The Annual Wholesale Liquidation Sourcing Issue
The eBay & Amazon Seller's News ~ Febuary 22, 2018 ~ Volume 19, Issue No. 4
Tips, Tools, News and Resources for eBay and Amazon Sellers
One wholesale trade show I always try to attend is the ASD show in Las Vegas. This year it is at the Las Vegas Convention Center, March 11 to 14, 2018. Right now I am planning to attend (about 95% sure). I was invited to speak this year, but didn't confirm quickly enough, so I won't be speaking this year.
With 9 shows in 19 retail categories and 2,700 vendors, ASD has a huge selection of merchandise in one place at one time. eBay and Amazon sellers can save time and money and find great deals at ASD.
If you go to ASD Show Information, you can register online and get hotel deals. The old LVH, now called Westgate Destinations is co-located with the Convention Center, recently renovated and usually has good deals during the show. (If you are an Elvis fan, this is where he used to stay when in Las Vegas). But, I don't think they are part of the ASD Hotel deal, so you may want to contact them directly.
Most of you know that one of my better selling categories on Amazon and eBay is gourmet foods. Almost all food items require an expiration date to be clearly displayed. When packing a shipment to FBA, my wife, Karen, ran into this. It gave both of us a chuckle and I thought I would share it with you.
Do you know where your FBA Products are stored? An easy way to find out is to download your Daily Inventory Report.
Your Daily Inventory Report shows each SKU you have in FBA, and it tells you the warehouse code where it is located. However, the letter codes can be a mystery. So here is a list of the various codes around the country:
In the last issue I wrote about potential problems with purchased UPC codes, but I neglected to give you the link to Amazon's exceptions to the GTIN (UPC, EAN, ISBN, etc.) policy. If you have had any issues with UPC codes, it's a good idea to take a look at this. Amazon seller central login required.
Good news if you sell jewelry on Amazon. They are reducing the referral (sales) commission. Here is the announcement from Amazon:
My friend, Jordan Malik just came out with: VHS Gold: The eBay Seller Guide to 1001 Movies That Sell for Over $25 in Used Condition! This one is a real money-maker. And, one thing I like about Jordan is he offers a 60-day money back guarantee on his products.
Feedvisor, my favorite Amazon re-pricer, has some interesting FREE information:
Every day, tens of thousands of price wars take place on Amazon. Do you have a strategy for effectively overtaking your competition?
Using big data, Feedvisor tracked 10 million Amazon products and identified over 60,000 price wars per day. Our research resulted in bringing you the ultimate guide to identifying and managing price wars.
In this exclusive guide, you'll discover:
Feedvisor's research shows conclusively that over time, the Amazon Marketplace is becoming more and more dynamic, and thus the frequency of price wars will continue to increase as well. If you don't have a strategy in place for price wars, now is the time.
One of my readers, Marc, has written a blog post that has a large list of Amazon Sellers Resources.
Kabbage, a service that loans eBay and Amazon sellers money to finance inventory and operating costs, recently published a great article on how the new tax bill will affect online sellers.
Amazon Lending is an invitation-only program that offers loans to Amazon sellers. Their rates and loan amounts are based on your Amazon sales performance. Amazon has just partnered with Merrill Lynch to provide loans to sellers in the same manner, while minimizing the Amazon's exposure to the non-payment risk. It will be interesting to see how the program changes. I am betting that interest rates will increase.
Lets get started with this month’s articles:
First of all, what do we mean by Liquidation? Liquidation goods are excess goods a manufacturer or store needs to liquidate for one of several reasons:
A Liquidation dealer is someone who deals in these goods. The typical price range for liquidation product is 15% to 25% of the retail price.
There are several names for liquidation dealers. They are also known as closeout dealers or surplus dealers. Although they may specialize in different types of goods, they all operate basically the same.
Liquidation products can be highly profitable, or a money-losing nightmare. Many eBay & Amazon sellers buy overstocked or closeout merchandise for resale. You can earn large profits if you are cautious and only buy resalable merchandise.
