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The Holy Grail Of Wholesale: Wholesale Secrets Revealed! |
| by: Robert C. Potter |
Like the legendary search for the Holy Grail, the cup that Jesus drank from at
the Last Supper, the same ?holy crusade? goes on today by veteran and newly anointed business owners for the perfect wholesale, surplus, and drop-shipping resource. They believe that divine intervention will lead them to suppliers that can defeat the economic laws of ?supply and demand.? There are more than a few people who try to build an enterprise based on the weak premise that they will able to ?score? in demand retail items for their new business, or auction, at either below wholesale prices, or ?pennies on the wholesale dollar.? I have seen many such requests whenever I troll the free wholesale sites, and discussion forums. Consider the following offers and product requests:
?Where can I find Seven Jeans for thirty dollars a pair??
?Where can I find Diesel Jeans for twenty dollars a pair??
?Willing to pay 50.00 per bag for Louis Vuitton handbags!?
?Sony VAIO Laptops Only 800.00!?
For those of you who might think that these inquires are within the "realm or realism" then you truly are a "crusader!" Trying to ride the wave of popular retail products brings out the greed monster in all of us. Pursuing the ?deal of the century,? has lead some aspiring business owners to risk their start-up capital on unrealistic expectations of inventory. In this article I want to discuss three of the more sought after sources of supply, and the ?Pros & Cons? of each. I will also clear up some of the misconceptions that seem to surround the wholesale, surplus, and drop-shipping arena..
Wholesalers: Typically, one of the better places to purchase products for your new
found venture. Most true wholesalers will require that you have a ?Certificate Of Resale? before you can purchase from them. A Certificate Of Resale, or ?Tax & Use Certificate,? is not hard to obtain, and costs anywhere from five to twenty dollars depending on the state you live in. Some states do not require that you even have one. You can obtain the certificate from your State Department of Revenue. To see if your state requires you to obtain such a certificate, and for a complete listing of the Department Of Revenue in all fifty states go to the Roisyn.com website:
Roisyn.com/certificates.html
http://www.roisyn.com/certificates.html
Depending on your states procedure, once you fill out the paperwork you can get your ?Certificate Of Resale? number the same day. You do not have to Incorporate in order to obtain a Certificate. You need to be a Sole Proprietor (at the very least) and have an address where you plan to conduct business. Once you have your number, you will be able to open a business checking account at most local banks. Most do not require more than a few hundred dollars to get started. Wholesalers will require a minimum purchase price that can range anywhere from 100 to 1000 dollars.
A true wholesaler is usually one step away from the original source of the product. For instance, a manufacturer produces and owns blue widgets. They will then employ either a sales representatives to get the product into the market, or they will assign a wholesale distributor the exclusive rights to carry and sell their product.
Some companies are import wholesalers. While they do not necessarily manufacture a product, they will import products from other manufacturers overseas. A great example of such an importer/wholesaler is the Bnfusa.com:
Bnfusa.com
http://bnfusa.com/
There are a few ways to find wholesale products. Just about every product that is in the distribution chain will usually have a dedicated trade association, organization, or trade publication attached to it. You can find such trade information with the help of the following directory information:
National Association Of Wholesale Distributors
http://www.naw.org/Content/NavigationMenu/About_NAW/Associations/About_Associations.htm
The above website address will lead your toward associations, ranging from
Advertising to Woodworking. You should be able to solicit them for wholesalers
within a particular industry. If you want to purchase their membership list (separate from the association listings), you will have to get in touch with them to check their current prices. Other good sources are:
Encyclopedia Of Associations
By: The Gale Group
The Encyclopedia Of Associations lists over 100,000 different non-profit American
organizations. If you cannot find what you are looking for from the National
Association Of Wholesale Distributors in terms of trade associations, then this is
the directory for you. However, you will have to go to your library to find this
research gem. You can usually find it in the reference section of any large
University, or Public Library.
Publist.com
http://www.publist.com/
Trade magazines are another good source. Publist.com allows you to: ?Search our database of over 150,000 magazines, journals, newsletters, & other periodicals. Find FREE in-depth information on familiar and hard-to-find publications from around the world, representing thousands of topics.? The only downside of this site is that you have to be part of a particular industry before they will give you a free subscription.
