How To Make A Living Selling Other People's Products:
Part 1 - The Basics of A Resell Rights Business
by Gobala Krishnan

If you want to start your own Internet-based home business but don’t have your own products, don’t want to earn petty affiliate commissions, and are sick and tired of network marketing, then choosing a “reseller” type of Internet business model may be what you’re looking for.

Unlike affiliate programs where you get paid a commission for any successful sale or sign-up you refer, a reseller business opportunity is starkly different and, in some cases, more profitable. It’s all about securing the resell rights to someone else’s product and then selling it to your own market or list to make 100% profit. In many ways, reselling other people’s products is much less risky too, provided you know exactly what you’re doing.

In Part One of this article, we discuss the logic behind the business model itself and how to get started with the right tools, the right knowledge and the pitfalls to avoid.

How Does a Reseller Business Work?

When you really think about it, there are many traditional businesses that have their foundations in reselling other people’s product or service. Take K-mart for example: all they do is secure the rights to sell someone’s products, stock them up, and sell them. The same concept applies to marketing both tangible and digital products on the Internet. You buy the rights to an e-book someone wrote and you can sell it legally for maximum profit.

Here are some advantages of having your own reseller business:

• Faster start-up – creating products can take weeks, months or even years. If you sell someone else’s stuff, you can get started overnight.
  
• Less risk – If you buy the rights to a hot-selling product, the question of whether it will have a demand or not is rendered irrelevant. You’re just left with the task of finding the buyers and taking their money.
  
• More flexibility – experts can only sell on their specialized industry. A reseller can buy into different markets anytime to capitalize of current trends.

But just like K-mart, Borders, Amazon, and a host of other existing reseller businesses, the only way to hit the jackpot instead of barely scraping through is to have your own unique positioning, or as it’s called in the marketing world, your USP or Unique Selling Proposition. We’ll get to that later…

Tools Of The Trade

To have an autopilot, successful reseller business, you need the correct tools. Here are the bare necessities:

Sequential E-mail Autoresponder – If you don’t want to get tied down by doing routine follow-ups with prospects, the solution is to get a reliable autoresponder. If you don’t know what it is, a sequential autoresponder is a software program that will send pre-written email messages and pre-determined intervals to your prospects.

As the general rule of thumb, most people will need to see your message at least seven times to trust you and order from you. You can always hire a programmer to install an autoresponder script for you, but from my personal experience it’s better to outsource this function. Keeping up with regulations and side-stepping unpredictable email-blocking software by ISPs should be left to people who make a living doing just that. Some of the better ones available as a software solution are:

http://www.AWeber.com
http://www.EmailAces.com
http://www.Getresponse.com

Advanced Shopping Cart – If you plan to sell multiple resell rights products, then you can go crazy just keeping track of everything. You’ll need an advanced shopping cart that not only allows you to manage your product inventory, but also allow you to create cross-selling and up-selling functions easily. If possible it should also give you advanced features like download page protection, coupon and discounting systems, automatic shipping calculator and other useful feature. An example of a good investment would be http://www.1shoppingcart.com.

Credit Card Processor – To accept payment online, just having a Paypal or Stormpay account doesn’t quite cut it. You’ll need your own processors, and good ones are available from http://www.2checkout.com, http://www.Worldpay.com, and a host of others for reasonable fees.

Ad Tracking Software – To measure exactly which of your marketing campaigns turn to cash, you need an ad tracker. This should come with your shopping cart system or autoresponder or both. Avoid paying for a dedicated ad tracking software if you can, because quite honestly it’s just a simple program that is sometimes over-hyped and over charged on the Internet.

Complete Web Hosting – As your reseller business grows, you’ll find the growing need to use third-party software and custom programming, so make sure you have all the basic standards covered: PHP, CGI, Perl, MySQL and Apache. Ask your Web host if these are already provided in your account. If it’s not, you may want to consider getting a “reseller Web hosting” account and resell the extra bandwidth as well.

Understanding Resell Rights

When purchasing a resell rights product, make sure you understand exactly what type of license it provides. Here are the basic four levels of rights you can obtain:

Level 1 = Resell Rights - You obtain the right to sell the product yourself, but you cannot allow your customers to sell it. If your customers want to sell the same product they need to purchase their own rights from the original author or publisher.

