Buying Liquidation and Surplus Goods To Resell on eBay & Amazon
The Online Seller's News, June, 2014, Volume 14, Issue No. 10
Tips, Tools, News and Resources for eBay, Amazon and Independent Online Sellers
This is our annual liquidation sourcing issue. Our first article explains what the liquidation market is all about, how to source from it, some of the terminology you will encounter and some pitfalls to avoid. Then our wholesale sources will list a number of liquidators.
Amazon "Frozen" Sellers get Frozen Out. I have said many times to be wary of fads or jumping on bandwagons. Every new Disney movie creates a line of products -everything from tee shirts to characters to glasses and cups, lunchboxes and practically anything you can imagine, and the movie Frozen was no exception.
Disney produces and sells many of these items themselves, but they also license other companies to do so. The problem is that almost all of these products become fodder for counterfeiters.
It seems that there was so much counterfeit Frozen merchandise floating around on Amazon that Amazon was getting complaints. Hundreds of Amazon sellers were buying "Frozen" products from sources that claimed to be licensed, but were not. However, there were also plenty of sellers who did buy from legitimate sources. Well, one day out of the blue, all the Frozen sellers found their listings cancelled and got an email from Amazon that said they could not longer sell Frozen merchandise. They did allow a few large sellers to continue; who could prove they bought their goods from properly licensed sources. And some sellers were able to get reinstated when they sent in documentation proving their items were genuine.
Most of these sellers had their items in FBA that they now have to recall and try and sell on other platforms. I suspect in a month or so there is going to be a lot of Frozen merchandise showing up at thrift shops around the country.
The moral of this story is to be very careful when buying any licensed products. Only buy from large established companies that specialize in licensed products and even then be careful of jumping on any fad.
Sales Taxes continue to be a troubling issue for eBay and Amazon sellers. And with Amazon you also have the Sales Tax Nexus issue if your goods are in warehouses in certain states. Kat Simpson and co-author Michael Rice have written Introduction to Sales Tax for Amazon FBA Sellers: Information and Tips to Help FBA Sellers Understand Tax Law . It was published in 2012 so it's still pretty up to date.
When we first launched The Complete Amazon Marketing System we were only sending to buyers in the US. But we are now selling into Canada . Unfortunately shipping to Canada for such a large heavy book is quite expensive, so although our US edition continues to have free shipping, we are charging $16.90 for shipping to our Canadian buyers.
We are also selling into the UK and Europe at www.SkipMcGrath.co.uk. We have a set price for sales to the UK and Euro zone countries, but if you want a book shipped to another country, please email us through the website and we will give you a quote. Please don't order the book until you get our quote back.
A few folks have asked for electronic editions. We have not done that for two reasons. One is the danger of copying - unfortunately we see unauthorized copies of our eBooks showing up on overseas websites all the time. The other reason is the size. At over 350 pages it's a little long for an eBook and the many screenshots don't display that well on a reader such as a Kindle or an iPad.
We are continuing to expand The Complete Amazon Marketing System and add new materials. This will soon result in a price increase, so if you have been thinking of getting the program, you may want to do it soon.
A lot of you have been asking to learn more about Importing. A long time eBay and Amazon seller, Richard Akhmerov, has created an import training program called Import Veteran. I have looked it over and he is the real deal. I have been importing for the past two years and yet I still learned a lot of things I have been doing wrong.
He has also produced a really good eBook that shows you how to prevent scams when importing from China. You can get that as part of the Import Veteran training course, or you can click here to download the book now for free.
I have always wondered about the success rate of selling "green" products versus regular products and have therefore created a survey. Its only 3 questions and takes less than a minute to answer. If my readers would not mind helping me out; But please when you take the survey - put yourself in the mind of a buyer -not a seller.
Please click here to take the survey. Thank you.
