Last June, my mother Rita retired after working the same job for 31 years. She’s 60 and energetic (she takes a hip hop dance class), so she wanted to find a way to fill her time, but was strongly against getting another job.
In the past, my mom had casually bought and sold things on eBay (EBAY). Now that she’s retired, reselling used items online has basically become her part-time job. She spends her mornings shopping at local thrift stores and her afternoons photographing and listing those items online. The house has gotten a little cluttered with her inventory, but she’s happy. She’s on a retirement budget, but the eBay sales serve as a supplement – she pulls in a not-too-shabby $600 a month or so that she can use to travel or spoil her grandchildren.
By now we know that eBay is an online marketplace where people can buy and sell anything from shoes to TSA body scanners, but before my mother’s reselling obsession, I was unaware of just how profitable it could be.
According to eBay, retail growth with eBay Established Commercial Sellers (small-business sellers) saw 20% annual growth between 2010 and 2014. And in the first quarter of 2017, the eBay marketplace (where sellers list their products) earned $1.18 billion in revenue. Independent online sellers, in many ways, are reaping the benefits of the overall slump in department store sales and steady increase in online retail sales; a look at this table from the Federal Reserve Bank of St. Louis tells the story. The use of technology has also allowed this community of small-business owners to resell their goods internationally, opening them up to a literal world of opportunity.
To get a better idea what it takes to make real money in this space, we talked to three entrepreneurs who resell full time. From what to buy to where to sell it, they share their experiences in this booming era of e-commerce.
Becoming your own boss
For Josh McAlary, 26 , becoming a full-time reseller was about having the freedom to choose his own fate.
As a competitive runner who was recruited to run track and cross country in college, McAlary was never one to back down from a challenge. That is, until he decided to get his MBA from Michigan State University. “The program was great, but they were teaching me how to work for another person, and that was not what I wanted to do,” McAlary told Yahoo Finance. “I realized that I wanted to be an entrepreneur.”
McAlary focused his efforts on eBay reselling, a hobby he developed during undergrad to pay for expenses not covered by scholarships. In December 2015, McAlary sold $30,000 in men’s clothing, making a $15,000 profit in a single month. Sales are always higher in the fourth quarter anyway (because of holiday gift shopping), but McAlary felt confident that he was on to something.
A few weeks later, he officially dropped out of his second semester of grad school and opened his own LLC, Vogue Squared. He’s carved out a niche in selling men’s apparel, and made $299,000 in gross sales online in 2016. McAlary took home $144,000 in profit. Not bad for a grad school dropout.
To earn such an impressive salary, McAlary says he sometimes puts in 15-hour days. At 7 a.m. he goes to the post office and ships out items that sold the previous day. Then, he’ll head to the thrift stores or discount stores to source for new inventory. After that, he goes home to measure, photograph and list all the new items.
“I can kick back and watch TV while I list and I think that’s relaxing.” he said. “I also have the freedom to take 14 days off for a trip, and still make money by setting my store on vacation mode. There aren’t a lot of jobs that would offer you that luxury.”
While working for yourself comes with perks, you also miss out on benefits provided by a company, of course. With his salary, McAlary has to pay for his own health insurance (he buys it in the private market), and contributes the max to his Roth IRA every year.
In addition to eBay, McAlary also cross posts on a handful of other sites including Poshmark, Amazon (AMZN), Etsy and Grailed. This strategy allows him to target prices to different clientele, which increases the likelihood of selling an item. That said, navigating all of those different sales platforms isn’t easy, and users must get comfortable with all of the different fee structures.
For example, eBay takes 9% of every item sold, to a maximum of $50. If you don’t have an eBay Store, you may list up to 100 auction listings in a month for free as long as your starting price is between 1 and 99 cents. If you have several items to sell and want to list at a higher starting price, most users opt to open an eBay store, which has subscriptions ranging from $24.95 to $349.95 a month.
After years selling online, McAlary says he knows what to buy, from Banana Republic shirts to Cole Haan shoes, and how much he can get for a certain item. Still, like a gambler, he’s always on the lookout for the perfect hand. “I found a sample Chanel sweater for $3 and flipped it on Etsy for $700. After shipping and paying the eBay fees, I took home $634,” he said.
Family, freedom, and flexibility
Nicole State, 30, from Portland, Ore., has always been good at finding value in secondhand items, a skill she developed while working at a consignment shop for eight years. After that, she briefly worked in corporate America, but craved a job with more flexibility after her son was born with autism.
