Imagine this: you have no capital but lots of time and you need to make money fast. You find a product to list on eBay, it fetches twice the price you paid for it and also covers your eBay fees. You doubled your money so you buy two more of the same product, list them on eBay, double your money again. Now you have four times your original investment, so you buy four similar products, list them and double your money, then you buy eight… and so it goes.
That’s a common scenario for virtually all the world’s top eBay PowerSellers and it’s not that difficult to achieve. You could in fact sell tens of thousands of products on eBay each month using this simple technique, once you have one hugely important feature in place... you need a reliable supplierof repeat selling product lines, priced below retail value, and in constant supply.
You need to buy ‘wholesale’and it’s the choice of virtually all top PowerSellers used to generating big money on eBay. People like:
- gowingstore each month selling 10,000 plus DVDs
- cofy_store_uk each month selling around 5,000 consumer electronic and computer accessories
- rikkyboy69 selling just under 2,000 DVDs each month, mainly movie related
- startup_software selling around 2,100 video games each month
‘Buying Wholesale’represents perhaps the most likely way to grow a full-time profitable business on eBay, it can work wonderfully well and allows you to sell hundreds of items each month without hefty investment. But it’s an area packed with problems and scams and must be investigated very thoroughly before spending a penny in this potentially very lucrative area.
This article will help you spot good from bad and even turn what other eBay sellers consider a ‘good’ money making opportunity into an incredibly profitable business. For most people buying wholesale means purchasing goods in quantity at a discount on retail prices from a distributor or middleman who sells extensively to retailers rather than consumers.
In practice you’ll find ‘wholesale’applies to a great many more opportunities to buy items in bulk at a fraction of their potential resell value, not just from brokers working between manufacturers and retailers, but also directly from manufacturers, importers, liquidators, specialist liquidation auction companies, job lot marketers, wholesale dropshippers, artists and craftworkers, salvage and overstock suppliers. You’ll even find eBay wholesale specialists and Trading Assistants selling complete business contents.
And something you may not have expected... you can even buy in bulk from high street shops, charity shops, supermarkets, and still make incredible profits on eBay. To prove it:
• On a popular eBay blog I read (shop name kept private to avoid potential embarrassment): “There is a second hand record shop in (named town) called (named shop). I regularly buy records there purely to sell on via eBay. 95% of them sell for more than I paid (e.g. bought for £5, sold for £20).” This person also tells how he can obtain multiple copies of best selling records and benefit from plentiful repeat orders and second chance offers.
• Recently in The Daily Telegraph, H. W. from London, selling part-time on eBay says: “I go to lots of (designer clothing) sample sales where things cost a fraction of the retail price, so if I sell them on eBay I rarely lose money. For instance, I bought a pair of leopard skin Dolce & Gabbana boots for £40 and sold them on eBay for £350. Blouses that cost £55 in Topshop (at their first Celia Birtwell collection in 2006) were selling on eBay for £350. I bought a couple for myself and sold several. I made about £2,000. Things will go bonkers with the Kate Moss collection …”
• Also recently, Boots No. 7 Protect and Perfect Serumsaid by top scientific researchers to be THE best thing in wrinkle control, sold out within hours in Boots shops and re-appeared on eBay where prices of three to four times the retail value are common and some eBayers had multiple listings and lots of second chance potential.
Is Wholesale Buying Good For Your eBay Business?
Anyone new to eBay probably starts by selling unwanted personal and household items and are often surprised how much they make on this hitherto ‘worthless’stuff. The selling bug bites and there’s nothing left in the house to sell?
Now what?
The most common step is to decide between selling rare and one-off items such as collectibles and antiques or bits and pieces picked up at flea markets and auctions; or opt instead for consumer goods with regular selling potential such as clothing and household goods, pet supplies, garden furniture and business-to-business equipment.
Those one-off items are frequently big profit makers, often they break auction price records. But as more people get to know about sometimes incredible high prices fetched on eBay, the more intense bidding becomes at local auctions, the more established traders start buying at flea markets before the public arrives, and the less scope there is for smaller and inexperienced traders to cash in on these fabulous ‘miracle finds’.
No such restrictions exist on buying consumer goods from wholesalers, and this is usually the best way to grow a profitable eBay business, and the reason it’s also top product sourcing choice of all the world’s top eBay sellers.
