots that appear to be taken in front of an infinity wall. They also surround the product with brilliant light so that it looks sharp and high-resolution on the website. This will give customers a sense of control, as they can judge for themselves just how high quality a product it is. 

Is a reseller just a distributor?

The short answer is no. The roles are quite similar in many ways, but they are nonetheless separated by stark differences. Distributors tend to be incredibly close to the customers they sell to. Their job is to understand manufacturer’s core audience. Distributors also do the branding for the manufacturer. They have a responsibility to correctly advertise the product and ensure it reaches the right audience, hence their need to be so close to the customers. With this responsibility, they also have to take inventory of the product. It’s this high level of responsibility for each specific product that makes them quite different from resellers. 

Resellers essentially are just a means of getting the product to the customer; it really is just the act of reselling it. Resellers have a responsibility to get the product to customers but without so much representation of the brand. You would be right in thinking that this approach comes with more fundamental risks, particularly in terms of sales. This is why resellers tend to work with big-name brands and large corporations

Can resellers benefit me?

If you are interested in building your business from resellers, then the cost of resold products can certainly be advantageous. Because resellers work so closely with the manufacturer, they cut out the need for extra costs. Purchasing products from a wholesale price means that the products they sell on are often cheaper and much more affordable. As mentioned previously, reselling can apply to physical products and virtual ones, such as software. If you wanted to invest in effective data back-up software, such as Cloud storage, then a Microsoft Reseller could help you to find the package you are after. 

Have a robust marketing plan

It is very unlikely that you will be the first person to resell the product you are looking to promote on your e-commerce platform. It is, therefore, important to establish yourself as a unique reseller. Here are some questions to ask yourself:

  • What expertise does my business have to offer?
  • What relationship do we have with the manufacturer?
  • How long have we had a strong relationship with the manufacturer?
  • What exact service are we offering to customers?

Being able to answer these questions enables you to find your unique selling point or USP. Being able to pinpoint what edge you have over other businesses will help you to find an audience. When you have settled on what your angle is, it’s important that you establish a marketing strategy. Here are a few marketing strategies to implement alongside your e-commerce platform.

  • Customer service: you should have a contact address and phone number. If you are providing a service with your resold product, your ability to help customers will be part of your marketing strategy – positive reviews are invaluable. 
  • Social media platforms: this is helpful for recommendations and building an online community. It’s also a point of contact. 
  • A helpful website. this should exhibit every aspect of your business. It should break down what you are reselling and why customers should trust you.
  • A blog: this is useful if you are offering a niche service. Providing troubleshooting content and advice will naturally draw your audience to your website. 

Formulate a formal business plan

If you have the knowledge to back your ideas, and the drive to make it work, then you will need to build a structured business plan. It’s one thing to be able to sell software and explain how it’s used, but quite another to transform it into a fully-fledged business. Your e-commerce platform should just be a practical means of getting the product to the customer. Here are the basics of a first business plan:

  • Register with HMRC as a business, so you can be taxed accordingly.
  • Establish a strong relationship with the manufacturer and get a sense of supply and demand. 
  • Set goals for the year and detail how you plan to meet them. 
  • Begin your marketing strategy and continue to build a strong relationship with customers.

Your business plan should adapt and change as you progress and improve. While you did not produce or make the product you are selling, it will still take a business plan to get it into the hands of customers. Not having a plan of action could see your reselling business fold. 

Becoming a reseller is not just about being able to sell someone else’s product for less money. In fact, it involves working closely with the original creator of that product. The reason for this is not only regarding the integrity of the product itself but also the legal issues often associated with it. With products such as software and Cloud programmes, the parent company has an agreement it makes between the purchaser of the software and the creator of the package. A responsible reseller will have taken the time to understand these legal nuances, and will happily work with the parent company to comply with them. Apart from these complexities, what makes for a great reseller is a strategic business person who has a plan to create sales targets and meet them.