Making Money Buying From Costo To On-Sell – Part 1

Have you ever seen a product at an Australian Costco and thought “Wow, that’s cheap. I wonder if I could buy five and sell them for a profit?”. Then things run through your head like “Am I allowed to resell things I buy at Costco? Can I offer a warranty or returns policy?”, and everything in between. Well I am here to you it can be done, there are many people doing it and I have dabbled in it myself.

Firstly, Costco’s rules are not explicit on reselling products but there in no policy against it. Further to that there are people reselling Costco products. They are mainly doing it through eBay but there is at least one web based retailer who primarily sells Costco product.

The other great policy of Costco that helps with reselling their product is the satisfaction guarantee that currently applies to all product sold in Australian Costco Warehouses. As a result you can offer your customers anything from the minimum statutory warranty required by Australian law through to an extended warranty with no financial risk.

So is the next step heading down to Costco and buying one of everything to list on eBay? Well, I am not sure that is a good business plan. For my mind you should focus on one of three type of product.

First is the ‘.97 special’ or other discounted lines. These are easy to spot by the price tag and are usually on the way ou the door which means that if you are holding stock after Costco sells out you become the only one or one of the few outlets in Australia for that product. Note that ‘.97 specials’ are not always super cheap and you should do some research to see if you can make a profit. There are already a number of eBay sellers offering Costco product and you can search for completed items on eBay to see what they are selling for. Also check the list price at major retailers via their websites.

The second category I that I think you can sell is seasonal and/or unique Costco product lines. Costco often imports American products that you just don’t see on the shelves at other retailers. Getting in on theses products early, especially if they are seasonal, is going to give you a good chance to on sell it. Winter sports gear as we head into the snow season and watersports items heading into summer can be good especially if they are the kind of items you aren’t going to find on the shelves at Target, K-Mart, Big W or any other major Australian retailers.

The final and more difficult category is items that are simply cheap. Those finds that you know are excellent value at Costco’s price. One example are the books. They always seem to be at good prices and box sets are even better. In recent time they have had Game Of Thrones and Roald Dahl box sets that were walking out the door by the trolley load. Yes, I saw one guy load up half a trolley just with the Roald Dahl box sets. I am sure that there are many other examples on the floor at Costco so if you are in the know of retail prices and Costco has a phenomenal price that you can make a profit from then why not give it a go.

If you are going to resell regularly also consider the potential business and tax implications. Selling a couple of items on eBay may be considered a hobby in the government’s eyes, but if you are selling any significant amount you are in business and the government will want their share of your profits. Check out small business advisory websites in your state and at a Federal level for more information.

One final thought…if you are going to resell online, either using eBay or on your own website, you are going to be competing with online prices. Make sure you are competitive with pricing and if you choose to provide an extended warranty because you can, play it up.

Check Out Part 2 of this tomorrow series where I share my own story of reselling Costco products for profit.