Making A Living As A Reseller- Part 2, by BIF

For those of you wanting to make the move towards self-sufficiency in a career, or for those who are just looking for extra income, I am writing about buying and selling as a source of income. I think with a little practice, anyone can learn to make money by reselling things. So far, I’ve provided some background on reselling from a theory perspective and information on my experience reselling, too.

Now let’s get started with details. Let’s compare your efforts buying and selling to that traditional institution, the pawn shop.

The Pawn Shop

Over the years, I have spent a fair amount of time in pawn shops looking for bargains. I have made friends with some of the owners, and they shared with me insight into the business. Most pawn shops I am familiar with tend to try to buy for about 25% or less of what they will price the item at for resale. (This results in a 400% or higher profit target.) This is true for the more “durable” goods, such as firearms, cameras, bicycles, tools, et cetera.

I was at a pawn shop recently when they bought a like-new Remington 870 shotgun from someone who walked in the door. They gave him $45 for it. A few weeks later, it was in their case for $325. Since that was more than the cost of a new one at Walmart, it stayed in the case a long time.

Incentive Not To Buy Stolen Merchandise

Here’s a thought about pawn shops, for those of you who mainly know about them from what you see on TV. Pawn shops have a reputation for buying stolen goods. I’m not sure about the laws in the rest of the country, but here pawn shops are required to log in whatever they buy and sit on anything they take in for 15 to 30 days. The police department goes around to all the pawn shops at least once a week and checks everything they take in against the list of items reported stolen. Pawn shops are out whatever they paid for an item, if the police take it. So, they have an incentive not to buy stolen merchandise.

Inventory Turnover

Let’s get back to reselling. Long ago when I was earning my accounting degree, we learned about the concept of “Inventory Turnover”. Turnover helps explain high volume sales at low profit margins versus high profit margins and low volume sales.

The grocery store is a great example. A grocery store makes only a few pennies on every loaf of bread it sells. The reason it can stay in business is that it makes those few pennies every day selling to its customers. If a store buys a loaf for $1 and sells it for $1.05, it has made a nickel. That’s not a lot in the scheme of things, but here is where turnover comes in. If that store takes the $1.05 it made and purchases more loaves of bread to sell, and it turns over its inventory every two days (remember buying day old bread?) then at the end of a year, that dollar being reinvested at 5% every other day (less cost of goods sold) has generated close to a $400 profit.

Compare that to a pawn shop, which tries to get 500% return on investment but takes six months to do so. After a year, the $50 initial investment has grown to something like a $650 profit, if we assume they were able to reinvest and resell. The $650 isn’t bad, but if they were able to get the same inventory turnover as the grocery store, at a 5% profit per sale, it would have grown to over $18,000. (Those of you who are math majors or financial accountants give me a little slack. First off, these numbers are rounded, and second it has been around 35 years since I was taught this stuff.)

Fallacy of “What It Is Worth”

So why doesn’t the pawn shop sell for less? It is what I call the fallacy of “what it is worth”. The pawn broker thinks that he can eventually sell the $45 shotgun for $300 and wants to hold out for the maximum profit. You run across the same mindset with a lot of sellers. They complain when someone offers them less that “what it is worth”. I just saw a post on a reseller board complaining that they had bought a used blouse for $1, sold it for $25 and then later found out it was “worth” $100. To me, something I am trying to sell is not worth what I think it is; it is worth what a buyer is willing to give me for it. This is not to say that you should take lowball offers, but rather you should not hold out forever to try to make the absolute maximum sales price. Accept a reasonable offer, buy more items to sell, and move on.

Turnover Is Key to Profiting From Reselling

The concept of inventory turnover is not limited to a comparison of pawn shops and grocery stores. If you attend gun shows regularly, like I do, then you may not always recognize the dealer. However, you have seen the same guns on his table at premium prices for many years. Turnover is the key to successfully profiting from reselling.

Of course, you do have to be able to acquire inventory fast enough to turn it over in a reasonable time. That can be a problem for the casual reseller. Yet, the concept is still valid, even though you may not be able to make a 6800% return each year. Selling now at a reasonable profit and reinvesting is better than selling months from now at a slightly higher profit.

