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What Is 'Resale'?

Resale is purchasing an asset from another business to sell it later at a higher price.

Resale relies on helping wholesalers sell their wares without having to identify, market, and sell to individual customers.

Josh Kaufman Explains 'Resale'

Resale is the acquisition of an asset from a wholesale seller, followed by the sale of that asset to a retail buyer at a higher price.

Resale is how most of the retailers you’re familiar with work: they purchase what they sell from other businesses, then resell each purchase for more than it cost.

In order to provide value as a reseller, you must:

1. Purchase a product as inexpensively as possible, usually in bulk.
2. Keep the product in good condition until sale—damaged goods can’t be sold.
3. Find potential purchasers of the product as quickly as possible to keep inventory costs low.
4. Sell the product for as high a markup as possible, preferably a multiple of the purchase price.

Resellers are valuable because they help wholesalers sell products without having to find individual purchasers. To a farmer, selling apples to millions of individuals would be time-intensive and inefficient: it’s far better to sell them all to a grocery chain and focus on growing more apples. The grocery then takes the apples into inventory and sells them to individual consumers at a higher price.

Major retailers like Wal-Mart and Tesco, book retailers like Barnes & Noble, and catalog operations like Land’s End work in fundamentally the same way: purchase products at low prices directly from manufacturers, then sell them for a higher price as quickly as possible.

Sourcing good products at low prices and managing inventory levels are the keys to reselling. Without a steady supply of sellable product at a low enough price to turn a profit, a reseller will have a hard time bringing in enough revenue to keep going.

Accordingly, most successful resellers establish close relationships with the businesses that supply their stock to ensure they continue to get a reliable supply of good assets at low prices.

Questions About 'Resale'

• Does delivering value as a reseller make sense for your business idea?
• If so, what do you need to plan for to make it successful?

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"Buy low, sell high."

Stock Trader's Maxim

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