We can’t overstate the role resellers play in the UK’s economy. The retail industry alone contributed 5.2% of the country’s GDP in 2020, according to data posted on ONS website. 

Resellers bridge the supply and logistical gap between manufacturers and the market. But unfortunately, not many understand or appreciate the role resellers play. So, it’s not surprising we get the questions, who is a reseller, and what are their responsibilities?

We’ll discuss reselling in this comprehensive guide, defining what it means to be a reseller and what makes reselling viable. This blog will also discuss the legalities involved and answer your prevailing questions about reselling in the UK. So, let’s get into it. 

Reselling Business: The Fundamentals

We’ll start from the basics by explaining who a reseller is and what they do.

Who is a Reseller?

A reseller is an individual, business, or company that purchases items, marks up the price, and sells to others for profit. Essentially, a reseller serves as the bridge between manufacturers and consumers and profits from it. 

A reseller can sell multiple products from different manufacturers simultaneously, or they can choose to work with only one brand. Some resellers may even sell products from different direct competitors simultaneously. The reselling business in the UK rarely has any regulations except the ones the government imposed or which resellers are bound to by a legal contract.

Types of Resellers

There are three broad categories for classifying resellers. 

Distributor

Distributors are individuals or corporations serving as the major off-takers for manufacturers. In essence, they purchase goods in bulk directly from the manufacturers. They then sell in smaller units to whoever wants to buy from them.

Distributors primarily deal with manufacturers. They buy at the original price and often get large discounts from manufacturers. Expectedly, resellers who are distributors typically buy products in large bulk and usually have large warehouses for storing their goods. 

In fact, they often have better storage facilities than the factories that manufacture the products. That’s because goods typically stay longer with distributors than manufacturers. 

You should also note that distributorship generally comes with brand loyalty. Your status as a distributor means the manufacturer recognises you as an ambassador for their brand. 

As a result, you may not have the freedom to resell products from other brands. Most especially, selling products from competing brands may land you in trouble with the manufacturers you represent. 

But then again, some distributorship positions are flexible. For example, the manufacturers may not mind you distributing their products and those from other brands. However, you’ll sacrifice some perks for that freedom.

Being a distributor means you need significant capital investment to set up proper storage facilities, purchase goods in bulk, and take care of logistics and warehousing costs. You’ll typically hold the most extensive stock of your brand commodities in your locality. So people that want the product but can’t get to the manufacturers can come to you to get what they need.

Wholesaler

Most people confuse wholesalers with distributors. That’s because UK resellers in the two categories both buy and sell in bulk. Nonetheless, there’s a slight hierarchical difference between them. 

A distributor directly takes the products from the manufacturer, while the wholesaler typically takes them from the distributors. Manufacturers have resellers who take their goods from their warehouses and bring them to a general UK market. Then the wholesaler takes bulk from the distributor and brings them to the local communities where retailers and final consumers have easy access to them.

A good example is Nike — a sportswear giant that produces a larger proportion of its footwear products in China. First, Nike’s distributors bring those shoes to the UK from China. Then, wholesalers take the sneakers from distributors and bring them to the state or regional level. 

A wholesaler is someone or a corporation who buys in bulk from a distributor and brings the goods closer to the final consumer. They may have warehouses too or may operate out of smaller shops.

Retailer 

Retailers are also very similar to wholesalers, so people sometimes mistake them for each other. But then again, retailers are easy to identify separate from wholesalers. Retailers typically sell minimal units directly to final consumers or users. 

In addition, retailers usually get their stock from wholesalers at the local market level. They then bring it to the neighbourhood and common marketplaces to make it accessible to end users.  

That said, retailers also buy bulk, but they purchase the smallest bulk volume at generally low discounts from the wholesalers. That’s why retailer items often seem pretty expensive. 

Typically, distributors enjoy significant discounts from manufacturers. Then they give the goods to wholesalers at generous discounts. However, the price will be higher than what they got the goods for. The wholesalers will then break the bulk into smaller units and sell them to retailers for lower discounts. So most times, retailers don’t have much choice but to sell at relatively high prices to make a reasonable profit.

Furthermore, retailers typically sell the least volume and have more freedom to sell whatever product mix works for them. So it’s common to find retailers selling Nike shoes and products from Adidas, Puma, New Balance and all the other popular brands simultaneously. 