Tradepub.com
http://www.tradepub.com/
Tradepub.com allows you to subscribe to trade periodicals from their web site for FREE! No hidden trial offers to qualify. Even though there is no hidden trial offers, I think that same situation applies here, as with Publist.com. You have to be associated with the industry you want to
subscribe to. Nonetheless, it is a good source for finding trade information.
ThomasRegional.com
http://thomasregional.com/
If you are looking for industrial product manufacturers, then this is the directory for you. The Thomas Regional directory, will give you access to services from over
?550,000 industrial distributors, manufacturers, and service companies.?
The Thomas Regional will help you find suppliers in your own state or region. Registration is required, and you can use the directory for FREE! Other free
online sources of wholesale information and offers are: Wholesale411.com, Wholesalecentral.com, Wholesalegopher.com, Bizbb.com, Wholesalegopher.com.
PROS AND CONS OF WHOLESALE SUPPLIERS:
Wholesale is the backbone of product supply for any type of new business venture. Large and small wholesalers are usually one step away from the manufacturer. They have the advantage of buying large quantities, and, depending on the type of merchandise, are able to pass along savings to those who are looking for ?products for resale.? With wholesalers (in most cases) you can be assured of purchasing new product. I can?t think of too many ?cons? when dealing with wholesalers--other than pricing. There might be items that could be too expensive to sell in the Ebay auction marketplace.
Surplus & Salvage Merchandise: Another sought after source of supply is retail surplus, closeout, overstock, liquidated, and salvage merchandise. Surplus dealers
and brokers, buy shelf-pulled, returned, overstock, closeout, liquidated, and salvage merchandise from manufacturers, retail stores, reclamation centers, and just about any business who has slow moving or salvage merchandise.
Surplus dealers buy these obsolete items in large quantities, and then resell them to just about anyone who wants them for their Ebay Auction, Flea Market, Dollar Store, or
Retail Store outlet. One of the largest trade associations for the surplus industry is the International Marketing Association Of Surplus Dealers: http://www.surplus.net
You can find dealers throughout the United States and overseas.
Other sources of finding Surplus, Salvage, Closeout, and Liquidated merchandise
include the following: Closeoutcentral.com, Liquidation.com, CWSMarketing.com,
Commoditysurplus.com, and National Retail Equipment Liquidators (Nrel.com).
PROS AND CONS OF THE SURPLUS & SALVAGE SUPPLIERS:
The ?Pros? of the Surplus & Salvage merchandise is that they can offer you
a variety of products at below wholesale prices. However you ?market your
merchandise,? you should be able to find a product, and price, that will fit into any business advertising model that you happen to be using. You do not need a ?Certificate Of Resale? to buy products from most Surplus & Salvage Dealers, or brokers.
The downside is that you have to do some investigative work. Some dealers will want you to buy merchandise in quantity (a pallet minimum, truckload preferred) and you have to visit the company you are buying from to make sure that the product is, as advertised. Also, more than a few S&S dealers want payment in the form of wire transfer which can be very risky. Also,
dealers, and brokers, will sometimes misrepresent the quality of the merchandise
they are selling. Before you consider doing any business with a surplus
dealer, or broker, you must read "The Ten Tenets Of The Retail Surplus And
Salvage Business." It can be found here:
The Ten Tenets Of The Retail Surplus And Salvage Business
http://productsforresale.com/articles/index.html
DropShipping: Supposedly the perfect business model. No inventory, no trips to
the post office or UPS. You just set up shop, take the order for the product you
are selling--pass it along to the wholesale drop-shipping company, and they send
it out for you. Some drop-ship distributors will even send you ad copy and pictures
to help you advertise their products. They can even put your return address on the package! A lot of Retail Catalog companies use drop-shippers as their means of
supply.
PROS AND CONS OF DROP-SHIPPING:
There is one obvious advantage to drop-shipping. It is basically a ?product less?
venture. No need to tie up your money in inventory. Drop-Shipping can fit into
any business model, or advertising method you happen to use. However, if you are an Ebay Auction seller, then you might want to rethink that position. Finding a drop-shipping company that can deliver on a consistent basis can be hard.