Benefits of Wholesale Buying
Like me, I suggest you use ‘Wholesale’to include all means of obtaining goods in bulk at a discount on typical retail values, especially eBay prices. So we’re including traditional wholesalers here, alongside manufacturers, job lot specialists, liquidation auctions, and so on. You’ll notice I have not included ‘dropshippers’in that list for reasons you’ll learn about soon. This is what makes wholesale buying so special:
• Usually the more product you buy the lower unit pricesbecome and the greater your profit margins will be.
• Wholesale products with reliable repeat supply lend themselves to multi-purchase buys, second chance offers, and back end selling to established buyers, and you can sell several times from one listing fee and you can use the same listing templates over and over again without changing anything. It’s the way virtually all top eBay sellers work and it’s not only easy and effective but very profitable, too, even on a limited budget. The process can change a small unit profit margin into a huge income earner on most repeat buy products.
That’s because it’s by no means unusual to find ten or twenty different people bidding on one item fetching, say £20 unit profit, and half or more of those people accepting a second chance offer and generating £200 profit or much more on one listing.
Important: It’s very tempting to buy all you can at low prices but you must be careful not to over-stock on items that are cheap but don’t actually sell.
Instead look for wholesalers selling products individually and in bulk which means you can buy once to test number of bidders and price potential before buying in quantity later. If you are quick, and your supplier is reliable, you might even make second chance offers immediately the auction ends, take payment and call next day cash in hand to buy more stock.
• Traditional wholesalers, the only type you want to buy from, get their products directly from manufacturers. As such these middlemen better understand their products and have close connections with manufacturers for further supplies, spare parts and repairs. Beware too many brokers in the chain between yourself and the manufacturer, called sub-wholesalers, who usually buy in bulk from liquidation auctions and job lot companies and rarely have contact with manufacturers. The more remote the link between those from whom you buy the product and those who actually made it, the more people are sharing in the profits and the smaller your profit margins will be. Also the less chance you have to obtain replacement goods and back up support.
Advice: Try to avoid sub-wholesalers, and most dropshippers, except for products you have tested and found to be profitable. The best scenario is to eliminate the middleman altogether and buy or have products dropshipped direct from the manufacturer. More about this later . . .
• Niche markets are potentially most profitable of all, especially if you find a manufacturer or reliable wholesaler of unusual items that are not currently listed on eBay. Niche markets are those whose members share a distinct interest or characteristic, such as dog art, adult material, racing and gambling plans, country music, scrapbooking materials, magic tricks, and much more besides.
By their very nature niche markets are smaller than general markets comprising people buying food, clothing, toys, and other essential items. But niche market buyers are among the most enthusiastic buyers of all and many will continue spending big time for the lifetime of their interest.
Anyone who finds a supplier of niche market products not currently being sold on eBay stands to make incredible profits from a handful of products and only one point of supply. It’s worth spending as long as it takes to find your niche. When you find it, look for a supplier, preferably local, obtain a few products, list them on eBay, determine selling and profit potential, then form a contract with the supplier guaranteeing you sole eBay distribution rights.
• Focusing on readily available consumer goods from wholesalers ormanufacturers is invariably much less expensive than listing one-off and unique items on eBay.
Most top PowerSellers avoid auction listings and favour shop listed products instead, sometimes choosing higher priced shop formats with traffic-optimising benefits provided by eBay.
Shop listings are very cheap, but basic shops (£6 a month) do not show up in any eBay searches, unlike Featured and Anchor shops at £30 and £300 a month, respectively, which show up as ‘Related Shops’in some eBay search engine results. In eBay’s words, upgrading gets your shop mentioned in search results ‘Sometimes’for Featured Shops, ‘Frequently’for Anchor Shops. I have to say, with the many ways of promoting your shop for little or no cost, I don’t consider paying £360 and £3,600 a year worthwhile for smaller business owners. Wait until you grow your business full-time before upgrading from Basic Shop level. eBay Express Shops also offer significant benefits .That sounds like a lot of money until you compare it to listing 3,000 products at auction, for 7 days, for about 50p to several pounds a go, cost £1,500 or much more, multiplied by four (and some) to cover a 30 day month, bringing it to a staggering £6,000 plus.
• ‘Wholesale Dropshipping’is where wholesalers and other large scale suppliers send goods directly to your buyers, in much the same way the better known model ‘dropshipping’ actually works. Dropshipping happens where you promote a product belonging to someone else, an individual or major business entity.
They usually provide your product illustrations and descriptions. Most will allow you to download images and descriptions from their web sites without you ever having to pay for products upfront. The alternative is where you actually buy one sample of the product, create your own illustrations and eBay descriptions, test the product, make sure it sells and offers good profit and second chance potential, and only then do you contact the product manufacturer about a dropshipping agreement.
