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 Show Date: 2/11/2008
 Segment 3 Ė How to Source Surplus Without Getting Burned Ė Chad Maslak

Colette: Weíre speaking with Chad Maslak of Surplus2Profits.com about what you need to know to safely and profitably source surplus goods.

Colette: Chad, you were talking a little bit just before the break about selling on eBay and I often get the question about selling products on eBay about price points and how to know whether something is profitable to sell on eBay. When youíre selling liquidation on eBay, what would you say is one of the #1 things that they should really be aware of?

Chad: I would say that when people sell on eBay, Iíd like to share five things to answer that question.

Colette: Okay.

Chad: #1 is usually when people sell on eBay and when they sell anywhere actually, the money made a lot of times is when they buy. And if you can buy from a good source at low enough prices and you understand who youíre buying from and you understand the source, itís much easier to profit that way. So I would say, #1, make sure you know who youíre dealing with. Call the source and talk to them.

Colette: I 100% agree.

Chad: And how long have they been buying it and how long have they been in business and any questions that you can ask and any information you can get.

#2 is understand what youíre buying. I think a lot of times, in regards to your question, I think a lot of people will, if they want to build an eBay business, I think there are two types of eBay sellers: 1) the people who want to go to a garage sale and they just want to make some extra money on the side, and thatís okay; and then 2) the people who actually want to build a business and become a PowerSeller and make it their full time job. A lot of times I donít believe that they really understand what it is that theyíre buying. I get the question, well how do find this product, how do I buy this pallet of stuff? Well, I would say, be wise and know the key questions like, what is the condition of the products? What categories are the products in? Whatís the wholesale cost of the product as compared to the percentage of the wholesale youíll be purchasing it at, or the surplus percentage that youíre purchasing it at? How many pallets are on the load and how many pieces of product are there? Those are some key questions to ask the product sourcing when you want to consider selling on eBay.

#3 is understanding the cost associated with reselling the products. This is more than just knowing how much the pallet is selling for, but itís also important to understand what is involved in getting the product ready to put back on the market and getting it to your customer. Does the product involve putting your time in? Will it need cost of repairs? Is the product a new product? Are you going to have to invest in packaging materials to ship it? What is the cost of goods sold so you can figure out what your profit margins are.

#4 is to know the market value of the product. Is it going to even be profitable for you to even sell the product? All too often I think people want to sell the hot items, especially on eBay, because those products are in demand, but I donít think they understand sometimes that those markets can be saturated or they donít look to see how much competition they may have or whether theyíre even competitive. Sometimes people I think want to sell their favorite thing, but nobody else wants to buy it. In other words, if someone is selling Cabbage Patch Kids, I donít think someone may want to invest in a Cabbage Patch load if no one wants to buy them.

Colette: Right. I donít know, those Cabbage Patch Kids are real cute (laughter).

Chad: (Laughter)

Colette: And they are a trend thatís coming back now.

Chad: I think so. You see things that keep coming back, so maybe that will be a hot seller.

Colette: But like you say, the key is knowing that market value of the product, knowing, just like with anything you sell, know whether or not the market is going to buy it. Because, if there are no buyers, youíre stuck with a pallet load that you canít turn around in that thirty days you were referring to.

Chad: Right, absolutely, and I think that is such a huge important key to consider.

Colette: So whatís #5?

Chad: Lastly, #5 is have a plan to move the products after youíve purchased them. A lot of times I think what happens is youíre always going to have some fast movers and hot sellers on a surplus and liquidation load, and then thereís going to things that are going to be a little bit slower moving, theyíre going to be harder to sell, take a little bit longer. And thatís why I kept saying having a backend process and an upsell process, because at your current existing customer you can move those store moving items with that customer. If youíre selling a camcorder, for instance, maybe you have a camcorder bag that youíre having a hard time selling or maybe you donít want to devote that much time because thereís not that much profit margin. Well, package it with your camcorder. There are just different things to do like that. So have a plan to know how to move your products.

Colette: Right, and two plans, you know, if you donít move it the one way quick enough, figure out what your Plan B is going to be so you can be prepared for it in case you need to do that.

Chad: Right, absolutely.

Colette: Could you provide us with a couple of examples of different ways of getting a hold of some liquidation and surplus stock?

Chad: Sure. There are several surplus dealers. A lot of times theyíre a good source of liquidation, but again they may not be as direct a source youíd like to get. There are also major reclamation centers. There are surplus auction companies. And you can work out deals actually with your local stores to take their overstock, shelf pulls, or customer returns.

Colette: Now, Worldwide Brands has quite a research department here and weíre actually always calling liquidators, weíre calling these reclamation centers to find the ones who will work with online retailers. I believe you also have a book that you put together.

Chad: Yes.

Colette: And they can find information about that on your site.

Chad: Thatís correct, at Surplus2Profits.com.

Colette: Great. Are you able to give us an example of how someone might approach their local store about buying surplus?

Chad: Sure. Let me give you an actual true story.

Colette: Great, I like true stories.

Chad: Right. I actually went into my local Loweís store recently and I got to thinking Iím always searching to find ways where stores liquidate their different products at and what do they do with the returns, where do they send the repairs, and what do they do with their overstocks or seasonal items. Now, Loweís has a lot of good products, obviously, if someone wants to get into hardware supplies and things like that.

Colette: Mm-Hmm.

