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Article added or updated:
03/30/2008 |
eBay - Finding Product Sources for Your Business
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Related Articles:
eBay Item Sources
eBay Success Story
What to Sell on eBay
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If you want your business on eBay to really take off, you've got to have
reliable product sources first. Our sourcing secrets will put you well
on your way to building your own empire.
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Anyone can make a sale on
eBay. But not everyone can make a business out of it. Today, more than
430,000 sellers are using eBay for a primary or significant source of
their incomes. The ones that rise to the level of PowerSeller know
success depends not just on how much you sell, but also how smart you
buy.
Every business seeks the one product no one else has at the lowest price
possible, for the greatest potential profit. Few companies will be so
lucky. Instead, successful selling relies on choosing reliable suppliers
able to offer quality goods at a fair price.
It's the source that counts, and eBay entrepreneurs face a plethora of
choices to stock their businesses with anything from collectibles to
industrial equipment. Suppliers may be located around the corner or
around the globe. They may be someone you know or a factory owner
overseas you'll never meet.
Where to Start
So where do you find a supplier? A good search engine can help you find
hundreds of companies online using search terms like "wholesale
merchandise," "drop-ship services," "closeout dealers," "job lot
traders" or "liquidators." For sources in print, check the classifieds
in newspapers, trade journals or your community penny-pincher newsletter
(available free at supermarkets and drugstores). These publications list
dealers specializing in closeouts and discontinued or irregular items,
in addition to estate sales, which may include private collections of
books and other items that would find eager buyers on eBay. Specialty
publications such as Closeout News are also good sources.
Closeouts and job lots are quick, easy ways to get a business going. But
when you've got neon-framed sunglasses one month, and you have fleece
socks the next, it's hard to establish a niche business that will draw
repeat customers. For companies looking to build a specialty, the better
choice may be to contract directly with manufacturers or, more commonly,
a manufacturer's rep (a salesperson hired by a manufacturer to promote
distribution).
Trade shows offer the eBay retailer access to manufacturers and sales
reps in one location, plus the benefit of meeting face to face to test
the chemistry and assess product quality firsthand. Trade shows
typically focus on a specific market segment, such as toys, novelties,
military surplus or electronics, so determine what you want to sell
before you go.
Making the most of a trade show requires some preliminary footwork to
avoid wasting time and money, says Sam Bundy, group president at VNU
Expositions, a trade show organizer with offices throughout North and
South America. Business owners can check VNU's list of shows at
www.merchandisegroup.com or their local convention and visitors' bureau,
which usually has a calendar of such events. Make sure the show you
choose is worth the admission price by contacting show management and
asking about the number of exhibitors—not booths, since one company may
have more than one booth—and what products will be represented. Look for
shows where exhibitors are mostly small to midsize wholesalers and
distributors as opposed to major manufacturers that are less likely to
sell to a smaller operator.
Matching a supplier to your own interests or expertise can help move the
process along, whether choosing from a trade show exhibitor or browsing
vendors online. Jack Sheng got his start as an eBay entrepreneur because
of his obsession with electronics, particularly cell phones and cell
phone accessories. His hobby made him an expert on the industry's
leading suppliers, a connection complemented by a friend who had links
to potential trading partners. From there, Sheng, 29, studied the market
by attending industry events and traveling to companies to understand
how products were made. Today, with $12 million in annual sales, Sheng's
Eforcity (eBay User ID: eforcity) in Temple City, California, is one of
the largest eBay sellers (ranked by unique customer feedback and by the
number of transactions).
Buy and Buy - Where to buy what you want to sell:
Closeout dealer directories
Drop-ship service directories
Family, friends and colleagues
Government auctions
Industry trade shows
Liquidators
Manufacturer's representatives
Newspaper and magazine classifieds
Odd-lot traders
Online wholesale product directories
Specialized classified ad newspapers
Wholesale gift catalogs
After more than 30 years selling used restaurant equipment, A City
Discount (eBay User ID: acitydiscount) knows its industry. So when the
company, which had sales last year of $3.75 million, decided to expand
its business on eBay to include new equipment, it knew which suppliers
to avoid and which it could trust. "We picked those we knew had an
inventory and would be able to supply the product," says John Stack, CEO
of Peach Trader, the Atlanta company that owns A City Discount. The best
source for vetting a manufacturer's reliability, Stack adds, is often
the manufacturer's own representative. "A manufacturer's rep frequently
will tell you if the manufacturer can fill orders on time," Stack, 53,
says.
Perhaps the best source of well-priced goods is Asia, but contracting
with suppliers out of the country presents challenges. The primary link
to this market is through manufacturer's reps or importers in the United
States who have connections to an overseas counterpart or to a factory.
Every layer adds a surcharge, but the price of experts who know this
complex market is worth it. "It's insurance, and you need to add as much
insurance as you can," says Jason Sprong, a partner with Vital Sourcing
in Boulder, Colorado, which specializes in sourcing and logistics in
China. "You still save between 30 and 60 percent off the price of what
you'd get in the [United] States," Sprong, 32, adds. A good rule of
thumb for overseas as well as domestic orders is to aim for a total cost
of acquisition at 80 percent of the selling price and warehouse and
shipping expenses.
Sourcing can be an ongoing challenge for startup businesses, and
entrepreneurs have to be alert to any way they can keep fresh stock
coming. A City Discount stays in touch with suppliers such as national
and regional restaurant chains so the company is ready when an
opportunity presents itself. A menu change, for example, might make
certain equipment obsolete, and A City Discount makes sure it's there to
take the items off their hands. "These companies don't want to be in the
equipment business," Stack says.