Regardless of your chosen selling format, dropshipping lets you take payment for the product and delivery cost, allow payment to clear, send an agreed portion to the manufacturer or product owner and leave that person to send the product directly to you customers.
Be warned: your business lives or dies by the honesty and professionalism of your dropshipping partner. You can’t trust every supplier to treat your customers properly and poor service from just one supplier could alienate your buyers, earn you bad feedback, and get you expelled from eBay.
Thankfully there are many ways to make sure the process always works in your favour. You do this by avoiding all companies and individuals representing themselves as ‘dropshipping’ specialists and wanting you to pay up before seeing their wares. You should also steer clear of any wholesaler you can’t meet or visit in person.
Online wholesalers are a major problem area that’s best ignored without strong proof of their reliability. Instead make your own wholesale dropshipping arrangements with business people you meet face-to- face and like and trust to keep stock available to process fast and efficiently to your customers. More about this later.
Finding and Dealing With Reliable Wholesalers
First off, the people you should be looking for need not be wholesalers at all, not in the traditional sense. The person or company you want has just to supply quality products, in multiple units, as and when needed, at prices lower than the ‘same or similar’products fetch on eBay. That really does say it all and I suggest you work hard and fast to change that phrase ‘same or similar’ to ‘unique’ products. You really need to find suppliers of items no one else is selling on eBay, preferably products that are not available anywhere else but from you. It’s very easy to get a manufacturer of unique items to make you his sole eBay distributor, especially if you sell in quantity and buy in bulk. This is not difficult given that many smaller manufacturers are not used to working online, preferring to deal with local shops and other high street sellers, and lacking time and knowledge to market online.
• Look forpotential suppliers at trade fairs and exhibitions. Many smaller manufacturers market exclusively to retailers direct at these events in preference to sharing their profits with wholesalers. You’ll find information about these events in trade magazines such as The Trader or trade journals of which virtually all manufacturers have their own exclusive publication – find a complete list of trade journals and magazines in Benn’s Media Directory or Willing’s Press Guide available at main town reference libraries. You’ll also find stocks of popular newspapers and trade journals in reference libraries in most major towns and cities. Or locate information about events at: www.exhibitions.co.uk.
• Search for suppliers locally. Business units and industrial and commercial sites are great places to start and you’ll find most list member companies at the main door or entrance gate to the complex. Check out potential wholesale partners in person, seek manufacturing companies without their own marketing department and not currently using wholesalers to distribute their products. I’ve found the best potential partners are small or family concerns who are great at making product but lousy at marketing. Get your leads from business directories at your local reference library, study Yellow Pages or ask your local Chamber of Commerce for member details. Find national manufacturers and genuine wholesalers in trade magazines like Exchange and Mart or Trader, but check carefully and ask for product samples before buying in bulk or you might end up buying lists of wholesalers or totally rubbish stock.
• Ask forfurtherdiscounts on large orders and forpayment in cash. Enquire about product lines they are having problems selling, ask for discounts, but don’t buy in bulk, get just one item, check it out, make your buying decision later.
Other Things You Need to Know about Wholesalers and OtherBulk Suppliers
• Some offline wholesalers, like Costco (one of the very best), ask a small membership fee to access their goods, reason being to prevent individuals buying discount goods and effectively reducing profits for retailers.
• Some wholesalers require proof of trading status, such as a business letterhead or cheque book or VAT statement. If you are new to business you can make your own business stationery using Microsoft Word or other suitable program and open an eBay account in the same name. Add your eBay ID and Shop name to the letterhead. That is usually proof enough of your status.
• Don’t everwire payment to wholesalers you don’t meet in person and avoid giving credit card details whereverpossible. Wire transfers, that is money sent directly between bank accounts, is rarely properly monitored. Credit card payments can be abused and you won’t always get your money refunded. Pay by cheque where possible so rogue traders can be traced to the bank depositing your money.
• Some wholesalers require you to spend a minimum amount before allowing you to buy their products. This is another way to ensure only traders, not individuals, have access to goods. Some also have set viewing and buying times so always phone for details and don’t turn up unannounced.
• Avoid calling during lunchtime hours, 12 noon and 2 pm, when high street shop owners typically visit, the place gets crowded, and makes it difficult to properly inspect the goods.
• Some wholesalers specialise in end-of-line and damaged goods but don’t always mention the fact. Many also stock catalogue and chain store returns, usually in good condition, but potentially also stained and minus their packaging. Make sure you always know what you are buying, before spending, preferably before visiting, and be careful to check everything thoroughly before handing over the money. You stand to get the very best discounts on end-of-line and returned goods but only in good condition.
