Should You Resell Toys at Christmas for Extra Money?

It's a holiday scene that is repeated across the globe on a yearly basis. As Christmas Day approaches, parents and grandparents begin a mad scramble to track down and purchase the year's hottest toys. Securing the object of the child's desire can make the parents or grandparents heroes on Christmas morning. Missing out on that must-have item can result in a tearful tantrum as little Tommy or Suzie wonders why Santa didn't bring the right presents.

To avoid breaking their children's hearts, some parents will shell out big bucks. The hottest-selling toys of the year become like long-stem red roses on Valentine's Day. Potential buyers equate them with love and will do nearly anything to get them. Savvy sellers know this and take advantage of the supply and demand to put a little extra jingle in their pockets.

If buying a shopping cart full of the most popular toys and reselling them at a profit sounds like a good idea to you, get an early start on your plan. While Black Friday marks the official kick off of the holiday shopping season, you can actually begin to plan your toy sales strategy long before November arrives. In fact, September is the month when Walmart, the nation's largest retailer, publishes a list of what they believe 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.

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.

There are a variety of strategies you can use, 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 too. 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. Every station runs stories about popular and hard-to-find gifts.
• Watch for items that are taking pre-orders. 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.

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.

With your recently purchase goods in hand and a good idea of the profit you can make, it's time to start selling. While eBay is the venue of choice for many sellers, it's not the only game in town, as Craigslist and other similar sites also provide potential outlets. Amazon, the other big-name sales site, implements seasonal restrictions if you haven't already established yourself as a vendor.

The chance to make a buck doesn't have to end on December 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 multi-year 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.

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.

The practice of reselling toys is not without controversy. Its detractors liken it to scalping tickets for sporting events, concerts and other shows that may be sold out. They blame resellers for driving up prices and accuse them of profiteering.

Its defenders point out that the practice is pure capitalism and completely legal. They are simply buying low and selling high. They are also providing a much-needed and in-demand service to clients who are happy to pay for it.

If you decided 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 it isn't likely to generate a big enough income stream to replace your primary source of income. Still, you never know. You might try it and like enough to become a year-round vendor.

The same process of identifying popular items, buying them and then reselling them doesn't have to be limited to the holiday season. The process, often referred to as "flipping," has long been popular among real estate investors, but can be applied to just about any in-demand item from hand lotion to handbags. Simply watch the trends, make a purchase at your local retailer and then resell it online to a buyer who can't find that item at their local mall. 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 or choice items picked up at estate sales. With some hard work and a little bit of luck, you could turn your newfound passion into a small business.

Also, if you are planning to dig through the basement or explore the attic in search of valuable toys, be sure to keep an eye out for other collectibles. Baseball cards, comic books and antiques of every type have a dedicated market and determined buyers. One person's trash may become another person's cash.