Hard economic times are a struggle for business owners everywhere. None of us are immune to the ebbs and flows of the economic cycles. In the midst of a recession, some businesses thrive more than others. Whether or not a business survives an economic recession involves both the type of products and services offered as well as the steps taken to prepare for it.
As resellers, we’re able to protect our businesses much easier than others. We are already involved in the reintroduction of used or liquidated items into the market. Most of the time, these items are sold at less than their manufacturer’s suggested retail price (MSRP), a benefit for those trying to save a few bucks.
The thing to remember is that customers will not change their buying habits unless they make the conscious effort. They may simply adjust their habits a little. Someone who gets a $6 specialty coffee from a shop may start bringing coffee from home, but they won’t quit drinking coffee altogether. People may start buying used (rather than new), working out at home (as opposed to a personal trainer), or plan and prep meals at home reducing the need to eat out.
A wise reseller would start taking steps to recession-proof their business before the actual economic downturn hits. Knowing how to adjust your sourcing strategy in the midst of economic recession can be the key to surviving it.
Three Tips to Recession Proof Your Resale Business
1. Consider Niching Down-
An economic recession is not the time to buy just anything with high margins. People will be selective about what they purchase. So, you must be selective about what kind of items you plan to source during this time. Items that are not necessary for everyday life may not sell very fast during these times.
This is the time to be choosy about what items you decide to resell. An item that will make high margins but won’t sell until later is just money sitting on your shelf. All business growth comes from money going in and money going out. If you don’t have that, your business is stagnant.
Stay ahead of the game and purchase items that you know will sell, and purchase only those items. Stay within your budget. Even if these particular items cost more to source, the fact that you can flip them faster and reinvest your profits will keep you treading water until the bubble breaks and you can return to your normal buying and selling routine.
2. Invest Time Understanding Consumer Trends
Even in the midst of a recession, there are things that people still need. “Need” items are more than just food, water, and shelter. While those are all things necessary for survival, we live in different times. People still need to get to work, so gas and car maintenance is a “need”. People “need” cell phones and computers to be able to stay in contact with the world.
Diving deeper into consumer trends can give you valuable information into what kind of products people will buy. Find out what categories are trending on your platform or within your demographic. Source those items to encourage quick sales and a positive cash flow.
Depending on your customer base, location, and platform you’re selling on, some items may sell better than others for you. However, these are some great items to start with. Pay attention to what categories sell well and see if you can source those categories specifically.
Items to consider reselling during an economic recession:
- Consumer Staples – replenishables such as toothpaste, household cleaners, and food/drinks
- Auto Care and Maintenance – despite the economic climate, people still need to be able to travel. They may do more of their own maintenance and repairs if they’re able, to save a bill at the shop.
- Food Storage & Tupperware – to avoid spending money eating out, meal prepping becomes necessary, and so do food storage containers.
- Cosmetics & Make Up – many wear makeup for confidence, and others to maintain a sense of professionalism. Whatever the reason, they do no go away during a recession. They may find lower cost supplies, but the demand will remain.
- Pet Care Products – pets require care that costs money. They may change the habit of going to the groomer every few months, and opt to try and bathe and groom their pet themselves!
- Clothing – clothing always needs to be replaced and updated. Especially children, who many times need replacement sizes as they grow.
- Baby Products – diapers, formula, baby furniture, etc. Baby’s needs are not relative to the economic climate.
- Home Renovations/Repairs – regular household maintenance is a necessity to keep the value of the home. These will always need to be done.
- Fitness programs – in lieu of a gym membership or personal trainer, some may opt to invest in a home gym to save money over time.
- Camping Gear – Some may not be comfortable spending money on a vacation, but camping and fishing is a great way to relax without the hefty price tag!
- Kitchenware – Again, with more people saving money eating at home, the demand for kitchen appliances goes up!
3. Consider Pivoting Your Business Down Other Avenues
The Covid pandemic of 2020 caused serious damages to the restaurant industry. They rely on the coming and going of their customers. Since people could not come in to eat many were unable to stay afloat. In many cases, restaurants “pivoted” their businesses in an attempt to combat the problem. This is why touchless delivery services and curbside pickup has increased in popularity.
With resale businesses, catering to the customer can keep you in business. How can you pivot your business to increase the likelihood that you can expand your audience and get your products to more people? For example, if you have a lot of health and beauty items, ones that are not profitable to sell individually, can you bulk sell them to make it profitable? Sure, you may not get as much per item, but you’re saving on shipping and listing fees. At the end of the day, if you’re getting more money in your pocket, is that not worth it?
This is where you can get creative with your business. Listening to your customer base, find out what they need. How can you provide that service to them with the supplies and inventory you already have? Pay attention to your competitors. Are they pivoting their businesses? What are they doing? Is it working?
Recession-Proofing Your Resale Business Requires Planning, Careful Oversight, and Hard Work
There’s no easy way to make sure your business survive an economic recession. Your business is unique in the products available, your working capital, your given space, and the amount of time you spend on your business as a whole. This means that solutions that work for us and our business may not work for you (and vise versa).
The most important things to remember is that your customer will tell you what they want if you’re paying attention. If you can provide a way for them to have that, then you’re increasing your chances of not just surviving the recession, but thriving in the midst of it.