Starting a Resale Business

starting a resale business

The resale market in the United States has snowballed in recent years. Reselling is when you source a product second-hand to resell for a profit. ThredUp, a popular website to resell clothing items, reports the resale market, now valued at around $28 billion, will grow to $64 billion by 2025. There are many theories about why the resale business is exploding. The global pandemic is producing cost-conscious shoppers. The rising unemployment rate means many buyers are looking for bargains. Another theory is that the younger millennial consumer base cares deeply about resources used to make clothing and find second-hand shopping more comfortable. Finally, widespread access to technology to resell items has made the industry much more mainstream and efficient.

Storage auction bidders have been reselling items for decades. Reselling is their business, and they were doing it long before the internet provided easily accessible places to resell items. Storage bidders have been sourcing goods to sell since before eBay and the dot-com bubble. Their success and the popularity of storage auction TV shows led to an explosion in the resale trade. Unfortunately, the TV shows glamorized a business that is much more than an easy side hustle. Many people don’t realize when they start bidding on storage units; buying and selling items from storage auctions is a material, legitimate business. It is a resale business. Here, we will share some tips with you to be a successful reseller.

 

Setting Up Your Resale Business

Success in any business requires a lot of pre-planning. First, you will want to obtain your business license from your state. See here for a state-by-state guide for obtaining a business license. If you plan to have a second-hand store or sell items in person, you might want to consider getting liability insurance. Liability insurance provides protection against claims due to injuries or damage. Insurance will protect you, your employees, and anyone who visits your shop. You will also need a resale permit. This permit allows you not to pay sales tax when you buy your inventory. You will need to charge sales tax when you sell the items and then report your sales tax collection each year. You can get a resale permit from your state’s Department of Revenue.

Besides licenses and insurance, you will need a way to track all of your purchases and sales. Think about purchasing an accounting program, like QuickBooks or Zoho Books. You should have a business bank account separate from your personal account. Co-mingling your personal finances and your business finances could lead to a tax nightmare in the event of an audit. It is important to know which purchases were made for your personal use and which ones were made for the business.

You will also need an inventory management system. When you are ready to file your taxes, you will need to know what sold and for how much. Additionally, you will need to know what you purchased that did not sell. Zoho offers an inventory management system with a free edition. eBay also offers the Easy Auctions Tracker. The Easy Auctions Tracker is an Excel-based spreadsheet, but it is sophisticated and robust.

Do Your Research

What are you planning to sell? Do you know what typical prices are? Some reseller pros recommend finding a niche market. Still, as storage auction bidders, it is difficult for you to pre-plan your inventory, so you might need to become an expert on selling many different types of items. Below is a list of things you might find in a storage unit to resell:

    • Electronics
    • Video games
    • Clothing & shoes (especially sneakers)
    • Collectibles
    • Sports equipment (varies by season)
    • Kitchen appliances and parts
    • Auto parts
    • Legos
    • Plush toys

Resellers can get overwhelmed when it comes to shipping items to their items. One problem is there are so many shipping methods to choose from. Another problem is online sites, like eBay, have shipping fees built into their platform. If you don’t have a clear understanding of how these fees work, you can end up overpaying.  Do you want to set up used fixed shipping fees or use a shipping calculator? You also do not want to price yourself out of the sale if your shipping rate isn’t competitive. It is worthwhile to learn about how shipping works unless you plan only to sell locally. You can consult the United States Postal Service about the weight of shipments and shipping rates. You can get free boxes and mailing envelopes from the USPS. Many of the online resale programs also offer guidance on shipping. For example, you can find out about shipping with eBay here.

Where to Sell

There are so many websites you can use to resell items. Some sites, like OfferUp or Letgo, allow you to sell almost anything. However, several sites like Poshmark and Etsy have specific requirements for what you can sell. Other sites specialize in a certain type of goods. You could get more money selling on the specialty sites than you might on a general resell site. Be sure to look at all different places to see where you might get the best return for your items.

  • Poshmark – designer brands, on-trend fashions, and shoes
  • ThredUp – new and used women’s and kids clothing and accessories
  • The Real Real – jewelry and designer goods
  • Kidzien – kid’s clothing
  • Etsy – vintage or hand-made goods
  • Ruby Lane – antiques and collectibles
  • Chairish – high-end furniture and décor
  • Swappa – tech gadgets
  • 5miles – sell within a 5-mile radius

The most important thing you can do to be successful is to treat reselling like a real business. Be active and consistent with your postings. Post often and follow through with all requests. You might find other resellers in your area and network with them. They might be willing to share their experiences and tips with you. If you want to get started right away, check out our two-part blog series Reselling Clothing: Best Practices. You can find part one here.

