People who re-sell online are always looking for a bargain. They go to car boot sales, peruse trade portal listings, look for closing down sales to identify products that can be purchased in volume at a low price and sold for a profit. Unfortunately, one of the problems with bulk purchasing is that the allure of the low price can cause even the most sensible entrepreneur to set aside common sense principles of good business buying.
Know Your Trading Partner
Unfortunately, there are a lot of scams in the surplus and liquidation business. It’s not that hard to put up a respectable looking website and make lots of offers that won’t be honoured after money changes hands. How do you figure out who you can safely work with? You can watch out for scam artists and take precautions such as checking to see if a vendor bank account is a business account or a personal account. Even better – only use companies that are recommended to you.
Understand the merchandise
You need to understand exactly what you are buying. Why is there bulk availability of this product? Is the manufacturer going out of business or is this a reject batch from an ongoing concern? Does the product meet any applicable standards, e.g., electrical safety, child safety and so on? How many of these items are you purchasing? If there are 40 cases, how many items to the case? Is the pallet of products all the same, e.g., are there name brand items on the top and knockoffs on the bottom?
Understand the costs
How much will it cost for you to move the product to your storage facility? Will you need to spend additional time working with the product to assemble or package the items? Will the product require any unusual handling or shipping materials? Each of these factors will add costs that needs to be factored into the price.
Confirm the market
This is a huge question. It’s very exciting to come across several pallets of x merchandise at a fraction of the price and yes, it happens all the time as an importer abandons inventory at the warehouse or a shipment is the wrong colour for the original purchaser but would be ok for you, etc. If the price is low enough, you may well be able to accommodate any special handling the merchandise requires. But, is there a market that will purchase this product? Will they purchase at the price you are offering?
Develop a marketing plan
Once you know the costs, you know the mark-up, there is a market that will buy the product at that price – do you know how you are going to find and sell to that market? In other words, do you have a marketing plan that will move the inventory in a timeframe that makes tying up the money in the inventory worthwhile?
If you are going to need to develop a whole new customer base for this product, you may want to re-think buying the product in bulk. That’s the time to do some trial selling, not burden your business with a lot of products you can’t sell.
Should you bother?
So am I warning you against taking advantage of a bulk buying deal? Absolutely not! The key is to follow the sensible rules of trading:
Check out the supplier to be sure it’s reputable;
Be sure you know what the ‘bulk’ contains.
Get assurances in writing.
Calculate all costs of handling and be sure you can sell at a profit.
Look for deals within your area of business so that you already have a built-in customer base that will purchase these items.
It’s always satisfying to score a coup by buying low and selling at a bigger profit than usual. Keep your eyes open and your business head on while you search for those deals.
FINDING BRANDED PRODUCTS DISTRIBUTORS
One of the frequently asked questions is ‘how do I find the distributor of brand X?’, ‘I have seen a competitor selling brand Y, how do I know who distributes it?’
Finding real wholesalers on your own is possible! The first instinct is to try sourcing through search engines, which is not an impossible task, however be aware that most real wholesalers do not appear and certainly do not advertise on search engines. Search engines are filled with middlemen and cheap wholesale information. Large wholesalers are mainly interested in supplying large retailers. This is because handling one large account is cheaper than managing many smaller accounts with the same aggregate buying volume.
Wholesalers operate on very thin margins; adding administrative costs by adding many small accounts to their buyers portfolio is not generally something they consider profitable. This is just the way wholesalers think, so you should be aware of this point, it is very important if you are to make progress with them and do business with them.
So how do you go about finding the distributor of product X in your country? It is quite simple actually, and involves only 1 call. That is when you know the manufacturer of the product (the manufacturer is not always so obvious, brand names do not always correspond to manufacturer names).
You can normally find out the manufacturer’s name by buying the product and reviewing its stickers or manual. Either one has to include the details of the manufacturer or importer (by law). Take down the manufacturer’s name and find their phone number. Call them and ask to speak to their sales department. Finally explain them you are a retailer, and that you would like the details of their main distributor or wholesaler. You might be confronted by a voice mail, and have to wait a couple of days for a reply, or have to chase a response. Don’t despair, the sales department should get back to you with the information you have requested.
Please be aware manufacturers only rarely provide details of liquidators of their products. If you resell in a very price sensitive marketplace, it pays to ask the wholesaler whether they can provide you with the details of the liquidators that work with them. Liquidators generally have higher order requirements, but can offer you a much lower price than a wholesaler (because the item they are clearing was purchased from the manufacturer or importer at or below cost).