Primarily, retailers enjoy the most freedom but typically get the least profit. But then again, retailing is the easiest and less risky of all the options. Unlike wholesaling or distributorship, you don’t need significant financial capital to get into retailing. Plus, you have more flexibility regarding product mix selection and how you want to get into the market.

Summarily

The different types of resellers all operate on different tiers of product distribution. It is often easy to tell by their setup and mode of operation what tier a reseller belongs to and who they primarily sell to. 

Distributors operate large setups and display a feasible capacity to hold large inventory. So, their market cuts across a larger demographic. 

Sometimes, they may deliver products to an entire nation, region or state. And of course, they don’t usually need to do much advertising. They’re big enough for people to notice them without noise, and there isn’t much competition.

Wholesalers also operate relatively large setups where they store goods they get from distributors. As a result, their market reach is enormous and often covers an entire locality or community. For instance, a distributor may cover a state while a wholesaler covers a city. And of course, they also don’t face fierce competition like the retailers.

Retailers often have to deal with the most competition because there are usually many of them. Hence they try to add value to the products to entice buyers and win market shares. Typically they serve a small community either with walk-in stores or online marketplaces. 

Nonetheless, one thing typically happens as the products change hands before getting to the end users. Each UK reseller adds value to the item along the way. The most obvious way of adding value is through repackaging and offering additional freebies on the products. But, sometimes, it doesn’t get up to that. Making it accessible to the local market and the buyers are sufficient added value.

What Do You Need To Become a Reseller?

Now that you understand what reselling means, you may consider getting into the business. But, the fundamentals are only the beginning. Great! You know who a reseller is, but you can’t just get up and decide to be a reseller. Of course, you can, but it’s not the best idea. 

Primarily, you don’t want to dabble in the business without adequate preparation. So, let’s consider some things you need to start the business.

Find the Right Selling Fit

Finding the right selling fit doesn’t mean you must get one right product or know everything about the commodities before selling them. It simply means you must find the products that give you sufficient motivation and emotional investment to push the business. 

But, that doesn’t mean you can neglect the part of knowing about the product. The least you can do is get a good grasp on the fundamentals of whatever commodities you’ll be reselling. So, do your research, find products you like, and do more research on them. 

Learn the price points, demand, supply, competition, the nature of the market and the level of commitment necessary to push the business. Most importantly, get familiar with the laws guiding reselling such items in the UK. You don’t want to get into the venture only to discover it’s illegal or has some stringent legal constraints.

Have a Business Plan

Reseller business isn’t something you garbage in to make some profit and garbage out. It requires commitment expressed through careful planning, consideration and execution. You need a roadmap indicating what you intend to achieve and all the necessary actions to get there. In other words, you need to write a business plan. Why?

First, writing is an action that causes you to express your thoughts as clearly as you can in text. In other words, you must think carefully about what you intend to put down. As such, writing a business plan will make you think long and hard about who you are as a reseller and the things you need to make the business successful.

While thinking and writing, you’ll gain clarity about market opportunities, threats, strengths and weaknesses. You’ll also consider your business feasibility in your chosen area. Essentially, writing a business plan transitions you from the position of a lofty dreamer to a prepared executioner.

Then again, you’ll be able to get your financial projections right and plan for reasonable figures. It’s pretty easy to overstate the numbers in your head. However, when you put them down on paper or screen, it becomes evident if you’ve inflated the figures or downplayed them too much.

Overall, a business plan provides a roadmap for your business. It serves as a comprehensive guide for your reselling business. The plan helps you understand your goals, projections and expectations. It also enables you to prepare for risks and opportunities as they’ll come your way as you run the business. 

That’s why we also call it the manual for running businesses. Not to mention it’ll be an indispensable instrument when you’re seeking investors, affiliates and financiers for your business.

But then again, we understand some business owners prefer to let others write their business plans. That’s not a very good idea. Because the writer will do all the thinking for you and may not capture all the necessary details in their writeup, it’s better that you take the time to create a specific plan for your business.

Get Familiar With The Industry

Who you’ll be as a reseller primarily depends on several factors, and the industry is one of them. You don’t want to get into a venture when you’re not versed in the industry movement. You’ll get lost quickly and may soon find yourself out of business. 

It’s great if you’re able to learn fast. But instead of opting to gain experience on the go while making numerous, sometimes costly mistakes, you can get the fundamentals before starting. 

Learning how the industry moves can save you much trouble early on in your venture as a reseller. You’ll know what reselling means, what to prepare for and expect per time. So, nothing will catch you by surprise or off-guard. And you’ll also be able to spot opportunities, trends and waves as they come.  

