A Guide to Reselling Toys at Christmas for Extra Money

It's unlikely to supplant your main income, but can bring in extra cash

The process referred to as “flipping” has long been popular among real estate investors, but it can be applied to just about any in-demand item, from hand lotion to handbags. The holiday shopping season can afford an opportunity to make extra money flipping toys as parents and grandparents begin a mad scramble to track down and purchase the year’s hottest items. Knowing how to leverage supply and demand could put a little extra jingle in your pockets this Christmas, and these tips can help you get started.

Key Takeaways

  • Purchasing toys early, perhaps at sale prices, and selling them closer to Christmas can yield a tidy profit if you’re choosing items that will be in demand during the holiday season.
  • Reselling toys could become a year-round side hustle if you’re interested in an ongoing source of income.
  • Appropriately pricing toys for resale is key to balancing costs against profits and generating a solid return on your investment.
  • Selling items for extra cash could have tax implications, depending on what you’re selling and how much profit you’re turning.

Tip No.1: Start Early

If buying a shopping cart full of the most popular toys and reselling them at a profit sounds like a good idea, it's important to start planning sooner rather than later. In-demand toys can quickly sell out, so waiting until Black Friday to start shopping could backfire. This is especially true as supply chain challenges and labor shortages persist, making it difficult for retailers to keep items in stock online and in stores.

It's helpful to mark your calendars to keep track of retailer announcements regarding holiday shopping and upcoming promotions. For example, on Sept. 29, 2021, Walmart, the nation's largest retailer, published its annual list of what it believed would be the upcoming season's most popular toys. Reading over these annual lists is a great place to start your research because it gives you specific items that you can begin to watch or buy before the holiday shopping season gets underway.

Set your budget early, so you know how much stock you can afford to purchase ahead of the holiday season.

Tip No.2: Look Before You Shop

When making your purchases, your key objective is to identify popular items that can be resold at a higher price than you paid for them. The goal is to maximize your profit margin when reselling toys at Christmas.

There are a variety of strategies you can use to fine-tune your final shopping list, including:

  • Look at last year's list of top-selling items (and the year before, too)—Perennial top sellers can be identified in advance and bought up before they are sold out.
  • Talk to parents—They know what their kids want and what the children of their friends and relatives want. They are an easy-to-find source of detailed intelligence.
  • Talk to kids—They're never shy about telling you what they want Santa to bring.
  • Talk to Santa—He spends all day in the mall listening to requests.
  • Spend some time in the store if possible—Cashiers, store managers, and stock associates know all of the popular items. They also know when the store expects to get its next shipment of those goodies.
  • Watch the news—Many stations run stories about popular and hard-to-find gifts, especially when shortages drive up demand for a particular item.
  • Watch for items that are taking preorders—Video games are well known for this strategy. If there's a list of people signing up in advance to get the item, you bet there will be people ready to buy it when it hits the shelves.
  • Look for the lines (online or in stores) —When people are willing to wait all night for the store to open, show up at midnight to be the first to buy, or permanently camp out on the store's website, savvy resellers smell the profit in the air. PlayStation 5, for example, has maintained its sold-out status online and in stores since its release in November 2020, with no end to demand in sight.
  • Check out the chat rooms—A little research into the top-selling items reveals many sites dedicated to people doing exactly what you are trying to do.
  • Look at the data—There are many sources of sales data (including some of the online sites you will be looking to use) that provide insight into the latest popular and quick-selling items.

When you've made your potential shopping list, figuring out the current selling price is easy. Just look the item up on eBay, Amazon, Craigslist, and just about everywhere else online buyers and sellers come together to do business. Compare the sales price for each item with your estimated resale price. This can help you get an accurate idea of whether reselling a particular toy is worth your while.

Use alerts to track prices and stay on top of deals. Amazon, for instance, will send you alerts when the price of an item on your watchlist changes.

Tip No.3: Choose Your Selling Venue

If you plan to resell toys at Christmas or any other time, it's important to give some thought as to where you want to sell them. Selling online can be straightforward and convenient. Some of the best venues for reselling toys online include:

  • eBay
  • Amazon
  • Craigslist
  • Facebook Marketplace
  • Facebook Local Bargain Groups

You could also resell toys through an app such as Letgo. When reselling toys online, it's essential to know whether the platform charges fees to create a listing or process a sale. For example, eBay charges both a listing fee and a fee when you make a sale. Because fees can take a bite out of your profits, it's important to factor them in when setting your sales price. You'll also need to factor in anything you might pay to ship toys to buyers (or have them delivered to you) if you're carrying those costs.