Drop-Shipping companies have been known to run out merchandise. If they happen to run out of the product you are auctioning, asking people to wait on their product because it is ?back-ordered,? does not inspire confidence. Your negative feedback rating can pile up real quick.
The other problem is expense. Some drop-shippers require a sign-up fee before you
even get involved with their company. This means that before you even start to sell
their product, you will get hit with a ?start-up? fee. You might also have to pay for support materials, pictures, and advertisement brochures for the product of your
choice.
In addition, when you sell a product from a drop-shipping distributor, there are
processing and shipping fees that have to paid in order to get the item into your customers hands. That price can range anywhere from 5.00 to 10.00 dollars, and up, depending on the item. After Ebay and drop-shipping fees, you can wind up loosing money, or at best, breaking even. Bottom line, drop-shipping and auction selling don?t mix. The best bet for any auction venture is to ?own what you sell.?
EVERYTHING CAN BE HAD FOR A PRICE?BUT THERE IS A PRICE TO PAY FOR EVERYTHING!
Now that we have reviewed the ?big three? let me put them into perspective. There are products that can be obtained through a few of featured supply chains, and then there are products that will never make it to the surplus, wholesale, or drop-shipping market. For instance, to get Louis Vuitton handbags through a surplus dealer is almost impossible. Surplus dealers that are promoting LV Handbags are misleading you.
Same is true for people who are selling designer handbags on Ebay in mass quantities. The likely scenario is that they are Chinese copies. Over 80 percent of popular retail
products here in the United States are copied in the People?s Republic Of China.
Those products include Nike, Reebok, Puma, Adidas, Louis Vuitton, Calloway (Big Bertha) golf clubs, and just about any product that enjoys mass merchandising status.
There is no plan by the Chinese government to stop ?knockoff? activity because it is a thriving industry that provides employment for the masses. Despite the pleas from the American companies to ?cease & desist,? there is a tepid response from Chinese officials
to do anything about the problem. When raids are conducted, they are ?ceremonial?
public relations ploys to appear as if they are doing something about the problem.
Another indicator of authenticity is price. You will not find any authentic Louis Vuitton handbags for 30, or even 100 dollars. Most are 500.00 and up. To illustrate this point even further, just think about the popular celebrities of today who are clothes and handbag aficionados. Jennifer Lopez, Britney Spears, Jennifer Aniston, Angelina Jolie, all ?sport? around town with ?Louies? that can fetch up to 10,000 dollars for an exclusive style of handbag. Do you think you will ever have access to these items in the wholesale, surplus, or drop-shipping market?
Forget it! You might not even get these in some upscale boutiques, much less
any wholesale or surplus dealer! There are people so well connected that they
buy up ?hot items? like LV Handbags before they even hit the stores. They
know who wants these items, and they will purchase whatever is available
so that they can have an exclusive for their celebrity clients..Don?t get me
wrong . It?s not that you can?t get ?designer duds,? or handbags at wholesale
prices. You will not get high end clothes and accessories that are featured in
your favorite issue of Vogue, Cosmo, as a ?product for resale,? in any
wholesale environment!
Even if some of these items made their way beyond the connected channels
of purchasing, exclusive clothing and handbag items like Louis Vuitton will
have limited distribution, in ?hand picked? boutiques. There are people in the
fashion industry, as well as other branded industries that would rather have their merchandise burned, or buried before they it would reach the wholesale, surplus,
or drop-shipping market! For more information on designer clothing, and to learn
about designer ?fakes,? the please refer to the following websites:
Information about spotting fake fashion:
http://fashion.about.com/cs/tipsadvice/a/fakingit.htm
http://www.handbag.com/fashion/howtolookgood/spottingfakes/
http://www.fakediesel.com/
For a healthy does of honesty, and an eye opening perspective concerning
the realities of purchasing designer clothes for resale, the Clothing Broker
will definitely explode some popular myths about obtaining such items:
The Clothing Broker
http://theclothingbroker.com/
THERE IS GOLD UP IN THEM THERE HILLS!
