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Phone Resellers: 5 Tips for a Successful Business Model

Cell Phone Resale Tips

Can you name a single person who doesn't own a cell phone? The devices transform the lives of almost every individual, from teenagers to top-level executives. As an entrepreneur, you understand the demand for affordable mobile devices, which is why you are exploring becoming a reseller.

Phone resale businesses are lucrative opportunities, especially when the reseller partners with a capable and fair wholesaler. Still, the partnership is only part of the equation. Creating a business from the ground up is challenging, but anyone can start a profitable business with the right information and resources.

1. Establishing Your Business
To become a legitimate business owner, you need to register it and establish a legal structure for it. The basic structures include:
Sole proprietorships
  • LLCs
  • C corps
  • S corps
The proper structure for your venture depends on various factors. For one, will you have partners or run the operation alone? Also, you will need to determine the level of exposure or liability you are comfortable with. As these are not easy answers to navigate, it is best to consult with tax and accounting professionals and a licensed business attorney.

2. Defining Your Business Model
Every business adheres to industry-specific business models. As a resale operation, you will have two models to choose between flipping or value-added sales. Phone flipping is all about moving through inventory as quickly as possible. You will buy phones in bulk from a supplier and resell them for a slight profit. The technical term for your operation is a high-volume, low-margin business, meaning you have low overhead. The risks are lower with phone flippers, which also means lesser rewards. If you take the value-added resale approach, you take on greater financial risks but may see higher profit margins. Adhering to this business model means you re-grade the devices and possibly repair them, allowing you to sell at a higher price. A value-added structure is resource intensive and may not be suitable for everyone starting out.

3. Creating Your Niche and Choosing Inventory
With your business and model understood, you can now figure out your inventory options; however, first, you must define your niche and, more specifically, your consumer. You must determine the market demand you wish to fill and address logistics. Who are your preferred consumers? Do you want to sell to college kids on a budget, or are you looking to sell to parents wishing to buy their kid's first phone? Identify your target consumer and figure out what phones they are most interested in. Too many amateur resellers try to supply everyone, but that is a rookie mistake. Realize you cannot satisfy the entire market of phone users now. Trying to please everyone will only hurt your bottom line.

4. Selecting Distribution and Marketing Channels
As an online reseller, your distribution, and marketing channels are relatively straightforward: Amazon, eBay, or a dedicated website. Creating a website for your business is potentially more lucrative than other channels, but it is more work with increased overhead. Still, depending on your niche, model, and inventory choices, a dedicated website may be the best portal for your business. If you opt for your own site, keep advertising costs in mind. Without the backing of major platforms, especially built-in cataloging metrics and support, you will need to invest in other marketing channels, like PPC and traditional advertising.

5. Building Relationships
As important as marketing, audience definition, and business model selection are to professional success, the crucial element of any profitable phone reseller is the partnerships they build with wholesalers. A wholesaler helps you create healthy profit margins. It also ensures you have a steady inventory for your consumers. As a business owner, you have the opportunity to work with industry-leading cellular wholesalers. Contact Today's Wholesale Closeout, a supplier of new and used phones, to learn more and apply for membership.