Sometimes, the source can be dozens or hundreds of individuals and small
businesses. Med1Online (eBay User ID: med1online) specializes in new and
used medical equipment, and some of its sources for used equipment are
physicians upgrading to newer technology. When a doctor wants to buy new
from Arvada, Colorado-based Med1Online, the company always asks what the
plan is for the outgoing machine. "The people we're selling to are also
the people we're buying from," says president Scott Carson, 41. The
company anticipates sales of more than $10 million this year.
Companies can consider themselves lucky to have such mutually beneficial
exchanges, but even expediency can't overcome price as the deciding
factor in choosing a supplier. Negotiations are a tricky process of
parry and thrust that only informed entrepreneurs can win.
Consider trade shows. Many exhibitors won't be appropriate trading
partners because minimum order requirements are too high. Once you find
suppliers who will sell at low volumes, work begins at setting a fair
price. "Ask those vendors what their best price is, don't commit to it,
then compare it to four or five others," says Bundy. "Then you'll know
what the market price is." Submit a bid at that level, or test your luck
and low-ball it. You can always sweeten the offer by paying 5 to 10
percent upfront and the rest c.o.d.
Most suppliers expect to haggle over price, but you should resist the
urge to bargain down to the last nickel. A supplier who walks away
feeling cheated probably won't be eager for more of your business. "I
would not try to play the price war," says Sprong. "You're probably
going to lose, and if you don't, it will be a one-time transaction."
When you're ready to buy, order as much as you can afford to warehouse
if you're not using a drop-shipper. Suppliers are volume-driven, and
they offer a better price when more goods are moving. Try to order 10
percent more than your last order.
In some cases, paying less can be an advantage. "Sometimes I pay too
much for something and too little for others," says Carson. Such
flexibility helps build trust and positions the business relationship
for the long term.
Points also go to companies that avoid burdening a contract with terms
such as returns of unsold goods. "That's almost consignment sales," says
Bundy. "Suppliers are not looking to take your risk."
Negotiating price with a supplier presents a Catch-22. Suppliers offer
their best price to vendors who can make products move, while vendors
say they can move more products when they get products cheaper. New
companies also face the challenge of reassuring suppliers of their
staying power. Stack recommends starting with local suppliers who can
judge the legitimacy of your business firsthand, and starting with less
pricey items that don't represent a huge risk to the wholesaler. The
point is to create a track record. "Today, I have manufacturers
approaching me to push their lines who had historically refused to sell
to me," Stack says.
Demonstrating the advantage of selling on eBay adds to a company's
negotiating strength. "You need to educate suppliers about the power of
eBay," says Eric Crawford, a partner and co-founder of Essex Technology
Group (eBay User ID: buyessex). "We explain that you can sell anything
here."
This Nashville, Tennessee, company has its own way of reassuring
suppliers. The company specializes in customer returns, overstock and
discounted electronics and sells them on eBay on consignment, which
means suppliers don't get paid until the items sell. Essex's proprietary
tracking software lets suppliers track the status of each item from the
time it leaves the warehouse to the moment the product is sold. "Most
companies would be scared to send a truckload of product to any Tom,
Dick or Harry," Crawford, 30, says. This way, suppliers can keep a close
watch on their goods as well as their buyers.
The more reassurance a company provides, the better the business's
long-term health. "Confidence," Crawford says, "is the hardest part of
sourcing."
What's Your Worth?You know your business on eBay is a sourcing success
when you have Med1Online's problem. The company's inventory had grown so
much, customers needed an easier way to find what they wanted.
Many items in the company's stock of sophisticated medical equipment
have the same function, but individual features may vary from unit to
unit. And those are the features that Med1Online's savvy customers
wanted. Scrolling through a few choices is one thing, but when the
options fall into the hundreds, says Scott Carson, president of
Med1Online in Arvada, Colorado, "it's a whole 'nother enchilada."
Med1Online helps customers navigate this complexity with a listing tool
that lets buyers search by individual product features, a utility that
adds value to the shopping process and gets customers on and off the
site quickly. That, in turn, gets products out the door faster.
Adding value comes down to making things easier for customers. It can be
as simple as making sure eBay listings are spelled correctly and
pictures are professional looking and large enough for eyes older than
40 to see. Med1Online adds value by fine-tuning the shopping experience.
But attention to the process can be applied at any stage, either in the
way a business leverages its products or in the quality of service and
support after the sale.
Leverage at A City Discount means offering customers a one-stop shop.
"We have a broad product line that covers different subcategories of
restaurant equipment so customers can outfit a complete restaurant from
us," says John Stack, CEO of Peach Trader, the Atlanta company that owns
A City Discount. The company also lets customers bundle multiple orders
so they pay one shipping rate—a small but still appreciated savings.
Integrity also adds value when buying used equipment. Essex Technology
Group—which handles, among other things, auction management, asset
recovery and product testing for clients—tests each item to see what
works and what doesn't, then shares the findings with buyers online. "We
tell customers exactly what is wrong," says Eric Crawford, a partner and
co-founder of the Nashville, Tennessee-based company. Even then, faulty
products usually find a buyer, because "people will try and fix them
themselves," Crawford says, proving the adage that anything can sell on
eBay.
This article first appeared
here.
Related Articles:
eBay Success Story
What to Sell on eBay
eBay Made Easy
Finding eBay Products
3 eBay Success Stories |
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