The reselling business comes with a lot of choices. Do I sell online or offline, Amazon or eBay? What kind of merchandise should I sell? How much should I sell? It’s a lot to consider.
One of the most important questions resellers ask themselves is, where should I run my reselling business? Some resellers do all of their business, from retail arbitrage to sale, directly out of their house. Others separate the two, and still others have some kind of hybrid. The major consideration here is the size and volume of goods you’ll need to store and—once they’ve been sold—ship.
Figuring out what’s right for you, however, is simple: know your options. In this post, we’ll take a look at the pros and cons of running your business out of your home, using a storage unit, or going through a warehouse service. While your final setup should be tailored to your specific needs, this guide should help you figure out how to set up shop, or identify when to make a transition as your business grows.
The At-Home Selling Savant
Running your business out of your home has many advantages—easy access, familiarity, and no extra cost. However, it can be challenging to share your living space with your merchandise. Typically, resellers who operate entirely out of their homes sell smaller items (think jewelry and books) rather than large or oversized items (like televisions or appliances). At-home sellers also tend to have a lower volume of sales per month.
To decide if it’s right for you, think about the reselling business space you have available. Where would you put an entire shipment of merchandise? Also, how fast do you expect to sell that merchandise? Seasonal items in particular will require long-term storage if you don’t sell out of them fast enough. And, while you won’t need to pay for your space, you will need to invest in organizational infrastructure. E-Commerce blogger Andrew Minalto has a great tutorial on how to organize your at-home storage bin system to keep your stock organized. Shelving and racking are also great storage options, priced based on both size and weight capacity. Be sure to think of the difference in shelving you would need for selling lighter items like toys versus heavier products like power tools. You wouldn’t want to invest time and money in hanging shelves only to have them come crashing down under the weight of your product.
If you’re storing items at your home, you’ll also be doing most of the work to ship them. Shipping costs can vary, so make sure you’re paying close attention. Amazon and eBay both offer UPS discounts for certain categories of sellers. The U.S. Postal Service’s flat rate boxes are another great option, and they ensure that you have the most accurate cost both for your own budget and to report to your customer.
Finally, think about whether your items can be picked up directly from your house, or whether you need to transport shipments to the post office. If you’re transporting, the size of your car and distance from the nearest shipping location become important. If you have a small sedan, you may only be able to transport a subset of your items at a time. Depending on the size and frequency of your shipments, multiple trips to the post office will cost you time and gas money—particularly if the post office is far away, or if you need to drive to multiple shipping locations.
The Storage Maestro
If you need a more space than you have available in your home, renting a storage unit (or some other storage location) might be right for your reselling business. While the rental price is an added cost, they’re a convenient option for processing and storing, as deliveries can be made directly to the unit. Rental prices vary depending on factors like size and location. If your stock is large or oversized, it’s likely a necessary investment. You also avoid having to worry about the seasonality of your merchandise or how fast you’re able to sell it. With more space, you have a greater opportunity to build a wide arrangement of stock to sell year round.
Similar to running your business from your home, you should still factor in the cost of shelving and bins to organize the items you’d like to sell. While the stock will no longer be creeping into your living room, organizing materials within your storage unit will help you keep track of your orders. Packaging and shipping are also consistent with running your business out of your home.
The Warehouse Guru
Depending on how many items you process, sell, and ship per month, you might want to consider investing in warehouse services. With provider programs like Shipwire or Fulfillment By Amazon, the main cost you need to consider is the service fees. If items do not sell or are oversized, then there may be long term storage fees with Amazon, or you can pay $0.50 per item to have them sent back. Whether or not this is a cost-effective option for you depends on the amount of product you are shipping each month. The higher your amount of shipments, the better the deal is for you. While this might not be the most cost-effective option for you, make sure to keep an eye on your shipping and storing costs as your business grows. If you’re not paying attention, you may grow into it before you realize!
While warehouse services are a convenient option if they fit your price point, it’s important to keep in mind that you do lose a degree of control. Not being involved in stocking and shipping can put you at risk for damages you aren’t aware of, and lacks the intimacy of customer-service you could provide when shipping the items yourself. To make up for any disconnect, make sure you are over-communicating, both with your warehouse service and with your customers if necessary. Make sure you’re aware of your reimbursement options are as well, so you won’t spend if you don’t have to. Amazon FBA, for example, has specific policies for items that were damaged by the warehouse, by a distributor, or were returned damaged by a customer. Even if it wasn’t your fault, it’s important that you manage your inventory and advocate for yourself if you deserve a reimbursement. Amazon FBA also charges fees for longterm storage. On August 15 and February 15 of each year, the company conducts an Inventory Cleanup and units that have been in fulfillment centers for six to 12 months are charged $11.25 per cubic foot. Units that have been in storage for 365 days or longer are charged a hefty $22.50 per cubic foot.
Speaking of Amazon FBA, the company’s storage fees changed on March 1, 2016. There were across-the-board increases for standard-size and oversize items for both January-September and October-December. Information like this is important to keep on your radar as you consider your storage options.
The Big Picture
No matter whether a reselling business is your primary source of income or a side hustle, make sure you carefully assess your shipping and storage arrangement. Ask yourself, am I operating as efficiently as possible? It may not always be as straightforward as a few mathematical calculations. For example: maybe you’re storing items in your home, but find yourself spending a lot of time digging through merchandise to find what you’re looking for because it’s so crowded. It might be time to invest money in a small storage unit in order to save time—time that could be better spent sourcing or packing items for shipment.
The three seller profiles listed above are just a few very defined storage/shipping arrangements. Many resellers choose some combination of the three (such as keeping smaller items in your home and all oversize merchandise in a storage unit). Some resellers may even rotate between them depending on the season, or their personal selling schedule. Do what’s best for you, but simply make sure you’re aware of your costs at all times so that you can calibrate as necessary.