Pros and Cons of Second-Hand Reselling

Pros

What are the advantages to the second-hand reseller model? Here are a few of the things that many resellers like about this type of business:

• You won't get bored. For many eBay sellers, the fact that every sale is different is one of the appeals to second-hand reselling. There's a certain joy of discovery when you search for items to resell; you never really know what you're going to find next. It's hard to get into a rut when every item you buy or every sale you make is different from what you've done before. If you think that selling one type of item day-in and day-out would get boring, the "sell anything" school of secondhand reselling is for you.

• Specialization breeds familiarity. On the other hand, if you choose to specialize in a particular type of second-hand merchandise, you won't have that much variety in what you buy and sell. What you gain, however, is familiaritywhich is a good thing. If you build up a high volume of business in a particular type of item, you'll get to know that category very well, which makes it easier to buy smarter and sell more efficiently. If all you do is sell used tools, you can become very good at selling that type of item.

• Riding the trends can be profitable. Successful second-hand resellers become quite adept at identifying and riding category trends. It's a fact that some categories get hot as others cool down; it's quite rewarding to acquire a batch of merchandise just when that category is on the upswing. It requires some skill to predict the trends and identify merchandise that is just on the verge of being hot. Sometimes this requires you to buy merchandise and then sit on it for several months, as you wait for the trends to turn. But if you can learn to buy low and sell high, you can make a lot of money with this business model.

• You have insurance against category downturns. For those second-hand resellers who don't limit themselves to a single category, that variety is one of the great things about second-hand reselling. If one category cools down, simply quit selling those items and move to something else. Sellers who specialize in a particular category can get seriously burned when a category capsizes. By not relying on a single category, you're protected from the vagaries of any given category.

• There's a low initial investment. One of the most appealing things about this type of eBay business for newbies is that it doesn't take an arm and a leg to get started. Since you're not dealing with large minimum inventory purchases, as you are with some other models, you can get started by buying just a few select pieces for resale. You can start with a larger inventory, of course, but you don't have to; you can size your business as big or as small as you're comfortable with.

• You can make the occasional big score. This is what most secondhand resellers live forfinding that item you pay 50 cents for at a garage sale and then reselling it for $50 or more online. Scoring big requires one part luck and one part skill at identifying diamonds in the rough. Most resellers develop a good eye for finding valuable items that others have overlooked. Rememberwhat's junk to one person is a vintage collectible to another!

In short, second-hand reselling is a good choice if you're fast on your feet, like a lot of variety in your life, and have a good eye for finding bargains and identifying items with high resale value.

Cons

Now that you know what's good about this type of business, let's look at some of the challenges. They include

• There's a lot of junk. Let's face it, not every piece of junk you obtain is a diamond in the rough; some of it's just junk. Especially when you're buying large lots at auctions or estate sales, you have to wade through a lot of rubbish to get to the good stuffand a lot of that rubbish is old and smelly and not very pleasant to handle. Even if you don't mind handling other people's hand-me-downs, what do you do with the stuff you can't sell? Junk is not always fun.

• Making it saleable takes work. Even the good stuff you acquire might take a lot of work to become saleable. You may need to wash or dry clean used clothing, patch up some holes and sew on some buttons, polish up the jewelry or silverware, and get out your screwdriver to fix minor electrical problems. You can't sell junk that looks like junk; you have to make your merchandise attractive to potential buyers. The elbow grease you put in is part of the cost of running your business.

• You have to put it all somewhere. So you hit the garage sales and flea markets every weekend, stuffing your car full of good deals you can resell for a tidy profit. Where do you put all that stuff until it's sold? I hope you have a big garage or unused basement because if you're a high-volume reseller, you're going to have lots of stuff stored away at any given time. And the larger the items you sell, the more space they require. If you get successful enough, you may have to consider renting a storage barn or other warehouse spacewhich adds to your business costs.

• It's unpredictable. Some people like to be able to plan everything out well in advance. If you're one of those people, you should steer well clear of second-hand reselling. Second-hand resellers seldom know what they'll be selling next week, next month, or next year. What your business will be is dependent on what items you can find to resell between now and then. Bargain hunting can be fun, but it's extremely unpredictable.

• There's no consistent source of inventory. While some resellers are able to find steady sources of merchandise, most rely on picking through the bargains at flea markets, thrift stores, and estate auctions. It's not like you're ordering items out of a catalog; you're constantly on the hunt for more stuff to sell. Not only is this manner of acquiring inventory unpredictable, it's also a lot of work. And there's no guarantee that you'll actually find enough viable merchandise to keep your business afloat.

• It requires constant research. Since you're constantly acquiring all manner of items for resale, you are also on a constant quest for information about those items. How do you know what a particular coin or figurine is worth? How do you know what category in which to list that item you picked up at a garage sale last week? How do you adequately describe that batch of used magazines you're ready to list for auction? All this requires research, and lots of itwhich can be extremely time-consuming. For some, research is both fun and enlightening; for others, not so much. If you don't like Googling for answers, this part of the business won't be much fun.

• There's more effort required to list each item. Along the same lines, every item you list requires a new and unique description, photographs, and item specifics for the item listing itself. There's no economy of scale, since every item is a new experience. With other business models, you resell similar items over and over, and you can save time by using eBay's "Sell Similar" option. Second-hand resellers don't have this option because they're never selling anything similar to what they sold before.

• You get little or no efficiency in packing and shipping. For many second-hand resellers, no two items they sell are alike. That means every item will take a different sized box, and will need to be packed and shipped differently. There's no economy of scale when you need a limitless variety of boxes and packing material; there's also no learning curve when you're packing a glass vase today and a pair of socks tomorrow. Sellers who specialize in specific types of merchandise can get by with stocking just one or two different types of boxes, and create a bit of an assembly line for packing and shipping those items; second-hand resellers can't.