Are you a member of Amazon Prime? I have been a Prime member for five years. I find that most Amazon sellers also buy on Amazon. For example we buy a lot of our office supplies such as tape, suffocation labels, polybags, etc. on Amazon. The neat thing about Prime is you get free two day shipping and really cheap 1-day shipping on everything you buy that is in an Amazon warehouse. Given how much we buy each year, the savings on shipping easily covers the cost of membership.
And, you can share the membership with 4 other family members even if they live in different cities. The cost was just raised from $79 to $99 year, but when you split that 5 ways, that's only $19.80 per person-per year for free two-day shipping on almost everything you buy. And if you like movies, as the main Prime member you get free streaming movies from thousands of titles. So check out Amazon Prime. They are now offering a free 30-day trial membership so you can give it a good test drive before committing to the $99 membership.
Lets get started with this month’s articles:
Many people buy overstocked or closeout merchandise for resale. You can earn large profits if you buy carefully. Read those last four words again: "if you buy carefully."
The first thing you want to learn about this marketplace is that it is important to only buy desirable merchandise. Some times merchandise shows up at closeout dealers because it wouldn't sell in a store. These items should be avoided.
Look for merchandise that didn't sell for economic or seasonal reasons -- not because the merchandise was poor. Some examples:
The easiest places to find liquidation merchandise is through what are called "closeout" dealers. Other names for these outfits include liquidators and surplus dealers. You can pretty much use those terms interchangeably.
Most wholesale merchandise comes brand new from wholesalers. However, closeout merchants may deal both in brand new merchandise such as overstocks and returns and/or even used goods.
Before we get any deeper into this lets look at some of the terminology common to dealing with liquidation dealers:
Closeout Merchandise: Advantages
There are two primary advantages to buying closeout merchandise. First, closeout merchandise is inexpensive. Closeout merchandise has the advantages that you can generally obtain product for cheaper than if you went through a non-closeout vendor. Generally, the merchandise tends to be new, high quality, but the price is cut or marked way down for clearance. It is common for liquidated products to sell for as little as 10¢ to 20¢ on the retail dollar. This allows you to sell on Amazon or eBay at bargain prices far below normal retail and still make a good margin.
Closeout Merchandise: Disadvantages
There are two basic drawbacks in buying closeout merchandise: limited stock and the possibility of receiving low quality merchandise. The drawback to selling closeout merchandise is that once you run out, you cannot get any more, so you now have to look for new items and that means creating new listings every time you find new products.
Here is an example of a closeout deal from Via Trading:
These two deals are "take-all" deals and therefore require you to have a lot of money to buy them. But most closeout dealers sell in smaller lots where you can buy goods for only a few hundred dollars.
When you buy closeout items, there is limited availability of a particular type or line of merchandise. You usually cannot make a stable inventory out of buying closeout merchandise since the product availability fluctuates.
Some liquidation lots include store-branded merchandise that the seller requires you not to advertise as from that store and sometimes even requires you to deface the label so the store brand name is not identified. These types of lots usually require you to sign an agreement before purchasing. Some of those agreements come with fines if you violate the agreement.
Most importantly, a buyer of closeout wares needs to be on guard about the possibility of buying merchandise that is irregular, damaged, or somehow has low resale value. This can occur especially, but not necessarily, with goods that have been returned.
You can circumvent these problems by dealing only with reputable closeout dealers. We are listing several in this issue.
Lastly, if possible, it may be worth your time to drive to inspect the merchandise; therefore, geographical locale may be an important deciding factor when you are looking to buy closeout merchandise. For example, Via Trading is one of the largest liquidation companies in the country. They are located in Lynnwood CA in the Los Angeles area. So if you happen to live within an hour or two of them it is a good idea to drive over and actually check out the merchandise.
Product from Reputable Dealers: How to Know
You want your first experience buying closeout merchandise to be positive. How do you know what to buy and from whom?
Let's say you are new to the reselling game. You are not even sure about what sells or if you can make a profit. One of the best places to obtain price information for what sells on eBay, and at what price, is a research product called Terapeak. Of all the research tools on the market this one is simply the best. They now offer a one-week free trial.
