Before You Buy in Bulk

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Buying in bulk can be a great way to resell online and there are some great bargains to be had when you buy in bulk at low prices. If you can get a bulk purchase of catalog returns or manufacturers closeouts for example, then sell these goods online, maybe through eBay, Amazon or Craigslist, you could make a very good profit.

But before you dash online to find the latest deals, think about some of the principles of sensible business buying and don't get caught out with a shady deal. Unfortunately when you buy surplus and liquidation goods, it is an area of business that is notorious for scams and fraudsters. There are lots of websites that look perfectly respectable offering some hard to resist deals but plenty of people have been ‘had’ when the goods don't appear after they've paid their money. So how do you know who to trust and how can you safely do a deal?

What are you buying?

Try to step back and look at the deal objectively -- try to understand exactly what you are letting yourself in for. Ask yourself why these products are being sold in bulk -- is it because they are faulty in some way or has the manufacturer gone out of business? Could it be there is no market for these goods and they are being offloaded? Could they be stolen goods? Also consider the safety aspects -- are you buying a batch of toys that are unsafe for children, or electrical goods that are faulty? What about branded items -- are they well-known brands? Just evaluate the merchandise before you buy and try not to get carried away with the enthusiasm of getting a great deal.

Look at the costs

A deal may look great on the surface, but have you thought about other costs associated with it? Do you have to pay for delivery? Are there any special requirements for shipping these products -- such as import or export documents and so on? Do you have to spend a lot of time repackaging or assembling products which will eat into your profit margin? Take time to look at the real cost of these products because there is often more to it than just the cost of buying them online -- you have to consider the costs involved in getting them and processing them ready for sale.

Do you have a market?

Also, consider how you will market your products and whether there is actually a market for them. If you already own a business and these products fit in with your existing lines, it would be much easier than if you are diversifying and have to find new prospects. Marketing costs can add up considerably and you don't want to be left with a bulk order you can't shift.

Entrepreneurs tend to get overexcited when they see a fantastic deal with merchandise at a fraction of the retail value -- it's easy to get carried away but stop and think seriously as to whether you really do have a market for the products at a price that will give you a decent profit margin. You may have to think about tying up your money in all this inventory for months, or even years on end while you find your customers.

Going ahead

If you have decided that after doing all your due diligence you still want to go ahead and take advantage of a fabulous deal, then make sure you pay attention to the following:

•    Make sure your supplier is reputable -- it's better to deal with established manufacturers, wholesalers and liquidators than somebody you've never heard of. Make sure you get assurances in writing of exactly what the deal consists of and what the inventory contains.

•    Calculate all your costs, including the unit price of each item, the cost of delivery and storage, the cost of handling the goods -- assembling parts and so on, repackaging ready for sale as well as the costs of marketing and shipping products to your customers. Make sure you can sell and make a profit within a reasonable timeframe.

•    Look at the market and whether you already have a customer base that will purchase your new products, or whether you have to go looking for new customers as this can add considerably to the cost and the time it takes to get your money back.

Buying in bulk can be exciting and very profitable when you get a good deal and have a ready market of customers. By doing your homework first and considering these important aspects, you can avoid the problems and enjoy all the benefits.