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Seven Places to Find New Products for Resale

Locating reasonably priced resale merchandise can make or break your biz. Here's where to look.
February 17, 2005
URL: http://www.entrepreneur.com/article/76342

The mantra of every successful entrepreneur who sells products is the same--buy low and sell high. Your ability to buy cheap is of paramount importance; after all, it makes up 50 percent of the success equation.

If you plan to buy and sell new products, your buying sources will include manufacturers, sales agents, craftspeople, wholesalers, importers, distributors and liquidators. Deciding whom you will buy from will be largely based on criteria relative to your specific needs, and revolve around product price, supplier reliability, product quality, product and supplier guarantee, supplier terms, and supplier fulfillment. For instance, if you are short on storage space and adequate transportation, then suppliers who drop-ship orders directly to your paying customers will be a far more attractive supply source, even if their unit costs are higher than suppliers who do not offer drop-shipping options.

Buying previously owned items for resale is an entirely different ball game because the product sources are much different. There are no wholesalers, manufacturers and sales agents to supply you with cheap products for resale. Instead, you have to rely on your detective abilities and negotiation skills to track down the best items to purchase cheaply. These sources will include private sellers, auctions, flea markets, online marketplaces, garage sales, and thrift shops.

Buying Wholesale

Traditional channels of distribution have greatly changed. At one time, all levels of distribution served an important function in the marketplace. Importers scoured the globe, visiting manufacturers for specific products, which they bought in large quantities and imported to their own countries. National wholesalers would then sell to local distributors, who sold to dealers or retailers, who in turn sold directly to businesses or consumers. It was not uncommon for a product to pass through four or five levels of distribution on its way from factory to end consumer, with each level adding a markup to cover expenses and profit.

Today, distribution roles are somewhat blurred, and there is overlap among wholesaler, distributor, importer and liquidator. But the end game of each is the same--sell products in volume to resellers at less than retail, enabling the resellers to sell to consumers and businesses for a profit. The information below focuses on three wholesale buying sources: wholesalers, liquidators, and importers. I must stress, however, that when you buy from these sources, you are not buying wholesale, but rather from a discount retailer, if they do not require a sales tax ID number. I mention this because recently there has been an increase in online businesses claiming to sell wholesale, when in fact they are discount retailers advertising as wholesalers. So always remember that if you are not asked for your sales tax ID number, you are not buying from a legitimate wholesale source. True wholesalers do not sell to the general public--only dealers, retailers, and resellers--and are referred to as business-to-business (B2B) wholesale sources.

There are really no tricks to buying from wholesalers as the process is pretty straightforward--find one who carries the type of merchandise you want to sell, open an account, and start buying wholesale. It is always a good idea to open accounts with more than one so you can shop for lowest price, take advantage of the specials each offers, and ensure that you always have a reliable supply in case one runs out.

Buying From Manufacturers

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.

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:

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