This is the text of a presentation I gave at eBay Live 2008 in Chicago.

Literally no company that manufactures, distributes or retails a physical product sells all of their products. There will almost always be extra unsold product. This product represents PROFIT for the manufacturer, distributor and retailer and what ever they can get for it is PURE profit. 

Why does this product exist? The manufacturer has over produced, orders were cancelled, models or packaging have changed and many other simple reasons. A distributor may have product in the warehouse that is old stock, old packaging, partial cases, returns from stores, mistakes, out of season, no longer in the product line, out of space to hold the product and many other reasons. The retailer has limited space and must offer new current lines and seasonal goods. The older merchandise must go. These all represent opportunities to a potential buyer. How do you find this product?

How do you find these sources?

 Start your search on the internet. If you know what type of products you are looking for, you can be very specific in your searches. If you are just trying to find great items to sell profitably, do general searches.  What factories, distributors and retail stores are in your area? Look at Manufacturers lists, Thomas Register and other directories. First, let your fingers do the walking. Forget about Wal-Mart, Kohl’s, Sears and other major chains. They have programs in place to dispose of their excess product. Look for the locally or regionally owned companies. Drive around your city or town. Go through the industrial areas and warehouse centers. When you drive down the streets take note of all of the company names. What do they do? Do they have any excess product to dispose of?  Warehouses developments near airports are usually good, as are areas by major highways. 

 When you find some that look interesting, do more research on the internet?  What do they sell, and how do they sell it. Are their products selling on the Web? Are they easy to ship?  What do they sell for?   Learn as much about each source as possible. Read online the magazines and publications that the manufacturers, distributors and retailers read. What is happening in their industry and market niche?

Now are you ready to make some calls?

NOT YET!

You must have a plan. First, you want to present a professional image. Print up some business cards. Practice what you are going to say and what questions you want to ask. How will you dress when you GO SEE these people. YES!! Go see, because when you go to see them they will probably talk to you, but if you call on the phone or send an e-mail you will be very easily dismissed. If you are going to a factory or warehouse, casual dress is OK, but do not call on a upscale retailer and expect to be taken seriously if you are wear very casual dress. Take a digital camera with you along with a pad and pen. 

Be prepared. Learn as much about the companies you plan to call on as you can. Drive by their location. Learn the language of their business. Do they deal in SKU’s, container loads, sell by weight, etc. Who are their customers? What is their market?  The more you know about them, the easier they will find doing business with you. How do they normally market their products? 

You must be able to describe to the first person you talk to exactly what you are looking to buy.  Again you must expand your vocabulary. You will need to use words like, overstocks, shelf pulls, store returns, banana boxes, reclamation center, I R’s, Broken sizes, unboxed, etc. 

But most importantly, you MUST find the decision maker. Who in this location has the authority to sell products and negotiate deals? Do not waste time dealing with people that can not help you get product to sell.  If the decision maker is not at the location you have visited, how do you contact the decision maker? 

What are they doing with this excess product now? Are they selling it on Ebay themselves? Are they selling it to someone else? This can become sticky. If they are not loyal to the current person they are selling to, why would they be loyal to you in the future? Try to build a relationship. Would they be interested in 2 outlets for their goods? Under what circumstances would they consider selling to you? Do they want more money? Watch out for this one. The next person in the door might get YOUR goods for a nickel more.

 Even if you can not make a deal or if they have nothing to sell you, leave having made a new friend. Thanks them for their time and for talking with you. Always leave the door open for a future opportunity.

If they do not have any product for sale, ask them if they know of other companies that might have something. Or, do they have any unused shelving, packaging, furniture, etc they might want to be rid of?  Old parts or spare parts for products they no longer carry anything that is taking up space and no bringing in revenue.  Leave them your business card and ask them to call if they have goods for sale in the future or know where you might find some. Will they have any product for sale before or after their annual inventory?

When you are describing what you are looking to buy, you must also tell what you intend to do with their product. Honesty is Mandatory!! If they do not want their goods discounted or sold in certain venues, you must honor those wishes. You are trying to build long term business relationships. How do you get these companies to sell to you?  Convince them that whatever you pay them is pure profit. They are NOT selling to you at a loss. Unsold merchandise that is sitting on a shelf gathering dust is a liability and you are turning that into a profit. You must convince them that you are helping them solve a problem that they might not have known they had. You are giving them a way to free up space and freeing up their working capital. 

OKAY, you have now located a company that has merchandise for sale and is willing to sell to you. What do you do next?  ASK MORE QUESTIONS. Do I need any kind of license to sell your product? Has this product been subject to a recall? Is it out of date? Is it new/ used/ broken/ usable?  How is it packaged? Original packaging, loose in boxes, dumped in a corner? Are there any odors, discoloration, stains or other defects in the products? Are there any existing warranties or guarantees? What do you have to do, if anything to make this product saleable?  How much work will you have to do before you are able to sell the product? 

Now comes the fun part. What did this originally sell for and how much is it now? What is it currently worth?  You must do some mental arithmetic to see if all you have learned makes sense. Is this a winner? What can you do to protect yourself from making a major mistake? Unless you are absolutely positive this potential deal is a grand prize winner and even then, take some steps to further insure your financial success in this deal. Tell the person you are dealing with that you must study the situation further. Ask to buy or be given a sample of the product. Take copious notes. Model numbers, sizes, quantities, packaging, ISBN’s, sizes, colors etc. Take lots of photos. 

Expect to pay for the goods before you can remove them from their facility. If you can get dated billing that is a major plus. You may sell the goods before your have to pay for them. Some companies might take credit cards and checks, but do not be surprised if payment must be made by bank wire transfer or cashiers check. 

Do not over commit.  Can you afford all they have to offer? Do you have a place to store it?  Can you take only part of the inventory at first? Will they give you the goods to sell on consignment? Can you get payment terms?  Can you leave the goods in their warehouse until you sell it?  Will they drop ship?  Expect negative answers, but you never know. 

Find a 401 C 3 Charity to work with. You may be able to show a company how to give away their products to a charity and get major TAX benefits, while you can still get the products to sell. 

Why are these sources better than just ordering from a wholesaler? The simple answer is more Profit. You will not be selling the same item at the same price as your competitors. Have you ever noticed some sellers offering the identical product at or below your cost? They can do this because they bought better than you did.  This is how you can become more profitable and substantially increase your sales. 

Other sources in your area:

Read the local daily and weekly newspapers and shopping papers

Read and advertise in Craig’s List

Go to local area auctions

Look for Going out of Business Sales.

Any business closures, consolidations or moves going on? 

You can benefit from Bankruptcies?  Call on the lawyers that handle them. There might be some real deals that can be closed quickly.

Read Industry magazines and E-zines

Any Major Department Store outlets near you?

Are there any Manufacturer’s Outlets in your area?

Are there any products that are only sold in your area that may have a market in other parts of the Country or World?   Think about specialty candy, food and drinks?

Are there any conventions in your area where the exhibitors dispose of their goods at the end of the show?

Drive behind buildings in industrial areas. Do they have huge and multiple dumpsters? What are they throwing away?  Drive around to the front and ask them? DO NOT GO DUMPSTER DIVING WITHOUT PERMISSION!!!

The key is knowledge. Learn as much as you can about the product you are interested in selling. If you like what you are doing, life is so much better. 

Here’s Happy Sourcing and Profitable Selling to you. 

 Herb Oberman

Copyright 2008

If you have any questions or comments please contact me.