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Newsletter: How to get into the world of buying wholesale and reselling

Boxes of goods are sorted in a store's staging area
To avoid trouble, make sure to legally purchase your products from legitimate sources.
(Myung J. Chun / Los Angeles Times)

Good morning. I’m L.A. Times Business reporter Ronald D. White, filling in for Rachel Schnalzer to bring you our weekly newsletter. Getting something on the cheap and persuading someone to take it off your hands for more — that’s a time-honored hustle. After the pandemic shut people inside and wiped out jobs, the gig got supercharged.

Lots of people got into reselling common consumer products, and demand skyrocketed as some goods became difficult to find or new remote-working and remote-schooling needs developed.

Interested?

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There are dozens of websites on which to sell merchandise, whether they’re items you already own or, to take it up a notch, a stream of goods you acquire from somewhere else at a cost that’s low enough to make a profit when you unload them.

There are the big generalists — including EBay, Amazon and wholesale site B-Stock — and a wealth of specialized online marketplaces for books, vintage clothing, jewelry and other things. Most sites have basic get-started guides and communities of sellers in which tips are shared.

As long as the merchandise has been legally purchased, retailers can’t prevent you from reselling it.

Some retailers require resellers to deface labels, bar codes and QR codes. And there have been instances in which brand owners issued cease-and-desist demands, but those rarely appear. Hang on to sales receipts, however, just in case.

There is one way folks involved in reselling can get themselves into serious trouble, and that is by not being careful about where they obtain their goods.

Selling fake or stolen items is not only illegal but also wrong and can be downright dangerous. A simple internet search will turn up stomach-churning cases involving counterfeit electronics that were faulty or even fire hazards and bogus brand-name cosmetics containing bacteria and feces.

How do I get products to resell?

Make sure to buy from legitimate sources. One is B-Stock, which acquires its goods at liquidation prices from big-name retailers and websites.

If you plan to buy from wholesaler sites such as B-Stock, you will need a resale certificate with a sales tax number. That allows you to avoid local sales taxes when you buy, which lowers your costs. The resale certificate requirements vary among states, but California and several others accept the Uniform Sales and Use Tax Resale Certificate from the Multistate Tax Commission.

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To resell items via a site such as EBay, you first have to register on the site by creating a business or personal account. You then list your items for sale with descriptions and photos.

In November, EBay launched a partnership with wholesale liquidator Bulq that lets resellers tap into items customers returned to Target and other big retailers. Stores often don’t bother returning the items to their own shelves because it’s cheaper to hand them off to a liquidation firm.

Is this a guaranteed path to success?

No. I did talk with folks whose resale businesses are thriving. But when you’re considering whether to get started, a big thing to remember is that it involves risk. Profit is not guaranteed, and if you’re unlucky, you might end up losing money.

Are there big upfront costs?

Not necessarily. Before some people began buying in bulk, by the cargo pallet or truckload, they started out very small.

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B-Stock recently surveyed 145 resellers to see how their businesses fared during the first 13 months of the pandemic and found that 25% did not require any financial assistance to start their business.

Once your business is underway, other traditional costs can be low, including marketing. Many businesses advertise their resale wares by using Facebook and Instagram pages.

Many sites charge commissions and fees on sales, which eat into your profit. And, of course, you’ll need to get the products to the customers, which means shipping.

For reviews of sites and a rundown of costs, check out SideHusl.com, which researches and rates moneymaking opportunities in the gig economy.

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Resellers generally need to collect sales tax in their home state and pay income tax on their earnings, although occasional sellers usually get an exemption for activities such as hosting a yard sale at their house.

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◆ A hoverboard burst into flames and burned a California woman. David Lazarus explains how it could change the way Amazon does business.

◆ What with the talk about student loan forgiveness and free tuition, is it time to rethink college savings? Certified financial planner Liz Weston offers insight.

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◆ President Biden’s American Families Plan would make the social safety net a reality, columnist Michael Hiltzik writes.

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One more thing

Disneyland reopened last week, to the relief of many workers who rely on the parks and hotels at the Disneyland Resort for a paycheck and more.

My colleague Hugo Martín spoke with workers ahead of the reopening to learn why they felt anxious to return. Along with stories about the difficulty of surviving the last year without a steady income, many described yearning for interactions with their co-workers and with park attendees.

“What I miss the most is the human contact,” Glynndana Shevlin, who hopes the Disneyland Hotel will call her back to work, told Martín. “I’m ready to put on my uniform.” Read the full story here.

Have a question about work, business or finances during the COVID-19 pandemic, or tips for coping that you’d like to share? Send us an email at californiainc@latimes.com, and we may include it in a future newsletter.


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