Reselling on eBay was a hobby she enjoyed, so State started focusing her attention on her online business to see if she could turn it into a moneymaker. “ I would go to my job during the day and then take photos and list on eBay at night,” she told Yahoo Finance. “I was making about $2,000 in sales a month when I decided that I could quit my day job and do this full time.”
The gamble paid off. State has been reselling full time on her eBay store for about a year-and-a-half. She does about $150,000 in annual sales, totaling about $80,000 in profit.
State’s favorite place to source for material is the Goodwill Outlet, where Goodwill stores send unsold merchandise or items they don’t have the manpower to sort. Shoppers rummage through bins, and at the end of their visit, they pay for their newfound treasures by the pound. Digging through these bins for hours at a time is tough work, and State says that she’ll typically buy something for $1 and resell it for $10 to $15. But sometimes she stumbles across buried treasure.
“I found a tennis dress [specifically] made for Serena Williams and bought it for $1,” said State, who lives a few miles from the Nike headquarters. “I sold it for $350. Those are the flips we live for.”
For many, reselling is a way of life, and sometimes the entire family will get in on the action. When State’s husband Joe was laid off last year, he joined the family business instead of looking for new work. By working together, State is optimistic they’ll be able to make even more money than she did in 2016.
“I wake up and take the kids to school, and then I source (shop for items) for about 2 or 3 hours,” said State. “During that time, by husband ships packages and lists new items online. We have the process pretty streamlined.”
As a family, the States still have to pay large sums every month for health insurance (around $700), and they aren’t currently saving any money for retirement, although that’s something they hope to do as their online business grows. Despite the lack of a nest egg, State says she is happy with her family’s current financial situation.
“We could work more hours and make more money, but we don’t do any reselling between 2 p.m. and bedtime because that’s family time. There is a give and take.”
Building your brand
In recent years, resellers are doing more than pushing used items online — they are building brands. Both Josh McAlary and Nicole State have YouTube channels where they share their reselling successes, and a few, like, Reezy Resells, are making a name for themselves by teaching others their strategies for selling online.
Reezy – he’s just known as Reezy, no last name – is a an energetic 32-year-old from California who got into reselling back in 2000 after the birth of his daughter. He was 15 at the time and dropped out of high school, opting for his GED so that he could work and earn money. Around that time, eBay was growing in popularity and Reezy would head to thrift stores and flea markets looking for items he could make a profit on.
“I would see people looking at books and scanning them with barcode scanners,” he said. “I know laser beams aren’t cheap, so I thought these people must be making money.”
So Reezy started asking other shoppers about the book scanners, and while many were intent on keeping their strategies private, one person told him how barcode scanners help buyers determine how well a book will sell online. From there, Reezy did some research and was hooked.
“On average you buy a book for $1 and then sell it for $12, so after fees and overhead you might profit $4 to $6. But I have some books that I’m selling for $50 to $100, so if you look at the margins on that, it’s crazy!” he said.
The biggest profit Reezy ever made was from a book on breeding horses. He bought the book for $2 and sold it for $700.
As Reezy’s book business started to grow, he said his home looked like the Library of Congress with all of the inventory. That’s why he chose to use Fulfillment by Amazon, a service where Amazon stores and ships your books for a fee after you sell them. (Similar to eBay, Amazon has an option for people to sell their own products to customers online. Amazon takes 99 cents plus other fees per every item sold.) Using this service has allowed him to scale his business, and grow faster than he ever imagined.
In 2015, Reezy did $655,000 in gross sales on Amazon, followed by $833,000 in 2016. This year, Reezy says he is poised to sell $1.2 million.
Although he could pay himself more, Reezy lives comfortably on $75,000 a year. With the leftover money, he has hired a staff of three employees which he pays $12 to $15 an hour to find books and sell them online.
After 11 years of reselling full time, Reezy is now focused on building his brand. Unlike the people he met years ago, Reezy shares his reselling secrets by posting regular “How to” videos to his 15,600 subscribers on YouTube. His video entitled “How to make a million dollars by selling shoes on Amazon/eBay” has already garnered more than 71,000 views.
He has recently given talks about his reselling success in New York, Philadelphia and Rhode Island, which is something that still blows his mind. “I had a woman come up to me after a talk and thank me for helping her to pay off her student loans,” he said. “That’s inspiring.”
Beyond books, Reezy has made big profits reselling shoes online. In the future, he hopes to go even bigger by selling wholesale items to retailers under his own label.
“We are just entering the golden era of ecommerce,” Reezy says. “So if you think it’s oversaturated, you’re wrong. There are so many ways to make money online and everyone can do it. “
Brittany is a reporter at Yahoo Finance.