Wholesale Secrets Revealed: The Holy Grail Of Wholesale!
By Robert 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.”
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
startup capital on fraudulent deals and offers.
In this article I want to discuss three of the more sought after sources of product supply, and the “Pros & Cons” of each. I also want to shed a little light on some of the misconceptions people might have about buying “products for resale.” The reality is that not every product will be available through wholesale, surplus, and drop-shipping venues.
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
Departments Of Revenue in all fifty states go to this
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 blue widgets and wants to get their product into
the marketplace. They will then employ a sales
representative to get the product into the market, or they
will assign a wholesale distributor the exclusive rights to
carry and sell their product line. Some companies are import
wholesalers. While they do not necessarily manufacture a
product, they will import products from manufacturers in the
United States, and from countries like China. A great
example of such an importer/wholesaler is the Bnfusa.com:
Bnfusa.com http://www.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/Associa
tions/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 nonprofit 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/
In addition to trade associations, 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.”
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.
ThomasRegional.com
http://www.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, but 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. Remember, true wholesalers will require that
you have a Certificate Of Resale in order to purchase from
them.
Surplus & Salvage Merchandise: Another sought after source
of supply is retail surplus, closeout, overstock,
liquidated, and salvage merchandise. Surplus dealers, and
brokers, purchase shelf-pulled, returned, overstock,
closeout, liquidated, and salvage merchandise from
manufacturers, retail stores, reclamation centers,
bankruptcy sales, 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.
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, or price, that will fit into any
business advertising model. In most cases, you do not need a
“Certificate Of Resale” to buy products from Surplus &
Salvage Dealers and 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 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
Drop-Shipping: Supposedly the perfect business model. No
inventory, no trips to the post office or UPS. You just set
up shop, take the order, 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 you might want to rethink that
position.
Finding a drop-shipping company that can deliver on a
consistent basis can be tough. Drop-Shipping companies have
been known to run out of merchandise. If they happen to run
out of the product you are auctioning, asking buyers to wait
on their product because it is “backordered,” 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, or “entry fee” before you even start marketing
their products. You might also have to pay for support
materials, such as pictures and advertisement brochures for
the product you choose to sell.
In addition, when you sell a product from a drop-shipping
distributor there are processing fees that have to be paid,
in order to get the product out the door and in the hands of
your customer. 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. Example: 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 knockoffs. 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 popular
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
American companies to “cease & desist,” there is a tepid
response from Chinese officials to do address the issue.
When raids are conducted, they are “ceremonial” public
relations stunts to appear as if they are actually taking
action against the counterfeiters.
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! 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 just so 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 the latest issue of Vogue,
Cosmo, as a “product for resale,” in any wholesale
environment, unless you spend thousands for the right
to distribute such a product.
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, and well connected
purchasing agents. In addition, there are people in the
fashion industry, as well as other branded industries that
would rather have their merchandise burned, or buried before
it would reach the wholesale, surplus, or drop-shipping
market! For more information on designer clothing, and to
learn about designer “fakes,” please refer to the following websites:
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! 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 cliche, 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 dollar. One type of
surplus product category that has some people loosing their
minds is surplus and salvage electronics.
The problem with electronics is that they have a low profit
margin even when they are brand new. Finding surplus dealers
with working, undamaged, electronic products can be a daunting
task. Most salvage electronics 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 salvage 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.”
For a further explanation of the surplus industry, and how you
can avoid “purchasing pitfalls,” I would suggest that you read the:
“The Ten Tenets Of The Surplus and Salvage Business” found
here:
The Ten Tenets Of The Surplus & Salvage Business
http://www.productsforresale.com/articles/index.html
GETTING DROPPED BY DROP-SHIPPING!
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 dropshipping
company who is serving them well. However, I will tell you
that dropshipping is a risk. I really can’t recommend any
type of guide, or information that would lead you to a
reliable source of drop-shipping companies.
Unlike surplus and wholesale, where you physically own and
control the product, that option has been taken out of your
hands. You are 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 “fulfillment” 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!
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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