Some times merchandise shows up with closeout dealers because it wouldn't sell in a store. These items should be avoided. Look for merchandise that didn't sell for product-obsolesce, seasonal or economic reasons (such as a recession), not merchandise that didn't sell because it was poor or unwanted to begin with.
Most wholesale merchandise comes brand new from wholesalers. However, closeout merchants may deal both in brand new merchandise such as those pieces gotten from overstocks product returns, warranty returns or even seconds or damaged goods.
Liquidation Goods: Advantages
There are two main advantages to buying closeout merchandise.
Liquidation Goods: Disadvantages
There are two basic drawbacks in buying closeout merchandise. These include:
When you buy liquidation items, there is almost always limited availability. That is the nature of liquidated goods. When they are gone, they are gone. You cannot create a stable inventory out of buying liquidated goods since the product offerings fluctuate from week to week.
Sadly, a lot of liquidation dealers are not truthful about their merchandise. Liquidation buyers need to be on guard about buying merchandise that is irregular, damaged or somehow has low resale value. This can occur usually -but not always, with goods that have been returned.
Lastly is the issue of brand selling restrictions. These are usually easy to determine in advance on Amazon, but a little harder on eBay. The problem is you buy a closeout lot of Coach handbags at 20¢ on the dollar, and when you try and list them you see this:
Yes, you can request approval, but, depending on the brand, that can be difficult to get.
You can circumvent these problems by dealing only with reputable closeout dealers. How to find them will be discussed below.
How to Find Reputable Dealers
You want your first experience buying closeout merchandise to be positive. How do you know what to buy and from whom? I suggest using the larger and older companies to start with. These would include, Via Trading, Liquidation.com and 888 Digital. Dealing with these companies will not guarantee 100% satisfaction, but will get you close. One thing to look out for with any liquidator is, shipping cost & control.
Some liquidators will cut prices to the bone and make it up on shipping. If you see a high shipping quote, those are often negotiable, so do not hesitate to ask. If they insist on their shipping price, consider that very carefully and don't hesitate to go elsewhere if you are at all unhappy or suspicious.
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 my favorite.
As for Amazon, since it's a fixed price site, you can just look up the product to see the price range. Or if you have a smart phone, there is a free Amazon Seller app that will do that for you.
Lastly, you can tell a lot about a liquidator by the way they communicate. If you email them with questions, are they happy to answer, and do so in a polite & professional way that makes you feel comfortable? Not wanting to deal with customers is a sure sign you should look elsewhere.
This is a guest article by Robert Cyr, who has years of experience in sourcing and selling wholesale liquidation products. Rob's work has been featured on the Fox Small Business website, Wholesale 101, WholesaleEz.com, WholesaleU.com, as well as other industry related sites and publications.
Rob is the publisher of the 2018 Liquidation Sourcing Guide which I strongly recommend anyone get who is interested in sourcing liquidation products for resale. Rob is one of those guys who delivers a lot more than he promises, and like most products I recommend, it comes with a money back guarantee.
Here is Rob's article:
A Common Myth Surrounding the wholesale Liquidation Industry
Let's face it, the opportunity to source name brand merchandise in small and large quantities through the liquidation industry is exciting, especially after you've spent countless successful hours, days, and weeks trying to locate inventory for eBay, Amazon, or other resell channels.
The liquidation industry encompasses a range of consumer merchandise that has been conditionally categorized as either overstock, shelf pulled, customer returned, or salvage. Pallets and truckloads of this categorized name brand merchandise is liquidated daily to small and large resellers who are listing goods on eBay, Amazon, selling it at flea markets, opening their own discount stores, etc. etc.
Just how much of this excess liquidation inventory is available to resellers?
According to the National Retail Federation, "Americans returned $260 billion in merchandise to retailers last year, or 8 percent of all purchases." CNBC, back in December of 2017, reported "Unwanted and damaged goods [consumer returns] either get tossed out or sent through a lengthy chain of liquidators and wholesalers, paying pennies on the dollar to the retailer before eventually selling them to bargain-hunting consumers."
