A Guide to Reselling Toys at the Holidays for Extra Money

Reviewed by Ebony HowardFact checked by Vikki VelasquezReviewed by Ebony HowardFact checked by Vikki Velasquez

Flipping has long been a popular strategy among real estate investors. It refers to buying a property, holding onto it for a short length of time, and reselling it for a profit. But the term flipping doesn’t only refer to real estate. It can also be applied to just about any in-demand item.

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 season, 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.

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 sell out quickly, so waiting until Black Friday to start shopping may 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 September 9, 2024, 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. You can also plan out when you’ll need to order those items to ensure that they’re delivered in time to resell them during the holidays.

Important

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

2. Do Your Research

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. As with any other type of flipping, the goal is to maximize your profit margin when reselling toys for the holidays.

There are a variety of strategies you can use to fine-tune your final shopping list. One of the first things you should do is to look at the list of top-selling items from the last two years. Perennial top sellers can be identified in advance and bought up before they are sold out. You can also check out the chat rooms by doing a little research into the top-selling items. This can reveal many sites dedicated to people doing exactly what you are trying to do.

Here are a few other considerations to point you in the right direction:

• 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 their parents—or Santa—to bring them.
• Talk to Santa. He spends all day at the mall listening to requests.
• Spend some time in stores. Cashiers, store managers, and stock associates know all of the popular items. They also know when their store expects to get its next shipment of those goodies.
• Spend time on social media, which can be a great place to check out the latest trends and see what holiday shoppers are interested in when it comes to toys or any other hot gift item. Instagram, TikTok, and X (formerly Twitter) can all be excellent resources when you need to get a feel for which toys are likely to be bestsellers.
• 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.

Scout sources of sales data that provide insight into the latest popular and quick-selling items. Consider looking for lineups online and in stores. When people want to wait all night for the store to open, show up at midnight to be the first buyer, or camp out on the store’s website, savvy resellers can sense a profit. For instance, PlayStation 5 maintained its sold-out status since its release in November 2020, with no end to demand in sight.

When you’ve made your potential shopping list, figuring out the current selling price is easy. Just look up the item on Craigslist, eBay, and Amazon, or 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.

Note

You can track prices with alerts and stay on top of deals. For instance, Amazon sends alerts when the price of an item on your watchlist changes.

3. Choose Your Selling Venue

If you plan to resell toys during the holidays 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
• Apps like OfferUp

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 separate fees for listing and making 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 what you might pay to ship toys to buyers (or have them delivered to you) if you’re carrying those costs.

Can you sell new toys on Etsy? Generally, no. That’s because Etsy doesn’t permit reselling. You can, however, sell vintage items or handmade toys through the platform. Just like eBay, consider the shipping costs and fees Etsy charges before setting up an account to determine whether it’s worth your while.

Warning

If you’re considering selling on Amazon, review the restrictions and guidelines for doing so if you haven’t already established yourself as a vendor.

4. Get a Head Start on Next Year

Many retailers clear out holiday merchandise to make room for the incoming spring stock the day after Christmas. 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.

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 its age can be substantial.

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

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.

Online selling platforms, such as Amazon and payment processors like PayPal, are required to issue a Form 1099-K to sellers for transactions above the minimum reporting thresholds. If you’ve resold items in the past, note that these thresholds have changed:

• For Tax Years up to and Including 2023: You’d receive a 1099-K if you had $20,000 or more in gross sales and 200 or more sales transactions per year.
• For the 2024 Tax Year and Beyond: The IRS is setting a $5,000 threshold for 1099-Ks sent by payment settlement entities that process debit card, credit card, or prepaid credit card payments on your behalf and from any PSE that processes 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.

How Fast Do the Hottest Christmas Toys Sell Out?

If you’re hoping to pick up some of the most sought-after holiday toys, you’ll need to be fast. Depending on the toy and how in-demand it is, stock may sell out in stores and online in a matter of minutes. Signing up for your favorite stores’ email list can be a great way to keep track of upcoming holiday sale dates and new toy releases.

Is Reselling Toys Worth It?

It can be, 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, it’s also essential to factor in other costs, such as shipping fees and taxes.

Which 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, games, scooters, bicycles, and Legos.

How Much Should I Sell Used Toys for?

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, you could likely charge much more than the toy’s original price.

The Bottom Line

If you decide to try your hand at reselling toys during the holiday season or at any other time of the 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 day job. 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 toy resales into a successful small business.

Read the original article on Investopedia.