What is “Sedori”? A Beginner’s Guide from Sourcing to Selling for Side Jobs!

• This article is for reference only as it is merely a translated version of the Japanese article below.
  せどりとは？初心者・副業でも始められる仕入れから販売方法まで解説します！ (Japanese version)

In recent years, more people have started sedori as a side job. The spread of the internet and social media has made it easier to research product trends and market prices.

One of the reasons for its popularity is that anyone can easily purchase and sell products using online shops.

This article explains the complete process, from product research to sourcing and selling, for beginners interested in trying out sedori.

For those who want to start sedori but don’t know where to begin, this is a great opportunity to learn the basic steps.

What Does Sedori Mean? Its Origin

Sedori refers to the act of buying products cheaply and selling them at a higher price to make a profit. Originally, the term was used in the context of finding rare items in second-hand bookstores and reselling them. However, today, it broadly refers to the act of purchasing goods at a lower price and selling them for a profit.

There are two main types of sedori:

Store-Based Sedori

This method involves purchasing products at low prices from physical stores and selling them online at higher prices. It involves finding discounted products from various stores like electronics shops, bookstores, or home centers.

The purchased goods are then sold on e-commerce platforms, auction sites, or flea market apps. This business is suitable for people who are good at comparing prices and gathering information on sales.

Online Sedori

This method involves sourcing products from online auction sites, resale platforms, or e-commerce websites and selling them at a higher price on other online platforms.

The advantages of this method include the ability to trade anytime and anywhere, access to a wide variety of products, and the option to use dropshipping*, which allows for selling without holding inventory.

*Dropshipping is a system where the manufacturer or supplier ships the product directly to the buyer after the sale.

Benefits of Starting Sedori

The benefits of starting sedori are as follows:

Low Startup Costs

By using online shops, the initial costs of sedori can be kept low. Unlike running a physical store, there are no expenses such as rent or utilities, and many services allow users to start for free, keeping monthly costs low.

Additionally, the quantity of products can be adjusted based on personal discretion, allowing a gradual approach with small investments to avoid large losses. This makes it easy to accumulate experience and grow the business at a comfortable pace.

No Special Skills Required

Unlike side jobs such as programming or video editing, which require specialized skills, sedori follows a straightforward process of “buying low and selling high,” involving simple steps like sourcing, selling, and shipping.

Since no special skills are necessary, it is an easy side business to start once the process is understood.

Flexible as a Side Job

Sedori can be started casually at one’s own pace. While quick shipping is important once an order is placed, product searches and sourcing can be done on a smartphone during breaks or commuting.

Exploring second-hand stores on weekends for hidden gems can also be an enjoyable activity. This business model is ideal for those who have limited time but want something easy to start and continue.

Disadvantages of Sedori

On the other hand, sedori also has its disadvantages:

Cost of Sourcing

To aim for significant profits with sedori, it is necessary to purchase a large number of products, which requires a reasonable amount of capital. If funds are limited, it’s best to start by gradually accumulating profits to increase capital.

Risk of Holding Inventory

It is important to understand that not all sourced products will necessarily sell. Products may remain unsold if demand is lower than expected, or if trends are missed.

If items don’t sell, they might need to be sold below cost, and in cases where storage space is unavailable, warehouse fees may also apply.

To avoid large losses, thorough research on products before sourcing is essential.

Difficulty in Maintaining Consistent Profits

While making profits in the short term through sedori is relatively easy, maintaining stable profits over the long term can be challenging. Trends are constantly changing, so it is necessary to continuously monitor market trends. Achieving stable profits requires a keen ability to select products that align with current trends.

Time-Consuming Packaging and Shipping

Shipping products can be more time-consuming than expected. Careful packaging is necessary, especially for fragile items, to prevent damage. For those who find it difficult to handle shipping on their own, using services that handle shipping on behalf of sellers is a good option.

What You Need to Start Sedori

Smartphone and Computer

A computer and smartphone are essential for sedori. They will be used in all steps, from market research to listing products and sourcing. For small-scale sales, a smartphone is sufficient, but for managing sales and using multiple platforms, a computer is more efficient. Be sure to also have a stable internet connection.

A label printer is also necessary. For example, if selling on Amazon, a printer is needed for printing product labels, invoices, and shipping labels.

Startup Capital

To make profits from sedori, some initial capital is required. When first starting, it is recommended to begin with a small amount, such as 50,000 to 100,000 JPY.

The average profit margin in sedori is said to be around 10-30%, so the goal is to grow 100,000 JPY into 130,000 JPY, and then 130,000 JPY into 169,000 JPY. It’s essential to avoid large risks while gaining experience.