With a windfall of consumer returned merchandise and excess unsold retail stock, there is almost an endless supply of name brand merchandise that can be purchased for nickels and dimes on the original wholesale or retail dollar, and then "flipped" using various resell channels.
Ok, this sounds great, but what about the common myth surrounding the liquidation industry?
"To be successful with wholesale liquidation purchasing, one should seek out and purchase bulk inventories from the original retailer or e-commerce retailer."
While this makes perfectly good sense in theory, very few big-box and online ecommerce retailers have an in-house liquidation program. There are only a handful of manufacturers and big-box chain stores that liquidate obsolete goods, shelf pulls, returns, and salvage goods to individual buyers.
By the way, if you're looking for the few "Direct" connections for pallets and truckloads of liquidation goods--- contact Best Buy, Macy's, QVC, and the Home Shopping Network (HSN), all of which liquidate bulk lots of merchandise directly to individual resellers.
By in large, all other big-box stores and e-com retailers contract with outside companies to liquidate customer returns and shelf-pulled merchandise. These third-party contractors are considered the actual "Direct Source" because there really isn't another way to purchase bulk lots, pallets and truckloads direct from stores like Target, Walmart, Amazon.com, JC Penney's, Kmart, Sears, Home Depot, Staples, etc.
Finding true contracted sources for liquidated wholesale merchandise is truly the only way to buy DIRECT from big-box chain stores and e-commerce retailers. The difficult part is knowing who these third parties are within a sea of Liquidators and Brokers of liquidation goods. Contracts in the industry are ever changing, so the task becomes an ongoing research activity for buyers of liquidation inventory.
Pricing is typically the reason why people want to purchase liquidations from the direct source, but we have another consideration to think about with this theory:
Large volume liquidators who buy in massive quantities from direct sources, often receive volume pricing that can be passed on to small liquidation buyers. Just from the numbers, who do you think will receive better pricing when buying pallets and truckloads of liquidation merchandise:
Buyer A: purchases a single truckload direct from the source
Buyer B: purchases 5-10 truckloads per week direct from the source
Let's assume in this example, Buyer B is a large volume liquidator who sells a massive number of pallets and truckloads monthly to small resellers. In this case, pricing from a high-volume liquidator will probably be lower than direct pricing from a contracted source!
There are many more considerations and concepts to grasp before one can successfully add liquidation sourcing to to a business model. The lack of fully understating the industry truly dictates the reason why we see so many published online complaints about pallet and truckload sellers. Sourcing the industry can be very profitable, but understanding basic fundamentals is imperative to success.
Sourcing and selling liquidation products can be highly profitable, or a financial nightmare. Imagine you are a soldier, and your lieutenant orders you to advance through a known minefield. You have two thoughts: You know it's a minefield, so you can take precautions, but, you don't know where the mines are.
That is sort of how I feel about sourcing and selling liquidation products. Let's see if I can help you spot the mines to get you through the minefield safely.
Some of these factors look scary. However, it is not my intent to scare you off buying liquidation products. If you follow my advice in this article, and get Rob's Book, the 2018 Liquidation Sourcing Guide, then sourcing and selling liquidation products can be insanely profitable.
1. Check out the company
One of the first precautions you want to take is, weeding out unscrupulous sources, because unfortunately they do exist. If I am considering working with a new source, I do three things:
2. Be Super careful about shipping
There are two issues related to shipping: Distance and fixed shipping quotes. The first one is simple - look for liquidators who are relatively close to you. Shipping a pallet load of goods can be expensive, and distance is a major factor. If you are on the West Coast, look for liquidators who are also on the West coast, and vice-versa if you are on the East Coast or in the Midwest.
The other factor is liquidators who set fixed shipping quotes. This is an old game - set a low price and make the profit on the shipping. Some sellers will make their prices super low, but when you look at the fine print, they say you must use their shipper and pay a fixed amount, or the shipping cost quoted. If a seller will not negotiate or budge on their shipping cost - find someone else!
