When it comes to running a reselling business, most resellers have a business model. According to Oxford’s Dictionary, a business model is defined as ” a design for the successful operation of a business, identifying revenue sources, customer base, products, and details of financing.” In reselling, this model is usually defined by how your inventory, cost of goods, target customers, and inventory sold affect your daily reselling activities. Within the reselling community, there are 3 commonly used business models: (1) Quantity Model, (2) Quality Model, and (3) Combination Model. Today, we will be taking a deeper look into these models and discuss how they are used in reselling.
The Quantity Model
The Quantity Model is sometimes also referred to as the Low Cost of Goods Model. In this model, a reseller will buy a larger quantity of goods for low prices. Resellers who utilize this model will typically shop at places like Goodwill outlet centers and/or various deeply discounted stores, in addition to, receiving items for free from others. Many people who utilize this model are not as brand or style specific and will sell items at both low and high price points depending on what they are able to acquire. In order to succeed using this model, a reseller will typically need a larger quantity and assortment of goods in order to have a higher sell-through rate.
The Quality Model
The Quality Model is sometimes also referred to as the High Average Sales Price Model. In this model, a reseller will buy less items but at a higher price point. The reseller does this in hopes of selling their items for a higher sales price. Resellers who utilize this business model will shop at thrift stores, buy-sell-trade stores, and through retail arbitrage. Additionally, these resellers will typically pay more attention to brand and style as they have less items to sell and need to ensure that their items will appeal to the majority of buyers in a timely manner. This model requires more initial capital than the Quantity Model but results in higher sales prices.
The Combination Model
The Combination Model or Hybrid Model is simply a combination of the Quantity and Quality business models. In this model, a reseller may incorporate different aspects from the Quantity and Quality business models as they see fit. Of the 3 models, this model seems to be the most popular but is argued as being the least sustainable over a long period of time.
Personally, I have always used a Combination Model in my business. For most of my reselling career, I lived in a small town and was unable to acquire coveted BOLO brands. Instead, I created a business model around the inventory that was available to me and as a result, I ended up with a Combination Model. As I have progressed through my reselling career, I continue to use a Combination Model. However, I have found that recently, it is leaning more towards a Quality Model over Quantity Model.
I hope that you found this post helpful and that it provides you with a good overview on the 3 most common business models used in reselling. As always, if you have any question, please feel free to reach out to me!
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