An excellent source for liquidation and surplus goods is Liquidation.com . This is a wholesale-lot auction site with incredible values. Some examples are 16 units of X-Box for $350 180 pieces of high-end fashion bracelets for $110, Factory refurbished Acer computers, Singing Elmo dolls and Winx play sets. Most sales on Liquidation.com are auctions so in a way it's like eBay. There are good sellers and bad, but like eBay there is a sort of feedback system so you can check out the seller first.
One thing to be very careful about when bidding on Liquidation.com - is to know the shipping cost before you bid. It's very easy to make a great buy only to have your profits killed by excessive shipping. Actually this is true of almost every liquidator company in the country.
Another great source of new liquidation goods (all from the manufacturer -no returns, no shelf pulls) is My Inventory Team. The good folks at My Inventory team send out weekly emails with Excel spreadsheets listing goods for sale. And the best news is they offer a service whereby they will label and ship what you buy into Amazon for you, so you never actually have to touch the merchandise. They do charge a fee for that but the savings in extra shipping charges usually offsets the fee.
And, of course we already mentioned Via Trading, who is one of the largest liquidation dealers in the country.
Lastly, if you want to really learn the liquidation business, an associate of mine, Robert Cyr, has recently published a great book/training course -
The Liquidator's Guide.
This is an excellent resource and includes his Black Book of industry suppliers and direct sources....A coveted list of "must have" contacts in the
Robert even shows you how to find liquidated goods direct from manufacturers without going through a liquidation company so you can buy goods at the same prices the liquidators pay. But the best part about The Liquidator's Guide is that Robert shows you how to buy goods without getting screwed over by an unscrupulous seller -and believe me there are plenty of them out there.
I used to recommend eBay as the best place for a new seller to get started selling online, but that is no longer the case. Let me give you some background and a few reasons why.
My wife and I got our start on eBay in 1999. My teenage son had discovered eBay as a place to buy and sell comic books and came to me asking for a credit card. Before I caved in, I though I better check this thing out. Before moving to the Seattle area, we had lived in Upstate New York where I worked in the corporate world and my wife ran a small antique shop.
When we closed the shop to move out West, we sold off all of the big pieces and brought all the small stuff with us in moving boxes. Two years later the boxes were still in storage.
So while surfing around eBay, I noticed a lot of folks selling antiques and collectibles. I was a bit dubious of the idea that I could sell something to a total stranger somewhere else in the country and they would send me payment sight unseen, but thought, "What the heck, let's give it a try." I dug out a pair of 19th Century Beehive candlesticks, took a photo and created my first listing with the help of my 18-year old son.
Beehive candlesticks were fairly common in the Northeast and we would regularly sell them for about $100 a pair depending on condition. Well I was shocked when they sold on eBay for over $160 with fierce bidding by three different bidders. I was hooked and we started emptying the boxes of antiques and books and listing them.
At the time, I was working in the corporate world in Seattle (a 1.5 hour commute from the small town where we lived), and Karen was working in our little town as a travel agent. Within one year, Karen quit her job to come home, raise the kids and do eBay more or less full time. Three years later I joined her. (That is also about the time I started writing books about eBay).
Back then eBay was practically a license to print money. And with the advent of PayPal it really started to explode. But like everything in life, eBay changed. With the departure of Meg Whitman in 2006, the new management headed up by John Donohoe, started taking eBay in a completely new direction. It was obvious to all of us sellers that John was winging it and had no solid idea of what direction that was, and he certainly never communicated that to the marketplace.
Little by little they did figure it out and eBay today is dramatically different than the old days. Today over 70% of all the items sold on eBay are Fixed Price (FP) sales, whereas they used to be primarily auctions. And a huge percentage of the FP sales are coming from mobile devices which is one thing eBay has really done well at.
But eBay has also changed -especially as to the way they treat new sellers. eBay now has several restrictions they place on new sellers. The reason they give for this is fraud protection and that is understandable as most fraud is perpetrated by people who open a new account for that purpose.