Credit Card and Bank Account

A credit card is necessary for purchasing products and paying monthly fees for services like Amazon.

It’s recommended to use a credit card specifically for sedori to avoid mixing personal and business expenses, which could complicate financial management.

A dedicated bank account for sedori is also a good idea.

Source: WISE

For those considering sourcing or selling internationally, a WISE multi-currency account is highly recommended.

The reasons to recommend WISE are:

• It allows holding 47 different currencies in one account, avoiding unnecessary currency conversion fees.
• International transfers are cheaper due to its P2P matching system*.
• All fees are clearly displayed in advance using the mid-market rate**.

*The P2P system reduces costs by matching transfers domestically rather than moving money across borders.

**The mid-market rate reflects the true value of a currency, unlike the marked-up rates typically offered by banks or exchange services.

For example, sending 10,000 JPY to the US with WISE results in as follows.

As of April 17, 2024: Survey conducted on the official WISE website, “Comparison of Exchange Rates”

WISE results in 63.74 USD received, while using MUFG Bank only results in 25.68 USD, based on the rate of 155 JPY to 1 USD. That’s a difference of about 5,899 JPY!

WISE allows for significant savings on fees that are often considered unavoidable.

Although not widely known in Japan, WISE has over 16 million users globally and supports more than $10 billion in transfers monthly. It is a highly trusted service, licensed by the Kanto Local Finance Bureau.

In sedori, unnecessary costs must be minimized to maximize profits. WISE is a smart way to save on international transfer and conversion fees when sourcing from abroad.

Packaging Materials for Shipping Products

When shipping products, packaging materials are essential. These include cardboard boxes, label stickers, OPP bags, cushioning materials, and cleaning tools for the products. Since these are consumables, it is advisable to purchase them in bulk from home improvement stores or online to keep them in stock.

Packaging is not just about protecting the product, but it directly impacts customer satisfaction. When shipping small items like accessories, using envelopes or letter packs can help reduce shipping costs. It is important to keep shipping costs as low as possible. Compare various shipping methods and choose the most cost-effective option.

Antique Dealer’s License (for handling used goods)

To sell used goods, an antique dealer’s license is required. This is stipulated by the Antique Dealings Act and requires permission from the public safety commission of each prefecture.

The definition of “used goods” is broad, encompassing not only items that have been used but also those that have been opened. If planning to sell used goods, it is advisable to obtain the license early on. The application process takes place at the Crime Prevention Section of the Community Safety Division at local police stations. Consulting with the local police station in advance can help the process go smoothly.

How to Start Reselling and the Steps Involved

Researching the Products to Sell

First, choose the category of products to sell. Recommended categories for beginners include books, comics, toys, games, electronics, CDs, and DVDs. If the category is one of personal interest, research will be more enjoyable, and knowledge can be deepened more easily.

Avoid large items that take up space or delicate products that require special care. Instead, opt for products that are easy to manage at home.

After selecting the product, conduct research. Check the status of the product on online shops and flea market apps. Key points to check include:

1. Is the product popular and selling well?
2. Are there many listings of the same item?
3. At what price are they typically sold?
4. Is the product new or used?

If online searches don’t provide sufficient information, consider using dedicated research tools.

Some representative research tools include:

• Keepa: Tracks past sales data on Amazon to help determine whether a product is profitable.
• NEWTYPE DELTA TRACER: Similar to Keepa.
• Leafer: Provides information on Amazon’s product rankings, monthly sales figures, and price trends.

Using these tools will help understand the product’s past price trends and sales performance. Additionally, past price trends can be checked on apps like Mercari and Yahoo Auctions.

Choosing Where to Source Products

Decide whether to source products through in-store reselling or online reselling, based on personal strengths. Each method has its advantages and disadvantages, so it’s important to select the one that suits individual needs.

For more details on how to successfully source products, refer to the related article: “The Secret to Success in Reselling: Recommended Sources and How to Maximize Profit When Sourcing.“

Features of In-Store Reselling

In-store reselling is ideal for those with a car or who live near many stores. On the other hand, it may be difficult for those without a car or who are too busy to find time.

Advantages:

Fewer competitors since it requires physically visiting stores.

The ability to check the actual products in person.

Disadvantages:

Transportation costs to the stores.

Sourcing is geographically limited.

The need to personally carry the sourced products.

Features of Online Reselling

Online reselling is suited for those familiar with the internet and who prioritize efficiency. However, it may not be ideal for those who prefer to physically check the products.

Advantages:

Sourcing can be done anytime and anywhere with internet access.

A wide range of sourcing options.