What Makes the Reseller Business Profitable in the UK?

Most people in the corporate world hardly recognise that flipping products can bring significant profit. Many disregard the business model as “small” and not worth their time. 

So, they continually pass over profit without giving it a chance. But what makes others try it out? Let’s find out!

It’s Easy to Start

The most significant advantage of the reseller business is it’s easy to start regardless of who you’re or what you do. You don’t need much cash or extensive knowledge to start your venture. You can even begin with zero inventory. So, you don’t have to worry about startup costs.

But of course, it’s better to start with some inventory. Depending on your commodity’s nature, it may even be as low as five units of goods. Then do a little marketing to inform people of your new venture and solicit customers. Repeat the process for as long as necessary while steadily growing the business.

In addition, you don’t need a shop or warehouse. You can sell the products out of your home or garage. And you don’t have to stock up in bulk unless you want to operate as a wholesaler or large-scale retailer. This advantage is a primary factor that draws people into the business.

Less Financial Commitments

As a reseller, you don’t always have to set upfront costs on your goods. You can always upsell and down-sell as necessary, depending on your customers. 

Market forces typically determine a product’s price. However, in some cases, particularly if you hold a monopoly of the items for your local market, you can set your prices whenever and however you want. 

Of course, this may be disadvantageous in some cases. For example, many buyers like to see price tags before deciding whether or not to buy an item. So, they automatically lose interest if they see your products without price tags. 

Hence, when employing such strategies, you always want to be aware of your customers’ preferences. But the fact remains that operating a reseller business allows you to influence market prices significantly.

You Can Determine Your Preferred Profit Margin

This point is pretty much a continuation of the last one. Once you can set your product’s prices to your liking, you can determine your profit margin. Your profit is what’s left when you remove your cost price from your selling price. Hence, you can tinker with your selling price as much as you like to get the best profit margin.

Access to Exclusive Products

As a reseller, you have closer access to a product’s source than end consumers. Hence, you have better opportunities to grab exclusive items from the manufacturers for yourself. 

In addition, being in the industry helps you stay ahead of the loop and keeps you informed of recent developments. So you’ll often know what’s coming and what to expect from manufacturers before most of the general public. 

Suppose Rolex decides to drop an exclusive limited-edition product sometime soon. In that case, you’ll be better positioned as a Rolex wristwatch reseller to get one of the drops. 

FAQs About Becoming a Reseller

We know you have multiple questions about reselling. Generally, most people don’t get the whole idea of who a reseller is from the start. It’s alright, so we’ll answer some of the common questions we get about the business below. Of course, this section will not include questions we have directly or indirectly addressed above.

What Should I Resell in the UK?

Many people who want to become resellers come to crossroads when it is time to decide what to sell. There are thousands of products to pick from, and this situation can be overwhelming sometimes. Hence, there’s no correct answer to which item is right for you. Instead, you want to look at the market you intend to serve and decide which product will provide the most value for it.

In other words, you should look at your target audience and find the things they need that aren’t available or in short supply. Then, whatever you discover might be the right product for you to resell.

Is Reselling Legal in the UK?

Generally, the resale business is legal. In fact, the government encourages it. However, some laws and regulations guide reselling activities in the UK. Particularly, there are rules regarding what you can sell, where you can sell and your identity as a reseller. So, at least get a licence if you intend to do a proper reselling business.

How Do I Setup a Reselling Business?

The reselling business model is straightforward. It starts with understanding who a reseller is, learning the fundamentals, and then identifying what you need to become a reseller (we discussed those points above). Once you have all that, get the appropriate licenses, buy your inventory and start selling.

Are there Educational Requirements to Become a Reseller

That depends on the type of items you want to resell. Of course, if you want to resell medications, you may need to have some medical qualifications to receive a licence. That also applies to weapons like guns and ammunition. However, for most general products, you don’t need educational or skill certifications to sell them.

There’s More to Reselling

Reselling can span across various industries and take multiple forms. However, it’s better to research the business model that suits you before making moves. Start from the fundamentals, know who a reseller is and their responsibilities to customers. Then draw up a business plan, purchase your inventory and get to work. 

We answered the FAQs about becoming a reseller towards the end of the post. If you need more help, Crept Chief Notify offers a subscription service that delivers access to real-time reselling guidance. We’ll teach you what products to sell, prices to set, where to sell and you can leverage our community of expert UK resellers, just like you. Join us today