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. As Christmas approaches, parents and grandparents begin a mad scramble to track down and purchase the year’s hottest toys.

If you need to make some extra money for the holidays, you could start a side hustle reselling in-demand Christmas toys. Knowing how to leverage supply and demand could put a little extra jingle in your pockets, 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 #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 to you, it’s important that you start planning sooner rather than later. In-demand toys can easily sell out, so waiting until Black Friday to start shopping could backfire.

For example, on Sept. 3, 2020, Walmart, the nation’s largest retailer, published its annual list of what it believes will be the upcoming season’s most popular toys. Reading over these lists is a great place to start your research, as it gives you specific items that you can begin to watch or buy.

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

Tip #2: Look Before You Shop

When it comes to making your purchases, your key objective is to identify popular items that can be resold at a higher price than what 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 – 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.
  • 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 when it hits the shelves.
  • Look for the lines When people are willing to wait all night for the store to open or show up at midnight to be the first to buy, savvy resellers smell the profit in the air. Nike shoes, Harry Potter books, and the ever-popular newest edition of the iPhone all fit into this category.
  • Check out the chat rooms – A little research into the top-selling items reveals a host of 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.  

Once 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. You can then compare the sales price for each item with what you think you could resell it for. 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 #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 easy and convenient. If you’re interested in reselling toys online, some of the venues you might consider 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 important to know whether the platform charges any 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. As fees can take a bite out of your profits, it’s important to factor those in when setting your sales price.

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

Tip #4: Get a Head Start on Next Christmas

The chance to make a buck doesn’t have to end on Dec. 26. If you don’t manage to score this year, put the leftover items in your closet and wait until next year. Many items enjoy a multiyear run of popularity that leads to seasonal shortages. The very 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 your item can be listed 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 #5: Don’t Forget About Taxes

Reselling toys at Christmas or any other time can help you earn extra money, but you may owe the Internal Revenue Service (IRS) a slice of the pie. 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 who have $20,000 or more in gross sales and 200 or more sales transactions per year. This form is sent to you and the IRS. 

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 can claim deductions for certain business and side hustle expenses to 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, 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. However, your efforts could result in a part-time income all year long. It’s even possible that you could expand your efforts to include antique toys, collectibles, and/or choice items picked up at estate sales. With a good eye, you may even be able to turn it into a successful small business.