3. Type of Liquidator: Auction or a fixed lot price
There are two basic types of liquidators: Liquidation Auctions, or Fixed Lot Price liquidators who set a price for a lot and sell directly to you.
Auction Liquidators - The main drawback with a liquidation auction is there are dozens of individual sellers and you are subject to their honesty and not the company you are dealing with. The major auction liquidators either have a feedback system (similar to eBay), or they police their sellers and ban them if they get serious complaints. But, that is not true of all auction sites. It is also on the auction sites where you see the most abusive shipping practices.
Having said that, there are a few auction sites that are very good - one of my favorites is Liquidation.com . A major thing I like about them is, they do a pretty good job of policing their sellers. Liquidation.com offers two types of shipping that is stated right in the listing. They are: Buyer arranges shipping, or Liquidation.com handles shipping. In the second case, they have a link where you can enter your zip code and get a quote first. They also have a link to a detailed manifest you can inspect before bidding.
Fixed Lot Price liquidators - Although I have had several good auction experiences with Liquidation.com, I usually work with fixed price sites. I have three that I work with: 888 Digital, Via Trading, and Bulq. I am not trying to say that other sites are not good to work with -just that these are 3 of my favorites, and ones I have personally had good experiences with.
4. Type of MerchandiseIf you are going to deal with liquidation companies, it is important to understand the different types of merchandise they deal in. I don't have room to cover all of them, but here are some of the most common ones you will encounter:
5. Brand name issuesThis is where you want to be very careful. Amazon, and eBay to a lesser extent, have both introduced programs whereby a Brand name can block you from selling their products. For example, I saw a very interesting lot of beauty products by Elizabeth Arden. Fortunately, I check the product on Amazon and got the following result:
As you can see, the product is restricted on Amazon (If you tried to list it on eBay, the listing would probably go live, but you would receive an intellectual property complaint with a few days, and eBay would cancel your listing (and might also suspend your account).
The lesson here is stay away from the more well-known brands, and before buying any brand name, check to see if you can sell it on Amazon or if it is a brand listed on eBay's Verified Rights Owner Program (VeRO). Here is a link to a free article about restricted brands. This article is mostly about Amazon, but in my experience, many of these brands are problematic for eBay sellers as well.
No matter how good or careful a liquidator is, it is a fact that some percentage of the lot (case, pallet or truckload) you buy, will be in non-saleable condition.
When I am pricing out the item-cost of a liquidation lot, I usually assume that somewhere between 10% and 12% will end up in the trash. So calculate that factor when you are pricing out a liquidation lot. Here is an example. You see a pallet of 300 blue jeans selling for $2,100 ($7 each pair). Bu, if you assume that 10% of them (30) are bad, then you need to deduct that number from the 300 pair. Now you divide $2100 by 270 and you see your true cost is $7.77 before shipping.
OK, now that you understand some of the pitfalls, you are ready to begin sourcing liquidation products to resell.
For those who have not been tuned into the discussion, OA stands for Online Arbitrage and RA stands for Retail Arbitrage. Arbitrage means buying something in one marketplace and selling it quickly for more money in a different marketplace.
Both RA and OA are essentially the same thing; buying products from retailers (whether online or in a store) usually at sale or clearance prices, and reselling them on sites such as eBay and/or Amazon where the same goods are still in demand at full retail price, or better.
This is currently done profitably by thousands of sellers. The question is: How long can it last?
Through my contacts at both eBay and Amazon (and reading between the lines of their policies), I am quite sure both companies have a plan to prevent sellers from doing RA and OA in the future.
For one thing, both eBay and Amazon have erected barriers to arbitrage. eBay has done this with their VeRO program and Amazon has allowed brand name companies to restrict their brands.
Let's say, for example, you were out Outlet Mall shopping, and found a great deal on a sweatshirt from American Eagle Outfitters, and a bathrobe from Ralph Lauren Polo -both were on deep sale.