Level 2 = Master Resell Rights - You obtain the right to sell the product yourself, and your immediate customers can sell it as well. This goes down only two levels, and your customer’s customer does not have the right to resell the product. They should buy the rights from you.

Level 3 = Generic Resell Rights - Anyone who owns the product can sell the product and also sell the resell rights to the product.

Level 4 = Customization Rights - Customize, re-brand, or repackage the product. There are many levels to how much customization can be made, some even offering to replace their name with yours.

Here’s an illustration that will make it clearer for you:

In the Level 1 rights, notice that the owner or publisher can choose to sell basic Resell Rights to anyone he chooses. The customers who bought them now become Resell Rights Holders, and they can in turn sell the product to any end customer they want.

In the Level 2 rights, if you buy a Master Resell Rights from the owner, you can sell the product to the end customer directly, or you can sell basic Resell Rights to another business owner who can sell it to the end customer. A Resell Rights holder cannot sell the rights to the product at all. In Level 2, a Master Resell Rights Holder cannot directly sell Master Resell Rights; only the owner or publisher of the product can do this.

In a Level 3 type of Generic Resell Rights, anyone who buys the product can resell both the product itself, and the resell rights included, to unlimited levels deep. In this scenario as long as you have bought the product, you are given the rights to resell it. Generic Resell Rights are usually inseparable from the product itself; you cannot sell the product and the rights as two different packages.

Who does the customer buy from? In the illustration above, you’ll note that the end customer can buy from:

1. The Owner / Publisher
   
2. The Resell Rights Owner
   
3. The Master Resell Rights Owner
   
4. The Generic Resell Rights Owner

By offering a Generic Resell Rights, however, the owner makes both basic Resell Rights and Master Resell Rights redundant. Beware of sites that want to sell you Master Resell Rights when the product itself already comes with Generic Resell Rights, since this makes no sense at all.

Avoiding The Common Pitfalls

If you want to avoid stumbling into Reseller Hell, there are a few things you should check, double-check and triple check to make sure you’ve nailed it down.

Does the product have any real value? – Recently a lot of junk software and e-books are starting to clutter the market with one thing in common - they all come with master resell rights. Most of these products are low-quality sorry excuses for content or usability and the only reason they’re being sold in the first place is the irresistible notion that you own the rights to sell the product yourself. Go to Ebay and for less than five bucks you can buy over 500 products with resell rights. Doesn’t sound right, does it? A lot of authors also use it as a marketing ploy to spread their own name to all four corners of the Web.

Are people giving it away for free? – I once made the mistake of buying a resalable product only to realize that others are giving it away for free as a subscription bonus. If someone can get it fro free, why would they want to buy from you? This usually happens when the original author, either intentionally or by innocence, fails to specify any terms and conditions.

Does the product seller have resell rights? – Just because the owner of the Website claims that he does, it doesn’t mean that you should take his word. Check with the original publisher or author to determine if the seller owns the rights, and what type of rights he own.

Is the product compatible with your market? – If you focus on the golf market, buying the rights to an Internet marketing product will only spread your operations thinner and rob the overall Unique Selling Proposition of your business. Instead, focus only on buying the rights to related or complimentary products.

Are you selling the correct rights? – Based on the section above about types of resell rights, are you making the correct claim? For example, if you purchase master resell rights you can only sell basic resell rights to your customers. You cannot sell master resell rights yourself – only the original creator or publisher can do that.

Are the terms reasonable? – Some authors only allow you to sell their product as a standalone item, whereas others allow you to package or bundle it in any way you see fit. Some authors set a minimum selling price or standard selling price, others don’t. Read the terms to see if it’s reasonable before you buy the resell rights.

Do you have an inventory system? – Imagine if K-mart employees had to rely on their experience and instincts to tell you if a certain product is available and you get the picture. Keeping an inventory list of the name of the product, author, original selling price, recommended selling price, terms and conditions and other information will not only save loads of time, it will also help you sell better. Organize your collection into categories, sub-categories even as bundled packages. As mentioned above, a smart shopping cart system like www.1shoppingcart.com can help you do this, albeit to a certain extent.

In part 2 of this article, we discuss how to find the “diamond” resalable product, and how to create advanced product packages.

Gobala Krishnan is a freelance writer for the IAHBE and a home based entrepreneur in Kuala Lumpur, Malaysia. His company helps frustrated and underpaid employees transform their passion into a profitable home based Internet business. For more info visit http://www.LibertyStraits.com.