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What is Drop Shipping?

Sell what Sells, NOT what's Cool

The Wholesale Misconception

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Wolves in Wholesale Suppliers' C...

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products to sell online - 5 Strategies for Safely Sourcing Liquidation

by Chris Malta

Secondary market goods afford eBiz owners the chance to earn some substantial profit margins. But Chad Maslak, founder of Surplus2Profits.com, cautions e-tailers to take the time to understand exactly what they're buying. Advises Maslak, "Liquidation is a tremendous opportunity, if you do it right. But if you just blindly jump in, you can wind up with a roomful of junk products you can't sell." From his own extensive experience, he has developed five keys for purchasing liquidation lots without getting burned:

    Research Your Sources in Advance
    There are numerous quality sources for liquidated items – reclamation centers and surplus auction companies. Sometimes, you can even make arrangements with local retail stores to pick up their liquidation items for a percentage of the wholesale cost. But what you don't want to do is just buy from the first dealer that pops up in the search engine results. You need to first determine if a source is legitimate.

    A liquidation company's website should provide you with all the necessary contact information. If a site has no phone number or email address, that should be a big red flag.

    Before you use a company, test their customer service – call or email and ask questions. Find out how long they've been in business, and ask for customer references. If they're local, visit their facility in person.

    The bottom line here is to use common sense. And remember, if something sounds too good to be true, it is.

    Understand Exactly What You're Getting
    Gather as much info on your products as you can. What category are they in? What is their condition? For what percentage of wholesale cost are you buying them?

    Your supplier should provide you with a manifest – an itemized list of the goods on the pallet you'll be receiving. It should include both the piece count and the associated wholesale cost for each product listed. By understanding what you're getting, you're able to identify if a purchase will be profitable for you.

    Determine Your True Product Costs
    You're not just looking at the price of a pallet; you're considering all the factors involved in making the products saleable. Repairs, time, packaging materials – account for everything that contributes to the total cost of getting your goods market-ready. Figuring out your Cost of Goods Sold allows you to pinpoint your actual profit margin.

    Know Your Product Market
    Learn as much as you can about the market you're selling into. Establish what these types of products are selling for there, remembering to factor in their condition. Look at the demand among your target audience, as well as the level of competition you'll be up against. If there's not enough demand or the market is crowded, it will be hard for you to move those products out the door quickly.

    Have a Game Plan
    It's important that you know, ahead of time, the sort of products and the category of products you're looking for. Most liquidation pallets are sorted by category and include a wide assortment of items within a category.

    Some of these items are faster-moving; others tend to be slow movers.

    You may choose to bundle those slower-moving goods, or to use them as loss leaders, up-sellers, or cross-sellers. But however you choose to package them, it's imperative that you have a plan for moving them out speedily. In liquidation, turning items over quickly is a major key to profitability.

Liquidation can be a powerful tool for building your retail business, regardless of your selling venue. You can purchase products that will appeal to your customer base, for pennies on the dollar. But your success hinges on your finding out as much information as you can, and using that information to make educated buying decisions. Encourages Maslak, "Focus on sourcing surplus goods knowledgeably, and you'll find that selling them successfully is much simpler than you think."
 
Archive List

ARTICLE ARCHIVE LIST

 

What is Drop Shipping?

Sell what Sells, NOT what's Cool

The Wholesale Misconception

Don't Get Taken by a Fake Suppli...

Wolves in Wholesale Suppliers' C...

Working Within the Process

Is Santa's Sleigh Big Enough for...

Beware of Drop Shipping 'Agents'...

Direct From The Factory?

4 Strategies for Seasonal Sellin...

3 Tools for Product Sourcing on ...

Tradeshows the Right Way - How t...

Tradeshow Sourcing - When the Sh...

Preparing for the Holiday Season...

What a Wholesale Supplier Expect...

Product Sourcing Using Trade Pub...

Tips for Finding and Getting Goo...

Storage Units Auctions - Buying ...

Starting an Antiques and Collect...

How EBay PowerSellers Source Pro...

How to Build Your Online Consign...

Dangerous Mindsets - Changing th...

Sourcing Customer Returns - Buyi...

Product Sourcing Strategies - Ne...

6 Common Product Sourcing Questi...

Increasing Your Profits through ...

Importing Basics - What You Need...

Selecting and Changing Your Prod...

The Inside Scoop on Trade Shows ...

How to Make Product Liquidation ...

Shopping with Uncle Sam - A Brea...

One Man's Trash... Could Be Your...

Our Town - Sourcing Products Loc...

An Intro to Closeouts - A Produc...

How to Find Authentic Suppliers ...

Beyond Borders - Sourcing Overse...

Heads or Tails? - How to Find Yo...

Five Holiday Trends - What Every...

Seeing the Whole Picture - A Who...

Drop Shipping Pros and Cons - th...

Far From Home - 4 Keys to Succes...

Product Sourcing Strategies for ...

The Ins and Outs of Importing - ...

How to Choose Your Product Lineu...

The Fine Art of Product Sourcing...

Sourcing The Secondary Market - ...

Local Sourcing Techniques - Prod...

Global Sourcing - Importing for ...

A Foreign Affair - Preparing to ...

Choose Wisely - How to a Pick Pr...

Made in China - Importing Option...

The Color of Money - How Color T...

The Nuts and Bolts of Liquidatio...

How to Break Into Importing - An...

Trend or Fad? What to Ask Before...

What Your Country Can Do for You...

Opportunities Abroad - China Sou...

Trade Shows Year-Round - What Pe...

5 Product Trends for 2008 that E...

Successfully Negotiating with Yo...

5 Strategies for Safely Sourcing...

Informed Compliance for e-Tailer...

Locate Qualified Drop Shippers f...

What is Product Sourcing? The So...

Where Do I Find Products to Sell...

Tips for Finding and Working wit...

A Beginner's Guide to Buying Dir...