Reselling: What It Means in Tech, and How You Can Profit

Reselling is a vibrant industry for enthusiastic entrepreneurs and businesses of all sizes; some of the largest industries in the world rely on the purchase and resale of products and services. If you need proof, you can always look at the tech industry.

Tech companies devoted to research and development hire resellers to provide regional sales and marketing of their products. In tech, reselling has nothing to do with pre-ownership; most tech resellers are peddling brand-new products or unique services to businesses or consumers. The tech reselling industry is huge — and exceedingly lucrative — so if you are interested in a new business opportunity, look no further.

What Is Reselling, Exactly?

The reselling industry is vast because it includes some of the most popular business models. For example, retailers are technically resellers because they rarely manufacture the goods they sell. Like retailers, other resellers typically purchase from manufacturers or distributors that lack the structures to sell directly to consumers. Resellers assume the responsibility of marketing and selling — usually to the end user — and mark up the price of the goods to recoup their losses and generate profit.

There are a few different kinds of resellers, including:

• Affiliates and referral partners. These are businesses that resell consumers or consumer information. The affiliate reseller assumes the costs of growing an audience, and then it sells that audience to businesses looking for visibility or leads.
• Retailers. Undoubtedly the largest reselling industry in the world, retailers purchase quantities of products and sell them in online or off-line shops.
• Drop Shippers. Akin to a retailer that doesn’t keep stock, drop shippers manage customer orders, which they provide to manufacturers, who directly ship products to customers.
• Channel Partners. Mega-corporations tend to ally with smaller regional businesses called partners or channel partners. While the larger business focuses on innovating and producing, the smaller business focuses on distributing and selling.
• Value-added Resellers. VARs improve upon the products they purchase and sell by bundling them with related products or adding services and support.

In tech, all types of resellers thrive. Thanks to the e-commerce industry, affiliates, drop shippers, and retailers are finding eager new audiences. Meanwhile, channel partners and VARs — which are by far the most common resellers in tech — continue to thrive from the rampant innovation within tech. In fact, some of the largest names in tech rely almost entirely on resellers for their profits. Hewlett-Packard, Microsoft, Symantec, Oracle, and Cisco all utilize extensive reseller networks — and eager entrepreneurs like you can take advantage of them.

How Do You Start, Right Now?

You don’t become a true tech reseller by buying devices and selling them however you like. There are laws and regulations surrounding who can resell and how — and most vendors have guidelines for their resellers, as well. Often, vendors will keep a cadre of official resellers, who can use official names and logos to advertise and who can sell original warranties on products. By breaking any reselling rules, you will face expensive lawsuits that will drive your entrepreneurial dreams into the ground.

Fortunately, plenty of vendors try to make it easier for new resellers to join the family. For example, Cisco works with ScanSource KBZ to offer FASTPATH, which walks you through the process of becoming a channel partner. You can usually find reseller contact information on vendors’ websites or ways to connect with regional reseller organizations.

If you prefer to strike out on your own, you should approach reselling like any other business. That means you need to devise a business plan to guide your decision-making, you need to identify your niche which requires researching your market and understanding potential products, and you need to find a vendor whose terms and conditions you can abide. Slowly but surely, you will grow your customer base and turn a profit.

Any new business is a risk, but the prosperity in tech and the established roles of vendors and resellers makes reselling relatively safe while providing proven profits. Thanks to tech’s outstanding growth, there is definitely room for more resellers within the industry. Still, the sooner you start your reselling business, the sooner you will see success.