Chad: So I got to thinking, I opened up a small conversation with one of the customer service workers who was helping me at the time and at the end of the conversation he was answering questions I had been asking such as, where does Loweís send their closeout items? What does Loweís do with their customer returns or repaired items? How long does Loweís keep their items on their shelves until they liquidate them? Where do they liquidate their items to? Can I purchase any of their closeout liquidated return items? Or simply, how much does Loweís liquidate their products for? Now, these are important questions that anyone can ask any of their local stores. Now, I understand this guy didnít know me from Adam, but it was amazing how he did start telling me what he did know. Now, he didnít know the answers to all my questions, but what I did find is the correct person to talk to about those questions that I could get answers to. So the information I have about my Loweís store, now I know what I can do to purchase Loweís surplus and liquidation items. So I think itís very important that you have not because you ask not. So I think that if someone just went into their store and they just simply ask questions. Now, if itís a national store chain maybe theyíll have to call the corporate center or corporate headquarters, but if itís a smaller store maybe the store manager will know.

Colette: Itís much simpler than a lot of people think.

Chad: Itís just simply asking.

Colette: Yep, thatís the key. Any traps to watch for when starting out buying surplus?

Chad: Well, I think you have to beware of the scam artists.

Colette: As always, especially in the sourcing industry, itís something we always teach all the time on our site.

Chad: Yes. And unfortunately I think there are more scammers than legitimate sources. It seems that way. But actually, there are a lot of great sources out there, but you want to make sure you know how and where to buy as well as what to buy, know who youíre dealing with. I would suggest that people do their homework. Make sure theyíre dealing with a legitimate dealer before getting involved with them. Beware of the things that raise red flags, you want to use common sense. And if it sounds too good to be true, usually it probably is. Just donít get sucked up in the hype of the instant riches of someone telling you that their products are the only way to make money.

Colette: Definitely. Thatís a big red flag.

Chad: Right.

Colette: If theyíre telling you thatís the only or youíll get instant riches, alright, flag up, think about what theyíre actually selling you.

Chad: Absolutely. And I think the internet is bombarded with a lot of cheap lists. You know, you see these things all the time, the eBay PowerSeller sources, and I think a lot of times these are middlemen who try to get in the way of sapping peopleís profits.

Colette: Yep.

Chad: And itís a very dangerous thing. So I would definitely suggest that you know who it is that youíre dealing with and once you understand who it is youíre dealing with, ask those key questions to know how to buy. And thatís going to definitely increase someoneís chances of making money.

Colette: And for those out there who are looking for some of those key questions, we have at worldwidebrands.com a free ebook that talks about how to watch out for those scams and how to ask those right questions. So if thatís a big concern for you, itís a free ebook. Go to worldwidebrands.com and youíll be able to download that and find out what those right questions are to ask. Now, what are the dangers of buying products on the surplus and liquidation market and how can someone tell if theyíre dealing with a legitimate source?

Chad: This is a great question and itís one of the first questions people should ask when first getting involved with a company. Simply, the danger is you can lose a lot of money if youíre not careful and you can be stuck with a lot of junk products that you can do nothing with. I would caution someone, again, to be extremely careful with who youíre dealing with. Now, on the flip side of that there are a lot of money to be made if you do it right, you just have to know the things to stay away from. To tell if itís a legitimate source use common sense. Make sure if youíre looking at a website or a company make sure you have all the contact information. If youíre on a website and you donít see a phone number or email address, I think itís a red flag. You want to test their customer support. Call them and ask questions. And if nobody answers the phone during normal business hours, even if they have a physical address and youíre within the vicinity, I would definitely suggest visiting the facility.

Colette: Definitely.

Chad: Beware of over-hype claims. This is one thing I think is very common. People wanting to sell name brand products at ridiculously low prices, for instance, if you can get great deals, beware of the guy who can get you 250 Sony Cybershot digital cameras for $10 each. Thatís just simply not going to happen unless theyíre stolen.

Colette: And you definitely donít want to be involved with stolen products because you, as the merchant, are responsible for what you are selling, and if you are buying stolen property youíre still responsible for returning that property.

Chad: Right, absolutely. And thatís a great point. Another reason why itís very important to know the source of the products that youíre dealing with.

Colette: Yep, definitely. Often when Iím talking about liquidation and surplus the question of, what is a manifest and why is it so important that you understand what a manifest is?

Chad: Okay, a manifest is simply an itemized inventory list for the products that are on the pallet or load with the associated wholesale cost and the piece count of each product listed. What it does is it simply allows you to know whatís on the pallet or load youíll be receiving by listing them in a paper document. And this is usually attached to the pallet. This is an extremely important document and let me tell you why: I once called a company located in Florida looking to purchase some pallets. I talked to the guy who tried to sell me three pallets of electronics products for a ridiculous price which didnít include freight. I proceeded to ask him what was on the pallets and asked him to go out in the warehouse and look at the pallets and tell me what he saw on the pallets, what condition they were in, and then I wanted him to read me the manifest. Well, the long story short of what happened is the price is way too high for what was included on the pallets, so basically I would have lost money on that purchase. I knew the questions to ask, so when I asked him the questions it didnít seem to match up with what the manifest was saying, so if I hadnít known to check the manifest I would have lost money and been frustrated and disappointed. So I guess the moral of the story is to focus on buying the products knowledgably so you can successfully sell them once you find them.

Colette: And itís a lot easier than you think, just know the right questions.

Chad: Thatís right.

Colette: That is our time today with Chad Maslak of Surplus2Profits.com. Chad, thank you so much for being here, we greatly appreciate all your comments and advice.

Chad: Thank you very much or having me, I really enjoyed it.

Colette: Coming up next, our Product Source of the Week segment, when Product Sourcing Radio continues. Iím Colette Marshall.

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