However, the restrictions on how much you can sell and how much money you can make until you have been on the site several months and established a reputation, make it difficult for someone to start making enough money quickly to establish a real business. Here is where you can read about the limits: http://pages.ebay.com/help/sell/sellinglimits.html
The other thing that is happening is if you make a mistake that violates eBay policy in the old days you would get a warning. These days, eBay just seems to pull the trigger and suspend or kick you off the platform permanently.
The other thing that has always been a problem on eBay is shipping. If you have a really good day and you make 20 or 30 sales, that is 20 or 30 products that have to be packed and shipped. A lot of eBay sellers start out while they are still working a full time job and this makes it difficult to meet eBay's strict one-day shipping window to earn Top Rated Seller status.
I have long recommended that eBay was the best place to start an online business because it was easy to learn and almost everything you learned could be translated to other selling venues such as Amazon, Etsy or your own website. But that is no longer the case. If many of you wonder why I have lately been writing more about Amazon than eBay it's because I now feel very strongly that Amazon is the best place to start your business. (With a big exception - If you sell used, vintage or antique collectibles, then eBay is still the best place to be. But if you sell new merchandise I would start with Amazon).
Why? Well for one FBA is a real discriminator. If you are starting your business while you are still working, or if you are older and don't have the time and energy you used to have, the idea of shipping all your goods in bulk to Amazon and letting them handle the shipping, returns and customer service is very appealing. And then there is the support. eBay support has actually improved and is really pretty good these day, but eBay makes it difficult to contact them. Whereas, on Amazon, I am only two clicks away from sending an email or speaking with a rep on the phone.
Also Amazon has fewer restrictions on new sellers and tons of great training materials to help you get started. (Note - Amazon does have some category restrictions in a few categories, but once you have been selling for a few months and build up some feedback, its fairly easy to apply and be approved in these categories).
Now the really good part; if you start on Amazon, you can sell as much as you want with no listing fees and once you are up and running on Amazon FBA you can then go to eBay and start selling the same goods on eBay that you are selling on Amazon. And, best of all, you can use Amazon to fulfill your eBay orders. No more trips to the post office or the UPS store with an armload of packages. The other thing this does for you is give you a steady income while you build up your reputation on eBay and get out from under the new seller restrictions.
So I am NOT recommending you leave eBay for Amazon or just do Amazon and don't bother with eBay. Why would you want to do that? Today eBay is a much smaller part of our sales, but it's still a part and still profitable. What I am recommending is: If you only sell on eBay, take a good look at Amazon and if you have not yet started selling online, start with Amazon (unless you are going to sell used or vintage goods).
Do you have any expertise in a service that you can perform online or over a distance without needing to be there in person?
Can you design a website or eBay store, can you do translations, create or edit videos, are you an expert in QuickBooks or Photoshop, can you design business cards and letterheads, do you have the eBay or Amazon skills to teach others? Can you repair computers, instruments, clocks, etc? Are you an expert in the value of antiques or collectibles? Can you do copyediting, create sales letters, or write compelling product descriptions? Can you make a custom product - jewelry, clothing, woodworking or other products people might want specialized or customized?
That is a very small and partial list, but I think you get the idea. There are millions of folks out there that may be a candidate for your service.
Selling a service that you can do long distance is a really neat deal. There is nothing to buy or ship. And, eBay even has a category devoted to services. Here is a look at the main and sub-categories:
The trick is you must be able to deliver your service online (email, or download) by mail or by telephone.
One thing to give a thought to is how much is your time worth? This will determine how you price your service (Don't forget to figure in eBay and PayPal fees). And of course the other factor is demand and competition. The greater the demand and the smaller the competition -the more you can charge.
Listing your service
The are four essentials you need when listing your service
Not everyone has a talent you can sell, but if you do have such a talent -and its something you enjoy doing, then this could be an interesting and profitable niche for you.