There is endless information about reselling that you can find on the internet. We are going to share several tips and tricks of the trade here on our blog. For example, do you know how the descriptions in your product listings become keywords for shoppers to find your items? Check back next month for marketing tips to enhance your listings.

Be sure to visit our website to see what great units await you to jumpstart your resale business.

 

 

 

 

 

 

 

Canceled Storage Auctions: 4 Most Common Reasons

StorageTreasures canceled storage auction email

Bidding on storage units is fun and exciting, but you might notice many canceled storage auctions as you get started. Canceled storage auctions are frustrating for buyers (it is the number one complaint we hear from bidders.) Many bidders think storage operators cancel units because the top bid did not go high enough, or maybe the manager decided to sell it to somebody else, under the table. They worry the sellers know who is bidding on their units, and they don’t want to sell the unit to certain people (the delinquent tenant).

Bidders, especially those new to storage auctions, don’t realize a lot happens behind the scenes before a unit goes to sale. There is paperwork, payment plans, legal ads, last-minute payments, and many other things that could result in canceled units. Last year, 47% of all units posted on StorageTreasures were canceled for many different reasons. Here are four of the most common reasons storage auctions get canceled.

The Tenant Pays Their Bill

Tenant payments absolutely, 100% happen — and often at the very last minute. An auction could be canceled minutes before it closes, or the sale could even be canceled before you arrive at the facility to claim a unit you won at auction and take possession. Legally, the property still belongs to the tenant until you pay for your bid and place a lock on the unit. This is why it is crucial to call the facility before you go to pick up your unit. To see more about taking possession of a storage unit, click here.

I have worked in the self storage industry for 12 years, and I have seen many, many tenants pay their bills at the last minute. In the case of live auctions, they even show up during the auction to try to pay their bill. I once saw a woman throw herself on the floor in front of her units to stop the auction in progress. Last-minute payments are widespread. They likely made up the majority of the 47% of canceled storage auctions on StorageTreasures last year.

 

An Error in the Lien Enforcement Process

The steps a storage operator must go through to sell a delinquent tenant’s unit are lengthy and complicated. The laws are vague and must be followed precisely. As you might have guessed, most storage facility managers do not come with a law degree, so mistakes are very easy to make. For example, many states require 15 days between the first legal ad and the date of sale. Easy enough, but do you count the day of the ad and the day of the sale? What happens if a holiday jumps in there and the newspaper is not posting legal ads that week? What happens if the newspaper spells the tenant’s name wrong? There are so many places for error in the process.

Operators do not want to have canceled storage auctions. Processing a tenant for auction is a cumbersome, expensive process. If they have an error in the paperwork, they have to start the entire process over from the beginning. There are fees for sending letters, legal ads and hiring an auction company. In addition to all of this, they still cannot re-rent the unit to a paying tenant. A paperwork error is a lose-lose situation for a storage operator.

 

Unauthorized Items in a Storage Unit

Often, a facility manager will open a unit door, take a quick inventory, and not realize that something they cannot sell might be in the unit. After they list the unit, they might see a headlight for a vehicle in the back of the unit. They will now need to perform a VIN search with the local motor vehicle department before listing the unit for vehicle sales. Other examples of items that cannot be sold are modified shotguns or assault rifles. The facility manager may have posted the units online without knowing these things are in the unit, and a supervisor later sees the prohibited items and cancels the auction.

 

The Auction Listing is Incorrect

In addition to following the lien process strictly, the storage operator has an obligation to you, as a buyer, to present correct information on the auction listing. The facility manager might post a unit and realize they put the wrong auction date or time. They can edit the auction up until the time the first bid is placed. After the first bid is placed, they can no longer edit the listing. They will have to cancel the unit and repost it. This is why you might see the unit pop back up on StorageTreasures a few days or weeks later.

Pictures can be wrong as well. To err is human. Managers might have hundreds of unit pictures on their computers and quickly select the wrong one when uploading units. Hopefully, they find the mistake and cancel the unit BEFORE you bid on it and win. They will likely need to cancel the unit and repost it with the correct pictures if they do.

Buyers successfully bought over 100,000 units last year and many of them for excellent prices, even after many units were canceled. Go to www.StorageTreasures.com NOW to find your next big win!