Starting a phone resale business involves investing money, taking risks, and setting up a new operating system, but you don’t have to do it yourself. We have helpful resources for every aspect of your phone resale business. This guide will give you eight tips for selling wholesale phones to other retailers, read on to help you determine your resale path.
1. Do your research and build a solid foundation
When starting a business, it is crucial to determine the best legal structure for your business. In the United States, businesses can be sole proprietorships, limited liability companies, S corporations, and C corporations. Which of the following structures is best for a telephone reseller? It depends on several things, including how you want to run your business, whether you have a partner, the level of liability protection you want, and whether you plan to sell the business later.
Consult a business attorney and tax and accounting professional to understand:
- Different types of businesses and their costs and benefits
- Tax and accounting implications of different structures
- What documents are needed to start a business
One detail to know up front is the resale certificate. A resale tax certificate shows that you are a registered reseller and will charge sales tax to your buyers, but you are not required to pay sales tax yourself. Some jurisdictions require a certificate of resale.
2. Define your niche
Telephone dealers should stock with the needs of specific types of customers in mind and develop a strategy for reaching such customers. The type of customer you are targeting should be informed by your research on:
- Market demand: Who is in the second-hand mobile phone market and what kind of mobile phone do they want?
- Your go-to-market plan: How will you sell your device locally or nationally, in-store or online?
A generic business that tries to be everything to everyone is harder to market than a business with a clear customer profile. Examples of truly niche markets might include recent iPhone sales to local middle-class buyers or mid-range Android phones to emerging markets.
3. Figure out your business model
As a phone reseller, there are basically two business models to choose from: phone rollover or value-added selling.
- Phone flippers buy a lot of phones as quickly as possible, and then resell them at a slightly higher price without any processing. If you specialize in phone flipping, you’re in a high-volume, low-margin business with very little overhead.
- Value-added resellers increase the value of equipment by rerating and sometimes performing repairs. This type of business is more time-consuming and resource-intensive as you need staff, offices, and warehouses, but it compensates with higher profit margins.
4. Decide what type of phone/device you want to buy or sell
There are many phones available, from low-end Android phones to mid-range devices to flagship phones like the latest Pro model iPhones. You can choose to buy these devices new or used.
New devices command the highest prices but also cost more, so they tend to have lower profit margins than selling flagship used phones. Selling wholesale phones to other retailers is more resource-intensive if you spend time and effort on sourcing and grading. Here’s what to look out for when buying wholesale phones.
Different types of businesses and their costs and benefits their phones typically fetch higher resale prices than other manufacturers like Motorola, OnePlus, Google Pixel, and Xiaomi.
5. Understand the economics
As a newbie in selling wholesale phones to other retailers to the phone resale business, you should understand the cost structure and profit margins of a typical business. You should be familiar with the average profit margin in the industry and expect your business to fall within that range.
Research the market and test what price the market will bear in your niche. It’s best to start your purchases with a tight budget for equipment, and slowly expand your inventory as you adjust your profit margins and have clear expectations for how much money you’ll make from each piece of equipment sold.
For example, I have a client who is a bathtub supplier. He has his own sales company. Because of work, they need to keep in close contact with customers every day. In order to facilitate communication, he wholesaled iPhones from me for his sales staff. After studying the market industry situation at the time, I gave him a perfect wholesale price for the market.
6. Find the right supplier
As a reseller selling wholesale phones to other retailers, the quality and quantity of your inventory depend on the wholesalers you do business with. Building strong relationships with wholesalers pays dividends, as they will be your long-term returning partners.
When choosing a wholesaler, make an effort to understand the quality of equipment offered, the full cost of the transaction (such as shipping), the level of grading and testing performed, and the return policy.
7. Consider distribution and marketing
Fortunately, marketing a used cell phone business is pretty simple. If you sell online, you have the option of creating a listing on an online marketplace like Amazon or eBay or dedicating resources to your own website.
Going public is a quicker way to get started, but competition is fierce and margins are slim. Selling from your own website means potentially higher profits, but you have to get traffic. This can be done through search engine optimization, paid advertising, and content creation.
Finally, be aware that markets around the world have different expectations for equipment quality.
8. Run your business strategically and efficiently
In business, there are two meta-strategies for making more money: increasing the value of sales or reducing expenses. You should pursue both goals. You can increase sales by increasing the number of customers who find you or by increasing the average value of sales.
On the expense side of the equation, take a close look at your cost structure to see if there are expenses that can be cut or eliminated. For example, do you need an office, or can you work from home? If you pay for warehouse space, can you find cheaper warehouses? It pays to systematically examine your monthly costs and research alternatives for each large expense.
9. 5 Steps to Become a cell phone dealer
To become a cell phone dealer to sell wholesale phones to other retailers in your area, follow these 5 easy steps. Please do not panic and take it easy to follow all 5 steps
1) Draw a business plan
You want to make sure you have a solid business plan but not just one but many, in case the first one fails.
2) Find a good location
Ideally, you want to be near a busy street or highway rather than somewhere isolated.
3) Apply for a business license
After you find a good location then you need to apply for a business license from your local city or county office. To collect sales tax from your customers, you must also apply for a seller permit.
4) Inspect wireless carriers in your area
Now it is time to find out which wireless carrier has a good cell site in your area. You can check the wireless coverage by visiting each wireless carrier’s website.
5) Find a master dealer
Now is the time to find a master dealer for each wireless carrier. All the wireless carriers will not do direct business with you. You need to find a trusted master dealer who can teach you about the activation process and who can provide you with all the supporting materials.
Please note that California requires a separate license to collect the mobile surcharge from customers. To become a dealer with a cell phone company of your choice, sign a contract with the master agent. Before signing the contract, however, make sure you understand every detail, as it will be legally binding.
Your new cell phone provider website should be marketed according to the rules of your chosen business opportunity. For example, you may use fliers, business cards, newspaper ads, and online ads as part of your marketing plan. You may, however, be restricted in your use of the cell phone provider’s company name, phone brand, and image. For your contract not to be terminated, you must adhere to its terms.
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