Potential Problem Areas and How to Avoid Them
Without doubt the worst problems come from sourcing wholesale companies online and using dropshipping companies without testing their service. Most problems surrounding wholesale buying can be avoided by making contact with local suppliers and forming exclusive marketing arrangements, and this is what we always recommend you do. These problems show why:
• Many ‘so called’ wholesale and dropshipping companies, especially working entirely online, are actually buyers themselves, also known as sub-wholesalers, who purchase from other wholesalers, add a hefty profit, and pass all their overheads on to you.
• Many ‘wholesalers’ are not product suppliers at all but just a source of information about possible wholesalers foryourchosen products. For ‘Possible’read: ‘addresses culled from any old telephone directory, out of date, no longer in business, not even selling products in bulk, perhaps not even selling products at all.’
Wholesale lists are a nightmare, you don’t ever want to buy a so-called ‘List of Wholesalers’.
Even genuine lists date fast and, because these lists sell in their thousands, whatever profitable products did once exist are soon out of stock and market-saturated on eBay.
• Some companies charge a membership fee to view theirproducts online, another sign you’ll access lists of companies (some also charging hefty membership fees) and very few genuine wholesale supply sources. Note: this is not always the case and some companies charge a fee, usually a light one, to access lists of genuine updated wholesale supplier sources. It’s hard to know good from bad, so if in doubt go to www.google.com, key in the name of the supplier or their web address, add ‘scam’and you’ll soon learn who to trust.
For a hopefully fictitious supplier, called ‘Money Making Products on eBay’ operating from London, go to Google and key in ‘money + making + products + on + ebay + London + scam’. If nothing turns up, that usually means the company is genuine, especially if they’ve been in business a few years. But it could also mean the company is new and not yet indexed on Google or scam news is still filtering through. You can test how new a company is by keying its url – internet address – into Google’s search engine, if nothing turns up the company is probably too new to be registered on Google but that does not make it a scam. Yet!
Why You Should Avoid Online-Only Suppliers
Virtually all great ideas for making money attract a rogue element keen to get-rich-quick on the back of genuine entrepreneurs. It’s not so common on the high street, or by mail order and direct mail where there is an actual street address for you to visit to collect goods or submit any problems or queries. The Internet is way too remote for developing trusting relationships between buyers and sellers of most things, especially high priced products. Go down this route and expect often to find your products don’t arrive or they are inferior quality, or your financial details have been stolen and your bank account emptied.
• Until you know better, based on other people’s opinions or a thorough search of a particular supplier, you should avoid buying anything expensive from online only traders.
• The best trading partners are major wholesalers like Costco, for example, and Makro, with web sites and a physical presence and reliable communications network.
Resources
• eBay has its own Wholesale Goods category currently with 35,686 items listed. Personally I don’t think this is a good place to buy, mainly because you are almost certainly dealing with sub-wholesalers, and prices have already been bid to the hilt, but you will benefit from eBay’s strict rules of fair play between traders.
• My top recommended online wholesale suppliers and dropshipping company site is www.wholesalepages.co.uk. I know the person running that site, he is extremely hard working and professional, I consider him a very honest and trustworthy person. No he isn’t giving me a kickback, I am speaking as I find. And you will find lots of information at the site for suppliers of hundreds of products listed: ‘Adult, aromatherapy, baby goods, badges & pins, bags, balloons, barbecues to umbrellas, watches and woodware.’
• My top recommended national wholesalers:
Costco (http://www.costco.co.uk), branches in Aberdeen, Birmingham, Bristol, Chingford, Chester, Derby, Edinburgh, Gateshead, Glasgow, Haydock, Leeds, Liverpool, Manchester, Milton Keynes, Oldham, Reading, Sheffield, Thurrock, Watford, Magna Park (Depot).
Makro (http://www.makro.co.uk), branches in Aberdeen, Belfast, Birmingham, Bristol, Cardiff, Charlton, Chester, Coventry, Croydon, Edinburgh, Enfield, Exeter, Glasgow, Hull, Ipswich, Leeds, Leicester, Liverpool, Manchester, Newcastle, North Acton, Norwich, Nottingham, Poole, Preston, Rayleigh, Reading, Sheffield, Southampton, Stoke, Swansea, Teesside, Wolverhampton.
Special: An article featured in an issue of eBay Confidential shows how to contact wholesalers and arrange exclusive deals, along with documentation to form a binding contract. You’ll find it at www.1st-12 in-auctions.com/wholesale.html
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