Here is part of the eBay VeRO page from American Eagle Outfitters (AEO):
And here is what you see on Amazon, if you try and list the Ralph Lauren bathrobe:
In the case of Amazon, you have to apply and receive brand approval before you can list the item. On eBay, your listing usually goes live, but it may be cancelled after a day or two.
Both of these situations cause problems when you are out shopping. How do you know in advance if you can sell an item once you buy it? This is a major problem because most stores have a No Return policy on sale or clearance items. Buy the wrong item and you are stuck with it.
At least on Amazon you can research the products before you buy, but eBay doesn't have any real way to do that. However, Amazon isn't perfect. Not every restricted brand is listed. And there are other brands that although not listed as restricted (or registered with VeRO on eBay), will still complain about an intellectual property violation. This is actually worse than just having your listing cancelled.
When these companies look at their list of authorized resellers, if you are not one of them, they assume your item is fake, and file a counterfeit product complaint. One or two of those can get your account suspended.
The reasoning companies use to keep you from selling include using photos, product names and descriptions of their products that is not authorized. So, if you find a photo of the product online and use it, they will claim intellectual property infringement.
It used to be if you took your own photos, you were safe, but this is no longer. If you take a photo of the product, or the product packaging, and that photo reveals an image of anything copyrighted or trademarked on either the box, or the product, then they can still claim a violation.
They will do the same thing even if you are selling it used. In fact, several sellers selling a brand-name product as used, may still get a counterfeit product claim. Not many companies do this, but a few do, and you have no way of knowing in advance who they are.
Another problem is the stores (both online and offline) themselves. Some stores are restricting sellers who buy too many of a sale item. This happened to me last year when I tried to buy a closed-out (but still popular) toy, from one of the largest toy company's online site. I tried to buy a quantity of 25 and got a pop-up when I tried to add to my shopping cart, that I could only purchase 5 each.
The final problem is time. It takes a lot of time driving around to find those deals. Shopping online solves part of that problem, but those companies are becoming wise.
With a few exceptions, Karen and I gave up on arbitrage, and went 100% wholesale a couple years ago. However, our reason was entirely different. We just became tired of spending our time shopping, and paying for gas to do so. (That was back when gas prices were really high).
The advantage of wholesale sourcing is two-fold:
As I pointed out above, there are thousands of sellers who still do OA and RA profitably. We have decided against it, but that decision is entirely up to you, and which business model you prefer.
OK - So what do I mean by a Call to Action? A call to action, usually abbreviated CTA, is a word or a phrase, encouraging a reader (buyer) to perform a specific action.
A CTA can be weak or strong. For example, "Click here to read my newsletter," is weak, whereas: "Add our BBQ Gloves to your cart now to start protecting your hands," is a fairly strong and specific call to action.
When a salesperson is sitting in front of a client, they are trained to close the sale. When we sell on eBay, Amazon or a website, we can't be in front of the client, so our listing has to close the sale for us. This is where a good CTA helps.
There is plenty of research preceding the Internet, and going back to the days of direct mail, that proves a strong CTA will increase conversions (sales).
It is a huge mistake to assume someone reading you listing will know what action to take. Yes, when most people see a listing for exactly what they want, they look for the Buy Now, or Add to Cart button. But, what about those buyers who may still be on the fence, or want to keep looking to see if there is a better price? This is where a clear call to action can make a difference. You can sometimes win a sale you may have missed if they moved on and kept looking.
We have all heard of impulse buyers. Yes, they are out there, but not in the massive numbers most people think. Instead, there are many buyers who can become impulse buyers with a strong call to action.
What are some traits of a strong CTA?
Let's look at each one:
Relate-Your CTA should relate specifically to what you are selling. If you are selling a safety-oriented can opener, don't say something such as:Add our gadget to your cart now. Instead, try something like:Start protecting you hands from serious cuts.Add the Safe-Can® to your cart now.
