As I mentioned in the article, "How to Obtain Good Product, Very Cheap", there are essentially three main methods to obtain product, namely:
- Salvage / Surplus / Overstock / Returns
- Buy on eBay, then Sell on eBay.
The first one above, which we are discussing here, includes Government Auctions, Chain Store Product Returns, Name Brand Overstock, Estate Auctions, etc. This is one of the main methods employed by the top sellers on eBay. It is also a good place to start for most sellers. With Salvage/Estate type product, you can use your credit, a loan or businesss line to buy the product, as you will usually need to spend atleast $600 minimum. I do not suggest using your own money, as most people simply do not have the means to come up with thousands of dollars on a spur. Anyways, you likely need that money for other bills. Using the bank's money is best, but respect it. Do not use it like a teenage girl who took dad's platinum card to the mall. Treat it more like a loaded gun. If you don't know what you are doing, you might shoot yourself in the foot. So, DO THE MATH before buying anything with credit. It should be your last step, not the first. Of course, I could sarcastically point out that most people use their credit foolishly anyways, buying stuff they don't need, which ends up in the closet, making your credit card company lots of money.
Using Credit or a Loan Rather Than Your Money
Since I know from experience that some of you will need convincing to use credit to buy product, let me prove why it is the best way.. First, you will have available to you about ten times the money power, as usually you have far more credit than you do real money. So, you are obviously able to buy far more product. Further, this is basically what most all businesses do. Of course, you should consult a CPA or someone who is good with money before buying a lot of stuff. I am not going to be blamed, because you did not do the math before buying something or did not calculate risk into your equations. BUT THE FACT OF THE MATTER IS, using your real money can really drain you. I have used $10,000 one time, of my own money to buy product. I regreted it later. Why? Because I now had that much less money in my account, when I could have just used the banks money and paid it back as I was selling the stuff. So, I lost access to that money, in a sense. The fact is Donald Trump and just about every other business man out there does it this way.. Trump has TONS OF DEBT, but it is good debt as he makes money off of the debt. He obviously learned this way early on and of course knows tons we don't know.
Since some of you are likely still skeptical, I will give you a plain example that will make it very clear that it is simply the best way. Take for instance a PS2 Slimline (Playstation 2). Generally, they sell for like $150 in stores. You can sell one on eBay for about $115. You can buy it in salvage form for about $45 bucks. Now, if you buy it for $45 bucks, put it on credit at 10% apr. You buy it, get it, sell it in 1 months time. You pay back the $45 bucks on the credit and keep the $115 - $45 = $70 profit. How much APR did you pay? Here is how you calculate: $45 x 0.10 APR x 1/12 months = $0.38 cents APR. So, for $70 profit, you spent $0.38 cents APR.
It should be obvious to you here that IF you do it right, you will make good money on the loan. So, where do people go wrong.. Well, I can tell you from experience, most of the time it has something to do with not paying back the loan after getting the money, or buying the wrong product that takes you 2 years to sell, or buying product from a bad source which makes you little profit, etc. So, in other words, if you cover ALL YOUR BASES BEFORE making a purchase, you will likely make very good money. The main problem, though, is most people can't even identify the bases. Ignorance is costly. I am saying this, as I have myself been ignorant on these very things I listed. I let $25,000 in debt from buying stuff rack up, because I was not faithful in paying back my loan when the sale went through. Or, I would buy product, a long time ago, from a bad source, which would not make me a lot of money.. SO, I have learned these lessons and NOW I am faithful to pay back the loan, buy from good sources, etc. Now, if I knew all that I know now, back then, I would likely have $25,000 less in debt. THE GOOD NEWS is I am here now telling you all this, so you don't have to make the same mistakes. If you listen, I might just save you $25,000 dollars. Do you see my point now?
So, what am I trying to get across here. If you use credit to buy salvage/overstock/estate auction product and you do it correctly, you will be able to make far more money than trying to use your real money to buy it. You will likely be able to make 5 to 10 times more using credit. But, you need to make sure you cover all your bases and respect the loan/credit.
Government Auctions and Store Salvage/Returns
I could sit here and just rattle off a bunch of good Estate Auction and Chain Store Return Wholesalers, which I will do below somewhat, but I believe you will learn far more if I taught you HOW to find them yourself.
To find these type of wholesalers quickly, for the specific type of product that interests you, I would suggest using www.google.com and to do searches similar to this one below:
- Google Search: "Salvage Pallet "
- Google Search: "Surplus Pallet "
- Google Search: "Estate Auctions "
- Google Search: "Salvage Auctions Pallet"
Those are obviously rather broad searches above, so I will now show you far more specific searches. Honestly, it all comes down to knowing the lingo and that is about it. The magic keywords here are: salvage, pallets, surplus, estate auctions, salvage auctions, etc. You put those words in, you find the right sources.
