I would immediately increase my prices to just over what they are selling my item for.

Someone did this to me! Not even a brick and mortar-a vendor market. I drove up and there were my skirts hanging front and center. The mother of thevVendor had been my customer the day before!! I thought “I must be doing something right!”

I wouldn’t be happy about it! No I wouldn’t resell to them

Most of my items are one of a kind collectibles or still very limited. I fully expect some to end up resold eventually. As long as no one is fraudulently claiming they made them, they’re free to do that.

Once someone buys something from me, its their to do with as they please. They only exception is infringement of copyright, ie they buy a pattern and republish as their own. Other than that I would approach and make arrangements for future restocking of their store. Win/win

As long as they aren't claiming to have made the item or promising things it can't do then I'm just gonna let them. I'm getting my asking price and a regular customer. I would however disable any return customer coupons and I always put my business card in the package.

I feel like this means your products are priced too low for retail - i.e. at your retail price it was attractive as a wholesale item. But in and of itself - once you sell a physical product, it's quite difficult to control what people do with it.