One of the best ways to grow your business is to find out what your better competitors are up to. Typically I set aside about 1 hour a month to do this.
Here are some of the things I like to do on both eBay and Amazon.
As I said, don't try and copy what your competitors are doing exactly and keep an open mind when you are reading their listings. Getting steamed because they are competing with you will get in the way of your learning.
You read our article about surplus, closeout and liquidation. And hopefully you bought Robert Cyr's book and learned even more but I want to stress one more thing. The liquidation marketplace is a rough and tumble business and it's easy to get hurt if you are not careful and know exactly what you are buying and what your True Landed Cost is. So here are a few liquidation sources to start you off, but if you get Robert's book - The Liquidator's Guide he lists many more liquidation sources including many he has personally dealt with.
Premier Closeouts and Liquidations sells wholesale health and beauty aids, HBA products and wholesale drug store items from major drug store chains and health and beauty companies. This link takes you to their Seller Profile on Closeout Central, where they have an email address to email them. Once you get on their list you get an email every week that lists what they have for sale.
Triple A Closeout Liquidators is a large liquidation firm that liquidates goods in over a dozen product categories. I do not have any experience with them or know anyone that does, so proceed carefully. They are a very large and established company so they are probably OK, but when dealing with any new source you should do your homework.
Merchandise USA is a large liquidator of chain store merchandise.
TDW Closeouts is a large closeout and liquidation dealer. They sell mostly brand name department store merchandise
Tech Liquidators is the liquidation channel for Best Buy stores. Be a little careful with them as they sell a lot of customer returns, however they also sell small lots of refurbished goods which can be really good deals.
HJ Closeouts is a large general closeout dealer and they are now offering 10% off your first order for a limited time.
Ok - Lets now look at some non-liquidation sources
Outback Flashlights is an Australian company that sells a wide range of flashlights from tactical lights to specialty lights.
is a line of specialty cleaning products from Europe. Not too many Americans have heard of HG, but they are as well known in Europe as Clorox or Procter
& Gamble are in the US. Best of all, they offer the service of labeling and shipping the products direct to Amazon for you.
Asia Pacific Gardening sells a line of bonsai plants, pots and tools.
Dana Robinson Jewelry sells a very nice line of fashion jewelry. Their items tend to be very unique and many of them have a hand made look.
Rose City Pepperheads has been making pepper jellies since 1998. They carry over 25 varieties of pepper jellies. Use in marinades, recipes and for snacking.
La Selva Designs sells a very nice line of printed tote bags and umbrellas. Click on the tab that says wholesale to get a catalog.
BK Specialty Foods Distributor - If you live in the New York City to Washington DC corridor, BK is a large distributor of specialty foods, including many ethnic foods and one of their specialties is gluten free food. If you live elsewhere, email them, as they may be willing to ship UPS. Remember you only want to buy packaged foods -nothing that needs refrigeration or has a short expiration date.
The gourmet food category is huge on both Amazon and eBay. If you want to find distributors near you, just Google "gourmet food distributor city. Just replace the word city with the name of the nearest large city to you. An example would be gourmet food distributor Chicago. This will get you dozens of results. The results will have some retailers mixed in, but keep looking for the real distributors.
Grillies are a new way to personalize your car or truck! No more cheap stickers and magnetic cutouts. Grillies are detailed all metal casting. Made to last a lifetime of cars --100 unique designs available so there's something for everyone! Made in the USA!
Signature Housewares designs, imports, and distributes ceramic tableware and kitchenware. Our primary markets are the United States, Canada and the UK. Use the contact link to ask for wholesale information.
Creative Consumer Products Inc., home of Dionis ™ Goat Milk Skincare since and Guess How Much I Love You™ Natural Care for Little Ones.
That’s it for now. See you again in about two weeks.
P.S. If you missed the last issue, click here to read it.
© 1999- Harry McGrath, Inc., DBA Skip McGrath, Auction Seller's Resource and Vision-One Marketing. All Rights Reserved.
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