No Funds To Acquire Initial Inventory

I wanted to write this article as an academic exercise highlighting a number of different sources of products and different selling tools, not as a diary of my activities over a certain period of time. So, let’s begin. I submit that anyone can find something to sell, even if they have no funds to acquire an initial inventory.

Curb Pick Up

In the city where I live, someone is always putting stuff out at the curb prior to garbage pickup in the hopes that someone else will pick it up and they won’t have to buy a $5 sticker to have the garbage man haul it away. For example, with little effort I could probably pick up 20 or 30 non-running lawn mowers per year. Half of them would need something simple like cleaning the carb or replacing the spark plug. The others might need a fix requiring a bit more knowledge, like polishing rust off the magnetos or replacing the carburetor. BTW, the last carburetor I bought cost $15, so even that is not necessarily a major expense.

One of our suburbs has a week in the Spring and another in the Fall when residents can put almost anything out at the curb for collection without any additional fee. Driving around the neighborhoods during the cleanup week can yield quite a few things to resell. You can also find lumber, furniture, and even working appliances curb side.

Craig’s List

Craig’s list also has a free curbside category. However, from what I hear, you need to move quickly after it is posted or someone will beat you to it. You do need to be careful with what you pick up. I remember reading about someone who picked up a wooden bed frame from the curb andended up with a bed bug infestation. I was going to use a lawn mower as the basis of this article, but then a neighbor put an older electric log splitter out at the curb. That seemed like a good starting point.

Electric Log Splitter

First, I cleaned it up a bit, gave it a try, and then found out it worked. It needed a little hydraulic fluid. I took some pictures, researched it on the Internet, including checking sold items on eBay to help with the description and asking price, and posted it on Craig’s list, which is a free listing. Although the research showed folks asking up to $125 for this model, I posted it for $75. I got a call or a text from several folks, including a couple of obvious scams, and ended up selling it after a week for $65 to a gentleman who wanted it to keep by the wood stove in one of his out buildings. My total investment was a few cents worth of hydraulic fluid and about 30 minutes of my time to clean it up. When selling on Craig’s List, expect people to want to talk you down. I usually ask more than what I will sell something for, let them talk me down to what I want, and then we both end up happy.

Stihl Concrete Saw and Wheeled Carriage

With the $65 from the first sale, I looked around for somewhere to buy more inventory. I made my usual round of weekly pawn shop visits and found a non-working Stihl concrete saw and wheeled carriage at one for $30. They had paid probably $5 for it. It was missing some parts and had no compression; however, the same saw in running condition sells for around $300. My original intention was to disassemble it and part it out on eBay. This is a great strategy for those of you who are mechanically inclined, as parting out items can yield up to three or four times what selling the complete item does. I thought about it and considered my options.

Tomorrow, I will tell you what I did. I’ll also move on to other ways to acquire inventory.

See Also:

SurvivalBlog Writing Contest

This has been part two of a four part entry for Round 78 of the SurvivalBlog non-fiction writing contest. The nearly $11,000 worth of prizes for this round include:

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Round 78 ends on September 30th, so get busy writing and e-mail us your entry. Remember that there is a 1,500-word minimum, and that articles on practical “how to” skills for survival have an advantage in the judging.


  1. Regarding Pawn shops, around here they also need log books but I know of a couple that operate off the books “out the back door”. The goods are moved out of state never to be seen again. Also I have been selling on eBay since ’98. The fees are always going up. They bought PayPal and payments must be made through them, more fees. It was nice when I could get checks, cash ‘or MOs. Last year (2017) PayPal sent me a tax form with all my sales totaled up and I am expected to claim it as income. Keeping track of my expenses will be a major headache. I sell locally on Craigslist with great success. For the life of me I don’t know how Craigslist turns a profit. They will host 24 pictures for 1 item. That’s a lot of storage capacity.

    1. I agree the fees on eBay are going up. I just noticed that they even take a cut of the shipping charges, I don’t remember them doing that in the past. I still think it is a good place to reach a large audience, one of the next installments of this article lists some alternatives to eBay.

      eBay has also announced that PayPal (which I think eBay sold or spun off a couple of years ago) will be replaced over the next two years by a new payment service that I think they own. I have not followed that too closely, but suspect that it will be good for eBay’s bottom line, not so good for the seller’s.

