Another buying source for new products is manufacturers, who also include farmers, producers, craftspeople, growers, and sales or manufacturers' agents. But I have chosen to concentrate on buying factory direct, manufacturers' agents, and craftspeople because they are the most likely buying sources. When buying from manufacturers, the inevitable questions arise: Should you buy from local or domestic manufacturing sources and support your own economy, or should you shop overseas manufacturers in hopes of lower prices? The answer is that each person will have to make that decision individually, but there is a strong argument for supporting your own economy, especially in light of labor laws and practices in some foreign countries. It is no mystery that products generally cost less from foreign manufacturing sources than domestic sources. On the other hand, domestically manufactured and produced goods are generally of much higher quality. Ultimately, your target audience will play a large role in determining where you buy.
- Buying factory direct. The first option is to purchase directly from the factory--no middlemen, agents, distributors, importers, or wholesalers of any kind. Buying factory direct for the small operator was not an easy or very accessible option as recently as five to ten years ago. What once took days, weeks, and even months and considerable expense to track down can now be accomplished in a few hours or less online, and all with the simple click of a mouse. With the aid of the Internet, you can source product manufacturers from around the globe and buy direct.
Even with the assistance of the internet, however, the fact remains that you often have to buy in large quantities, especially from overseas manufacturers who need to sell by the container load to justify expenses and their competitive pricing. The Internet has not changed this. Still, there are thousands, perhaps hundreds of thousands, of manufacturers nationally and internationally who welcome new customers with open arms, regardless of their current buying power. It will just require a little more homework by you to flush them out.
Still, you do need certain things for the relationship with the manufacturer to be successful, especially when starting out, including:
- Fair pricing. You need the ability to buy from manufacturers at a price level that enables you to resell competitively while still retaining the ability to profit. Never assume manufacturers will not negotiate on their list or catalog pricing. All manufacturers will negotiate to a certain degree. They are like any other businesspeople, and need paying customers to remain viable.
- Quality products. You need quality products, within reason, to sell. They do not have to be the best, but they must be able to stand up to consumer scrutiny. A super-low price is of no benefit to you if the product quality is so poor people won't buy.
- Reliability. You need a reliable buying source. The manufacturer(s) you choose to work with must be able to supply the products you need when you need them, and in a timely fashion. Buying and selling is very much a now, or impulse, business. You cannot ask customers to wait days or weeks for products.
- Terms. You need manufacturers who will offer you payment terms on purchases. Initially, in most cases you will have to apply for and be approved for credit or establish a payment record by paying in full for your first few orders. However, beyond this you should expect manufacturers to extend 30-, 60-, and even 90-day payment terms. The longer the better, from your perspective. Payment terms enable you to resell inventory and pay suppliers with your customer's money, not your own.
- Manufacturers' agents. Many manufacturers, especially small ones, enlist the services of sales agents, otherwise known as manufacturers' agents, to find new customers for their product(s) in new geographic markets, nationally, and internationally. This is especially true of manufacturers who do not have the financial resources or people inhouse to undertake establishing distributorships in far-flung locations, or who currently have a limited product line, too small to grab the interest or attention of major wholesalers and distributors. The job of the agent is to prospect for new business for the manufacturer, often establishing accounts with retailers to buy products on a frequent basis. Buying through a manufacturer's agent generally means you will be paying slightly more for the product on a per-unit basis, but over time, as your buying volumes increase, incremental discounts will reduce unit costs. The best way to source manufacturers' agents is to harness the power of the Internet and search manufacturers' agents directories, or to contact manufacturers' agents associations.
- Craftspeople. Talented craftspeople across North America make everything from custom furniture to woodcraft decorations, garden ornaments, stained-glass items, and everything imaginable in between. According to the Craft Organization Directors Association (CODA), the crafts industry generates $14 billion in sales annually. Needless to say, crafts are very big business in America. But how do craftspeople distribute their goods? Once again, according to CODA, approximately 60 percent of them retail their goods directly to consumers through craft shows, mail order, and online marketplaces. A further 10 percent place their products on consignment with retailers, such as gift shops, furniture stores, and fashion retailers. And the remaining 30 percent wholesale their crafts to retailers and resellers of all sizes. This 30 percent wholesale market adds up to a whopping $4 billion-plus worth of wholesale crafts up for grabs every year for resale!
Keep in mind that most craftspeople who do retail direct to consumers are the first to admit they are not the best marketers of their own goods, and miss out on a lot of profit because of their lack of sales and marketing skills. Therefore, persuading them to sell to you wholesale should not prove difficult. Start by talking with craftspeople right in your own area to inquire about the goods they make and their wholesaling policies. You can also contact craft guilds and associations to track down people who make specific products you would like to buy and sell. And rather than buy crafts wholesale for cash, consider working out a revenue split arrangement for all goods sold. This way, you'll to minimize the amount of start-up investment needed to get rolling. They supply, you sell, and both of you profit.
eBay and Other Online Auction Sites
Most people think of eBay as a great place to buy products for personal use or a great place to sell products, not necessarily as a venue to buy new products for resale purposes. But eBay provides great opportunities to buy new products wholesale at a discount.
New products in bulk are listed under the Wholesale link in the navigation bar on the eBay home page. The wholesale lots page is segmented into numerous product categories, including electronics, home furnishings, jewelry and watches, clothing, health and beauty, and sporting goods, each with its own subcategories of products. Via the wholesale lots page you can purchase new products, liquidated merchandise, seconds, pallet lots, remainders, and returns posted by wholesalers, liquidators, and manufacturers. Some products are available by way of no-reserve and reserve-bid auctions, while others have volume pricing through individual eBay stores.
Excerpted from 202 Things You Can Buy and Sell for Big Profitsfrom Entrepreneur Press