- Google Search: "Salvage +Pallet +'sporting goods'"
- Google Search: "Salvage +Pallet +sears"
- Google Search: "Salvage +Pallet +fashion +'jc penny'"
- Google Search: "+'Estate Auction' +jewelry +Michigan"
- Google Search: "+'Government auction' +car +Michigan"
As you can see, if you know how to find them yourself and know the right terminology, its almost as if they just flow right to you. Honestly, though, you will have to look through the search results to find the good ones. So, just clicking on the first result and just expecting it to be the killer wholesaler is not wise. Rather, you have to go through the search results above, and find the best supplier from the results. This is how I do it and it is likely the best way to do it. FURTHER, you will have to call or email most of those who do sell such product, as they often do not have all the items up on the website. They are constantly selling their pallets. Often, you can get on their email newsletter and they will send you their new pallets and loads they have every week. I get emails all the time like this, as I signed up with about 10 different wholesalers.
The good news is that once you have done all the work to find the best supplier from the results, you can often just stay with that supplier, if you make good profit off their product. So, it is not like you have to keep looking for a new supplier. Once you have one or two really good ones, you can just stick with them for quite a while.
I have found with almost any business online, you do most of the hard work up front.. Once you have done all the initial hard work, it is all down hill from there. The problem is most simply look at the initial work and turn away, as they want something easy or something that will guarantee their success. But, with business, there is no guarantee and really, if you think about it, few things in life have a guarantee. But, you can greatly increase your success by covering all your bases.. There are also business techniques, like the three business idea rule, that can almost guarantee your success. The three business idea basically says that if you do three solid business ideas at the same time, atleast one of them will work out greatly for you. So, rather than pursuing that one cool idea you have, you should pursue three at the same time, just in case one or two of them fall through. That way, even if all three do work, you can choose from the three which ones to continue on with, so you have your most profitable/favored business plan in the end.
Some Great Websites for Estate Auctions and Store Returns
Okay, so you want me to just get to the point and give you some really good websites. Here are some below, but like I said above, it is far better to know HOW to find these type of websites below. I show you above, but it requires work, obviously.
- Government Auctions Org
- Auction Zip - Find Auctions Anywhere!
- American Merchandise Liquidators
- Surplus NET - Directory of Surplus/Salvage Listings
- Alibaba.com - Business to Business Marketplace
- AAA CLOSEOUT LIQUIDATORS
- Wholesale Distributors Directory
- Beaufort Liquidation
Here is how to check to see if the company you are buying from is good or bad. Do your HOMEWORK before buying from anyone. So, if you find some nice company, or even use one of the ones I show above, do a search on this website to see if they have any complaints. If there is one and you read it and it appears the person is an idiot(some buyers are idiots), then do not assume the company is bad. BUT, if the company has five to ten entries against them, likely they are BAD.
- Rip Off Report COM - One of the most extensive lists of scams, frauds, etc.
- One good example of a bad salvage company. Do not buy from these guys! They have TEN complaints. Very bad sign!
- Another good example of a bad salvage company. Do not buy from these guys either!
So, What Can I Expect, If I Buy Estate Auction Items or Store Returns?
For Estate auction items, you will have to first find some auctions going on in your area.. Using the first two links above, Government Auctions Org and Auction Zip - Find Auctions Anywhere! will yield you locations in your area, where Estate and Government Auctions are located. Each one will likely run differently. Some will be private bid, others will be open bid, it all depends on what rules they incorporate. At first, you might seem a bit overwhelmed as to what to bid on, but often you can get a printout of what will be up for auction a week before the auction. This way, you can do some research on what to bid on and what a maximum price you are willing to spend will be. Of course, you will have to take into consideration the condition in your max bid, so consider various degrees of quality when doing the research on the going value for it.. There are often ways you can figure its value. For instance, if you intention is to sell it on eBay, just do a search on eBay's completed item history, so you know its value to the eBay community. This is a great gage as to the value of it when you list it.
For Store Returns, often you either buy in pallet form or in truck-load form. Since it is usually pretty expensive to buy a full truckload, you can always buy in pallet form and buy more than one pallet. This is how I usually do it, though, I have bought full truckloads before. Never buy, if they can not give you a manifest, a list, of what is on the pallet(s) or truckload. Generally, you have only partial control over what is on the pallet. What I mean by this is the pallets are already setup and you can not change what is on a pallet, but you have several different pallets to choose from and they often put related items on each pallet.. So, if there is a vacuum on a pallet, likely there is more on that same pallet. Or, if there is a camcorder on a pallet, likely, there are more camcorders and possibly cameras on that same pallet. I think you get the idea. ALSO, you only pay about 30% of the wholesale price.. So, that is about 1/4 of the retail store price! And, generally speaking, you can sell it for about 63% of the wholesale price on eBay. So, overall, you double what you paid when buying a decent pallet of goods. SO, again back to the Playstation 2 Slimline, the retail price would be like $150, the wholesale $120, you can sell it on eBay for $100 to $115. You pay only about $45 for it on the pallet. Of course, the pallet likely has 10 of those PS2 Slimlines and likely also 2 of them might not work. But, I worked that into the equation. Generally, all you do is divide the cost for each PS2 by 0.8 and you will get your effective price per each WORKING PS2 Slimline. So, having say 15% of the goods not operating is really not a big deal, as you get it all so cheap it works out well in the end.