Becoming a reseller is seldom difficult. You buy products, mark up the price and sell them to others. However, you will first need to get a reseller license, or business license, from your state. Depending on the products you want to sell, you may also have to apply for a reseller license from the manufacturer.
If you want to become a seller on Amazon, you will often need to prove that you are authorized by the manufacturer before you will be allowed to start selling.
State Reseller Licenses
First of all, if you are planning to start a business to sell products or services, you will need to get a license from your state government and in many cases, from your city or county government. Depending on your state, this could be called a vendor's license, a resale certificate, business registration or a reseller's license. There are two primary types of reseller licenses:
- Retail license: for businesses that sell to consumers or businesses that will use the product
- Wholesale license: for businesses that sell to other licensed businesses that sell to others
Depending on the state, there may be other types of licenses that may be more appropriate for your business. In Colorado, for example, you will need a special-event license if you plan to sell items in a state that isn't your normal business location (like a trade show, fair or other event).
A growing number of states also require that you get a reseller's license even if you are not located in that state. In Colorado, out-of-state retailers must get a license and collect sales tax if they sell $100,000 or more in goods or services delivered in the state.
Manufacturer Reseller Licenses
Many companies will allow you to buy products at a discount for the purposes of reselling them, particularly if you buy the product in bulk. However, companies that have invested in their brand or have established good relationships with their existing resellers are likely to be a bit more particular about whom they allow to resell their products.
While there may be nothing to stop you from buying items on sale from a local store and then reselling them for a profit, it's going to be difficult to build a long-term business this way. Authorized resellers will be able to buy and sell the product at cheaper prices than you — something your customers will discover sooner or later. Additionally, buying a product from you rather than from an authorized reseller will often void the manufacturer's warranty.
Selling authentic products without being authorized is one thing, but selling unauthorized products is completely different. Violating a copyright, patent or trademark is illegal. This is something that applies to someone selling counterfeit iPhones from China to someone who wants to become a seller on Etsy by knitting sweaters with Disney characters on them.
How to Become a Reseller Who Is Licensed
Getting a reseller license from a manufacturer is a process that varies widely. In some cases, all you need to do is show them that you have a website and a credit card to buy products. In other cases, you may need a physical business location to display and sell the products, and you may need to prove that you have sufficient history and sales volume at your location before they will consider you.
Some companies have a page on their website with an application form to apply for a reseller license. Others don't make it so easy, and you will have to contact the company either by phone or email to find out what is required to become a reseller.
If you are approved by the manufacturer, you may be able to buy products directly from them, or they may refer you to a distributor or wholesaler. It all depends on their supply chain. Read the application and the licensing contract very carefully. There are often stipulations in the contract on what you may sell and how much you can charge, and there may be a nondisclosure clause in the contract about revealing its terms to others.
- Some companies have non-compete clauses which means that you can only sell their brand of products.
A published author, David Weedmark has advised businesses on technology, media and marketing for more than 20 years and used to teach computer science at Algonquin College. He is currently the owner of Mad Hat Labs, a web design and media consultancy business. David has written hundreds of articles for newspapers, magazines and websites including American Express, Samsung, Re/Max and the New York Times' About.com.