Practical Ecommerce

Consider niche purchasing

Much has been written about the advantages of niche selling. This is because it is a great way forward for independent retailers. Less is written about niche purchasing. This is a great way for knowledgeable independents to make money at the expense of the box shifters and large faceless retailers.

Most retailers purchase their stock in roughly the same way. They do market research to determine what they think their customers will want. They find manufacturers and wholesalers and distributors from whom they can buy the stock. They negotiate as low a price as they can. They buy as much as they can afford or think they can sensibly sell in a certain period. Since we are all doing this, it is hardly a surprise when we all end up with similar stock and similar prices. With the enormous reach of selling platforms like Amazon and Ebay, prices are naturally driven downwards and we all suffer.

In the few weeks before Christmas, there will always be some fast-moving, desirable items that get in short supply and their price rises accordingly. This is the market to go for. There is no guessing required. You can see the demand is there and you can afford to stock up, knowing that it will sell. The problem is where to get the stock, as it is in short supply.

The answer is to find companies that are being lazy. They have set a common price for a series of items. They don’t realize that one is rare and selling elsewhere at a premium. Or perhaps they offer a product that has been running for months and they have failed to stop doing it when the market changes.

I will give a few examples to illustrate what I mean. I trust you will understand if I do not give every detail — find your own bargains!

Last year Toys”R”Us in the U.K. clearly had overstocks of an item called “Christmas Adventure Set.” It should have been £19.99 (about $30) but it was selling at half price, with free postage. On Amazon in the U.S., however, these items were selling at over $60. So I could purchase them at about $15 and sold them at $49.99. My sales peaked at over 10 a day by selling at the “reduced” price of $49.99 where all the other sellers were offering at $60 plus.

Then there is the U.K. manufacturer with its own website to sell to the public. Its wholesale section has run out of stock for a certain action figure and all retailers on Amazon Europe have run out. Indeed Amazon itself has also run out. The item is in demand and the selling price has already reached double the normal $7 price in Europe. The manufacturer’s own consumer site still has stock, and is still priced at the normal $7. The manufacturer’s search engine optimization is clearly rubbish, as it does not come up in Google. In addition to this, the manufacturer is offering free shipping and a free gift (a vinyl storage box).

So I can purchase the figure from the manufacturer at $7, and sell it in Europe for $14. To add to my profit the vinyl storage box is selling in the U.K. for £49.99 — $80 U.S. — and sells within hours of being listed. It’s a great item and well worth the £49.99. I cannot understand why the manufacturer is giving it away when it could sell it for so much — not that I am complaining.

Finally there is the game that Amazon U.K. is selling at cost, but is in the top 100 sellers in the U.S. and sells at a premium.

So by finding these items being dumped on the market in one country but in demand at a premium in another country, I can make good money.

In addition to online opportunities, there are also local shopping opportunities. For example, in my town in England a large national discount store has just opened. It has filled it shelves with merchandize from “Frozen” (the movie) at low prices to encourage customers to visit the new store. Frozen-related merchandise is in short supply online and sells at a premium. So I have a discount store selling items at a price that I cannot get wholesale and these items are selling at a premium online. I bought them.

Whilst these examples are good and bring in lots of sales, by their nature they are short lived. You need to constantly keep an eye open looking for such opportunities. Whenever you visit a new town or shopping mall seek out the stores that do not have an online presence. They could have older stock on their shelves that everyone else has sold out of long ago. Even though this could be just one or two items, it all helps. Whilst the biggest killings may be made in the Christmas period, there is nothing to stop you doing this all year. It is essentially exactly what antique dealers do every day of the week. Indeed it is what the independent freight shippers used to do hundreds of years ago: Purchase a commodity where it is cheap and ship it to sell where it is in demand. The only difference is we use FedEx and the postal services rather than a tramp steamer.

In short, stop following the herd and start doing your own thing.

email-news-env

Sign up for our email newsletter

Comment ( 1 )

  1. Elizabeth Ball December 4, 2014 Reply

    Thanks Richard, for an original article on niche purchasing. Has gotten me thinking!