Disadvantages:

Inability to inspect the actual product in person.

High competition with other buyers.

Sourced products need to be stored at home until sold. Be careful not to order too much stock to avoid overwhelming storage space.

Determining the Sales Platform and Listing the Products

To sell products efficiently, the target audience and the online platform used for selling should match. For example, if selling goods related to male idols aimed at women in their 20s and 30s, platforms like Mercari or Rakuma are appropriate. For products with overseas demand, international platforms like Amazon or eBay are recommended.

Different platforms have varying selling fees, such as monthly subscription fees or sales commission fees. When setting the sale price, ensure it remains profitable after deducting these fees and shipping costs. Since high fees can significantly reduce profit margins, it is essential to verify these fees beforehand.

Furthermore, it is important to select an e-commerce site or flea market app that provides services tailored to specific needs. For instance:

• If preferring anonymous shipping, use Mercari.
• If wanting product storage and shipping handled, use Amazon.
• If desiring assistance with the listing process, use Rakuma.

Choose the platform that best fits the business model.

Packaging and Shipping

Once the product is sold, package it and ship it. Packaging is important for two key reasons:

1. Preventing Damage to the Product
   If the product is damaged during shipping, it can result in returns. Damaged products cannot be resold, and shipping costs are wasted. Packaging is crucial to protect the product and ensure it safely reaches the customer.
2. Enhancing Customer Satisfaction and Earning Positive Reviews
   Well-packaged products tend to receive higher customer ratings. Positive reviews serve as trust signals for potential buyers, leading to more sales. Moreover, satisfied customers often become repeat buyers, which can lead to increased sales over time.

Careful packaging not only protects the product but also builds reputation and contributes to long-term success.

When Does Reselling Become Illegal?

Reselling, or “sedori,” refers to the legal commercial practice of purchasing goods at a lower price and reselling them at a fair market value. Like any typical business practice, it is not illegal.

However, there is a background to why reselling is sometimes considered problematic or “risky.” Specifically, fraudulent or malicious reselling practices, such as those seen during the COVID-19 pandemic with the excessive resale of masks at inflated prices, have raised concerns.

Such actions are considered improper commercial practices and are different from the original purpose of reselling. While reselling itself is not illegal, certain methods of conducting it can lead to problems.

Selling Tickets at Inflated Prices

The bulk buying and resale of tickets for concerts, sports events, and theme park admission at inflated prices were banned by the “Act on Prohibition of Unauthorized Ticket Resale,” which took effect on June 14, 2019. This law prohibits reselling tickets at prices higher than their face value without the organizer’s permission after confirming the purchaser’s name and contact information.

Unauthorized resale of tickets can result in penalties, including up to one year of imprisonment or a fine of up to JPY 1 million, or both. These regulations are in place to ensure fair ticket trading and allow fans to enjoy events at reasonable prices.

Unauthorized Copying and Selling of Digital Content

Digital content refers to information and entertainment created and distributed via the internet or computers, such as e-books available on platforms like Kindle or Rakuten Kobo, music files on Spotify or Apple Music, and films or TV shows accessible on platforms like YouTube or Netflix.

Selling unauthorized copies of such digital content is a violation of copyright law. This could result in penalties of up to 10 years of imprisonment, a fine of up to JPY 10 million, or both. These laws are in place to protect the rights of creators and ensure the proper distribution of digital content.

Selling Alcohol or Pharmaceuticals Without a License

Selling alcohol without a license is a violation of the Liquor Tax Law, punishable by up to one year in prison or a fine of up to JPY 500,000. In addition to alcohol, the unauthorized sale of tobacco, pharmaceuticals, and animals is also prohibited.

Furthermore, certain products like food, real estate, and financial instruments cannot be sold without specific permits or licenses.

Selling Counterfeit Branded Goods

Selling counterfeit branded goods is a violation of the Trademark Law and can result in imprisonment or fines. In some cases, selling counterfeit goods may also be considered fraud, leading to even more severe criminal penalties. It is important to comply with trademark laws and ensure that the goods being sold are sourced legitimately.

Is It True That Reselling Should Be Avoided?

The reselling market is highly competitive, with many people handling the same products, which makes it difficult to generate profits. Additionally, resellers must always stay on top of market trends, manage their inventory properly, and be mindful of legal risks, which can be time-consuming and labor-intensive.

However, reselling can also be a great opportunity to learn valuable business skills, such as market analysis and strategic thinking, which can be applied to other ventures. It is a recommended side business for those looking to develop skills that may benefit their main occupation as well.

For those looking to increase their income or establish additional streams of revenue outside of their primary job, reselling might be worth exploring.