Amazon implements seasonal restrictions if you haven’t already established yourself as a vendor.

Tip No.4: Get a Head Start on Next Christmas

The chance to make a buck doesn’t have to end on Dec. 26. The day after Christmas kicks off, another mini-sale season begins as retailers attempt to clear out holiday merchandise to make room for incoming spring products. If you don’t score big this year, put any leftover items in your closet and wait until next year. Many items enjoy a multiyear run of popularity that leads to seasonal shortages. The same items that were hot sellers this year may be in demand again next year.

Christmas toys do not need to be sold only in December. Listing sites such as Craigslist and eBay mean you can list your item year-round for free.

If the next year doesn’t bring you any luck, leave the items in their original packages and put them in the closet for 20 years or so. It’s a strategy that has worked out well for owners of certain versions of popular toys, such as Barbie, Beanie Babies, Thomas the Tank Engine, and just about every action figure from Star Wars.

Just be sure to keep the original packaging and any accessories. Buyers want their toys to be in mint condition. Like many other collectibles, the difference in value between an unopened toy in pristine condition and a heavily used toy that shows signs of its age can be substantial.

Tip No.5: Don’t Forget About Taxes

Reselling toys at Christmas or any other time can help you earn extra money, but you will owe the Internal Revenue Service (IRS) a slice of your profits. IRS tax rules require you to report all taxable income, including money earned from a side hustle or business.

Additionally, online selling platforms, such as Amazon, and payment processors, such as PayPal, are required to issue a Form 1099-K to sellers for transactions above the minimum reporting thresholds.

For tax years prior to 2022, you'll receive a 1099-K if you have $20,000 or more in gross sales and 200 or more sales transactions per year.

For tax years of 2022 and beyond, you'll receive a 1099-K from all payment settlement entities (PSEs) that process debit card, credit card, or prepaid credit card payments on your behalf and from any PSE that processes more than $600 in third-party network transactions.

Failing to report all of your income could land you in hot water with the government, resulting in a tax bill if the IRS determines that you've underpaid your taxes for the year. The good news is that you might be eligible to claim tax deductions for certain business and side-hustle expenses, such as advertising or payment-processing fees, which may help offset your tax liability.

Keep detailed records of your income and expenses when reselling toys, so you can file your tax return accurately.

The Bottom Line

If you decide to try your hand at reselling toys during the holiday season or any other time of year, keep in mind that your initial efforts may put a few extra dollars in your pocket but aren't likely to generate a big enough income stream to replace your primary source of income. But you could make a decent amount of money on the side for your efforts. It's even possible that you could expand your reselling activity to include antique toys, collectibles, and choice items picked up at estate sales. With a good eye, you may be able to turn it into a successful small business.

FAQs

Can Reselling Toys Be Profitable?

Yes, if you're able to maintain a solid profit margin. This means researching the hottest toys to buy and flip and understanding how much you might be able to charge for them versus what you'll pay to buy them. When starting a toy flipping side hustle or business, it's also essential to factor in other costs, such as shipping fees and taxes.

What Toys Can You Sell for Money?

Virtually any toy can be sold for money as long as there's demand for it. However, some toys may command higher prices than others when supply and demand are taken into account. The highest-value toys for reselling are often the ones that are difficult to find, dubbed the "hot" item for the season, or are collectibles that increase in value over time.

What Are Good Resale Toys?

Good toys for resale include toys that people want to buy, are in good condition, and can be sold for more than what you paid for them. Examples of toys you might be able to flip for profit include gaming consoles and games, scooters or bicycles, Legos, collectible or vintage items, and any highly sought-after toy.

For How Much Should I Sell Used Toys?

When pricing used toys for resale, you typically want to charge anywhere from 50% to 70% less than the retail price. But this can depend on the toy's condition and whether it's a vintage or collectible item. In the case of collectibles, such as Beanie Babies or something like an original Barbie doll in its package, you could likely charge much more than the toy's initial price.

Article Sources
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