Clear & Specific-A statement such as buy now is suggestive -and may even turn some people off. A statement such as Click the add to cart button now is more clear and leaves nothing to the imagination.
Immediacy-Create a sense of urgency to get a buyer to act now.
Benefit oriented- In the example at the beginning of the article about BBQ Gloves, it said: Add our BBQ Gloves to your cart now to start protecting your hands. That shows a clear benefit, and the call to action is immediate.
Yes, it can take a little imagination to create a great CTA. Remember, you are trying to persuade someone to do something such as buying a product, subscribing to your newsletter, or clicking on an affiliate link on your blog. When you sit down to create your CTA, keep that goal in mind and it will be a lot easier.
A few more tips:
This article is focused on creating a CTA, to buy, but a lot of this same advice can be worked into your copy to creat the atmosphere for a strong CTA.
Since this is our annual Liquidation Sourcing Issue, we are going to feature several liquidation sources before we get to our regular sources.
888 Digital is a very interesting company that works with all sizes of eBay and Amazon sellers from small to medium & large to the very-very large.
In addition to sourcing liquidation goods from manufacturers, 888 Digital also has a deal with Amazon to sell their merchandise. You know how things mysteriously disappear from Amazon warehouses? Well, they often turn up, and 888 Digital is the company Amazon uses to liquidate them.
Bstock is headquartered in Redwood City, CA (Near San Francisco). They work with 8 of the top 10 retailer chains in order to get a diverse range of liquidated merchandise for its buyers.
High End Closeouts , as the name implies tends to specialize in the more expensive products, mostly liquidated from Department Stores such as Nordstrom's and Neiman Marcus. One word of caution, their website is definitely not high-end.
Via Trading is located in Southern California and is a well known liquidation dealer with eBay and Amazon sellers You can get information and bid online, or live, in person if you are near Southern California. If you are from a different state and buy in person, make sure to arrange out-of-state shipping to avoid high California sales tax.
Liquidation.com is an auction-style site. The company is very reputable, but not all of their auction sellers are. This is one of those places it pays to pay attention to the shipping cost and options.
Bulq is one liquidator that is famous for sourcing in smaller lots. Most of their deals are under $400, with some under $300. They also publish a pretty good blog with posts that can help online resellers.
Quicklotz offers a variety of exclusive inventory that cannot be found with other merchants.
Here are some liquidators that Rob Cyr who publishes the 2018 Liquidator's Guide recommends:
American Global Liquidators - sells general merchandise, clothing, electronics, and is based in Florida. They sell by the pallet or truckload.
BlueLots is a relative newcomer to the industry with excellent reviews. They offer clothing, accessories and general merchandise in small lot quantities.
MAC Wholesale specializes in clothing-only lots for Amazon and eBay sellers. They say they remove all restricted brands for Amazon sellers, (But I would still check). Their name brand clothing lots start as low as $100-$250.
OK, lets move on to non-liquidation wholesale sources. Remember, some of these websites are retail sites that do not want the general public to see their wholesale pricing. However, they all sell wholesale, but you may have to use their Contact Us form to request wholesale information. (Make sure your request is polite and businesslike).
American Products Group sells a wide variety of kitchen gadgets and other products.
Andis sells a wide variety of hair cutting and grooming supplies, including horse grooming tools.
The Beer Greetings Company sells a very clever line of craft beer gift products.
Blitz Manufacturing sells a wide variety of specialized cleaning products that run from jewelry to guns and musical instruments as well as some personal cleaning products.
Galanz sells a line of smart home appliances from small (Microwave & toaster ovens, bread machines, rice cookers, etc.) to large (refrigerators and Washer-dryers).
Picnic Plus sells a wide variety of Picnic sets and other picnic and kitchen-related products.
AT Trading has a very nice line of generic clothing and accessories ready to private label.
D&D Distributing is an importer of toys, games and other gift products.
Pacific Mountain Outdoor is an importer and wholesale distributor of Outdoor sporting goods products.
See you again in March.
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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