Now lets address the Surplus & Salvage Industry. When people first encounter
some of the offers from Surplus dealers, or brokers, they tend to suffer from what
I call the ?I just found Gold? syndrome. A feverish excitement permeates their brain cells, and reduces them to a quivering pile of jelly, leaving their reasoning skills
inoperable! They recklessly buy what seems like a fantastic deal. A few thousand
dollars later, and after coming to the conclusion that their ?Golden Opportunity?
turned out to be bars of lead, elation, then turns to anger.
It is a clich?, and I hate using it, but it is more than appropriate when it comes to
surplus and salvage products. ?If it sounds to good to be true, it probably is!? Some Surplus dealers will hone in one at least one of seven deadly sins?greed! As with wholesale, you will never get certain products for ?pennies? on the wholesale dollar.
One type of surplus product category that has some people loosing their minds is electronics.
The problem with electronics in general, is that they have a low profit margin
even when they are brand new. Finding surplus dealers with good, undamaged,
electronic products can be a daunting task. Most electronics returns, and overstock
can be in pretty rough shape. See Techliquidators.com: http://techliquidators.com
What you are getting from most Surplus Dealers, or companies who specialize
in electronic selling, is someone?s customer returns, i.e., ?junk!? Unless you are
a electronics technician, or recycler, then I would stay away from ?salvage?
electronics.
Even product that is not damaged, and still in the box or retail blister pack,
can have a pretty high surplus price. If you find that someone is offering you
a electronics item?be it a DVD Player, or Xbox, for eight dollars a unit, then
?buyer beware.? You will more than likely be able to purchase lower end electronic
items like vacuum cleaners and cordless phones, at a more reasonable price. Once
again, in demand products like DVD Players, Laptops, and Car Audio Equipment,
and Plasma TV?s, if you do find them in the Surplus aisle, will still have a ?high
end? price attached to them, despite their ?secondary market? status. For a further explanation of the industry, and how you can avoid ?purchasing pitfalls,? I would suggest that you read the: ?The Ten Tenets Of The Surplus and Salvage Industry?
found here: The Ten Tenets Of The Surplus & Salvage Business
http://productsforresale.com/articles/index.html
GETTING DROPPED BY DROPSHIPPING!
My last critique, and word of caution is about drop-shipping. You might
have access to information about drop-shipping companies that would
prove me wrong. I will not argue with anyone who is dealing with a
drop-shipping company who is serving them well. But, I will tell you that
drop-shipping is a risk. I really can?t recommend any type of guide, or
information that would lead you to a smattering of reliable drop-shipping
companies.
Unlike surplus and wholesale, where you physically own and control the product, that option has been taken out of your hands when you are dealing with a drop-shipping concern. You entrusting a company to ship products directly to your customers. If you get involved with a company who cannot deliver, or who is back ordered, you can find yourself with some very irate customers. Sign up fees, shipping fees, and expenses for support materials can really affect the bottom line.
Also, most drop-shipping companies like to send out product in volume. If you are
selling just a few items per week, or per month, it might not be worth if for a drop-shipping company to deal with you. Large retail catalog companies use drop-shipping
or ?fullfillment? houses, but these companies cater to large scale operations.
The bottom line is this. When it comes to finding product supply for your business it pays to do your homework. Visit the company facility when you can. Never wire any money into a company account. Use a credit card, or Escrow service to protect yourself should
your supplier not deliver, or send you defective merchandise.
Understand that you will not be able to get the latest and greatest technology, or fashions, at surplus and below wholesale prices. If you follow all of these rules, and you use common sense as your ?crusade? you just might be able to find your own ?Holy Grail,? of wholesale product supply!
About the author:
Robert C. Potter is a wholesale and retail surplus products specialist. He is the author of ?The Ultimate Guide To Products For Resale!? Over 300 Wholesale & Surplus Supply Sources For Ebay Auction Sellers, E-Commerce Websites, Flea Market Vendors, and Retail Store Owners! You can find his 160 page ebook at:
http://www.productsforresale.com
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