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Retailers buy products cheap and make a lot of profits from their resale on Amazon. The so-called resale is booming, also due to the coronavirus crisis.
Thomas Brandon Kovacs aka Sparkojote explains the resale principle and how he started it himself.
Thomas Brandon Kovacs
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In just a few months, retailers on Amazon earn hundreds of thousands of francs.
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Products that were highly sought after during the pandemic were a particular sales driver.
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The resale business is also thriving in Switzerland.
Buying goods only to then resell them unused can be worth it – for example, a former insurance salesman earned the equivalent of around 40,000 francs in four months by buying products at low prices and then selling them on Amazon. According to Business Insider, the American belongs to a group of retailers called Arbitrage Ops.
The principle of the so-called resale is simple: products that are particularly popular at the moment and which will soon be out of stock in stores are offered at higher prices in online stores. Arbitrage Ops trains members through the Discord messaging service and offers tools to help them identify products that might be particularly useful for resale. Members pay around 70 francs to join plus 45 francs per month.
400,000 francs since May
The group has been in existence since May and business is booming: the approximately 500 members are said to have already earned CHF 400,000. Items like baby bathrooms, which were particularly popular this summer due to the pandemic, have fueled the business, according to the report. Some retailers would even quit their jobs to become full-time retailers.
Prices rise when products are in short supply, so retailers are careful to stockpile these products early. Are you complicit in the scarcity of products? If the product niche is very small, it’s conceivable, says trading card retailer Thomas Brandon Kovacs. In large markets such as the sticker market, however, sole proprietorships don’t make a big difference, he is convinced: “Compared to companies that resell stickers on a large scale around the world, my sales are peanuts.”
There is also a large resale business in Switzerland, says influencer Thomas Brandon Kovacs, known on social media as Sparkojote. In 2013, he began reselling Pokémon and Yu-Gi-Oh! Trading cards. There is a big difference for retailers in the US or Europe: “In Switzerland, Amazon doesn’t play a role for retailers.” He initially offered his tickets on Ricardo. Like 20 Minuten, the platform belongs to the TX group.
Kovacs can understand that many retailers are leaving their old jobs. In 2018, he himself launched an online store for trading cards and at the same time quit his IT job at UBS. “People underestimate how long it takes to have their own online store,” says the young entrepreneur.
Buy at half price
Today, his shop generates an average of 15,000 francs in sales per month. Buy tickets for around 30-50% of the sale price. But it’s not a quick deal for him: “Sometimes I stay on a card for up to 5 years.” As a reseller, you need a lot of patience.
Basically, however, anyone can become a retailer, says Kovacs: “Goods are no barrier to entry – you can even buy something for 1 franc and resell it for 3 francs.” Only when you no longer want to depend on platforms like Ricardo or Amazon do you need capital for your web shop.
On the other hand, it is important that you are familiar with the traded products, so that you can better evaluate the quality of the offers and the trend in market prices. “For example, I would never change clothes because I have absolutely no idea,” says Kovacs.
Does a reseller have to pay taxes on their profits? It depends on whether he sells products at a profit only occasionally or repeatedly, says Jens Hanebrink, ZHAW tax advisor and tax law expert. Anyone who buys an iPhone once at half price and resells it at market price makes a private tax-free capital gain. However, the borders are fluid. Regular reselling of iPhones risks being seen as a business. In this case, all profits would be taxable, there is no tax exemption. And from a turnover of 100,000 francs per year, VAT would also be required.
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