    2. Regarding eBay – they have also become balanced WAY too far in the buyer’s favor over the seller. The last item I sold there was a guitar in perfect, like-new condition.

      I packaged and sent it in a soft case and very well protected. The buyer claimed it arrived damaged in one area and had pictures to prove it. I claimed there was no way that could have happened based on how I shipped it.

      He filed a claim and PayPal immediately froze my funds until I credited (agreed to settle with him) $50 for the issue. There is not even any way you can refute a buyer’s claim or make your case to eBay when something like this happens. It is totally handled in the buyer’s favor.

      I did a little research on his eBay account and looked at reviews he had posted for certain items. Among them was a guitar of the exact same model as the one he bought from me. Six weeks later he sold the damaged guitar on eBay and showed the damage in his listing with the same photo he used to claim damage on mine.

      So he was able to upgrade his damaged guitar with my perfect one and get some $$$ back from me in the process.

      The truth is I felt lucky to get off with as little loss as I got. he could have taken me for much more based on their policies. As noted, I or any other seller, have no rights whatsoever in a buyer claim – valid or bogus. I had been a seller with over 600 positive reviews and zero negative ones. Based on this and numerous other factors noted in the other comments here, I will never sell through eBay again.

      You’ve been warned.

  2. I’ve been on eBay since 2000. Over those years, it has consistently become better for buyers and worse for sellers. In the early days, it was a giant online yard sale for small, easy to ship items. But if you wanted a specific part or item it was frustrating.

    Now, I search for the exact item I want, see the results, and in most cases BIN and instantly check out. I see the exact shipping charges I will pay. No entering CC info, no surprise charges.

    Craigslist makes money b/c certain listings require payment.

    1. I used to make this point every year when I taught Economics in high school. I would go to EBay and look up a mint Detective Comics #27 which was the first appearance of Batman. The kids would gasp at the $450,000 buy it now price (free shipping of course). I would make the point that it was only worth that if someone was willing to pay that price.
      I would check back on it with them as the semester went on. Finally, right before exams, I showed them it was still on sale. I asked what’s it worth to the seller right now? The smart kids would say “zero” because no one has wanted it.

  3. The CRAIGSLIST question: How do they make a profit?

    ‘Profit’ is always a function of costs vs. revenue. “It’s not what you make”, they say, “It’s what you keep.” What you keep is the profit.

    As people started doing business more online with computers and phones, print media adverts clearly declined. To get and keep market penetration CL management lowered the cost of entry to $zero$ AND provided a fantastic service for ‘personal classifieds’, earning the “business” from well established print media: Denver Post, Gazette, Pueblo Chieftan etc.

    As I understand it, revenue in 2018 in the classified segment in 2018 was in excess of US $3.3 Billion in the US. 3.3 BILLION in revenue! That means that everyone would have to spend 3.3 BILLION to break even, and I’m sure they are not. The difference is profit.

    Once market penetration was established, they offered premium services for a fee. For example, Job ads are from $10 to $75 each! Brokered Rental properties and car Dealers are all a paid gig. Which honestly was pretty nice when every car dealer just went in and Flagged every other car dealer’s listing. Now it’s much better “cost” vs. lost time.

    But what are CL internal Costs?
    Human labor, always ranks pretty high, but JML implied above that the storage costs might be astronomical. Let me assure you that it’s a different cost per terabyte than you’re likely accustomed to.

    All that is to say that the Capitalist concept where a buyer and seller can agree on a price and meet to buy and sell products and services is fantastic! Yes, I’m sure that CL needs to keep a low-water-mark-of-site-users to afford to keep the lights on, but know that CL is “Making BANK” profit!

    CL isn’t a mystery at all. There is insane money in free ads.

    The real question is How Apple intends to buy so many hard drives to keep making that icloud service profitable. Recall that EACH phone has 8GB, 16GB, 32,GB 64GB or 128GB of storage and these days and that space is backed up every single day. I don’t pay a dime for my icloud storage but on one hard drive somewhere in Apple land they have to backup my little girl’s birthday party daily. I believe they’re on the cusp of being in trouble as not enough hard drives are manufactured because they literally can’t source hard drives fast enough. Amazon, Google, & Facebook have similar challenges.

    I’m a bit ‘all over the map’, but this is my comment.

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