While many ecommerce businesses trade only in new merchandise, there is a booming market for used, refurbished, and surplus items. Savvy ecommerce merchants can identify niche markets and use public auctions, websites, and classified ads to source valuable inventory for resale.
In this “eCommerce Know-How,” a recurring Practical eCommerce feature, I will introduce the idea of using auctions and classifieds to find inventory that you can flip quickly and easily for a profit on your own site or on auction sites like eBay.
Finding Your Niche
Some items lend themselves to resale while others are not so easy to remarket. Finding a successful niche can be key to making a profit from used or alternatively sourced merchandise.
ABU Games in Boise, Idaho is a great example of a multi-channel merchant that has found a successful niche selling products that don’t necessarily come from traditional merchandising sources. Through its online store and an eBay shop, the company sells collectible Magic the Gathering cards. The cards are used to play a role playing game that has similarities in concept to Dungeons & Dragons, one of the first and perhaps most popular games in the genre. Magic the Gathering is believed to have about 7 million players worldwide, and those players have an strong appetite for the more than 15,000 different cards available.
According to Gabriel Wilson, ABU’s owner, the company has several million cards in stock, the majority of which it purchased from individuals, not Magic the Gathering’s publisher. Visitors can go to the ABU site, place the cards they wish to sell in a sort of reverse shopping cart and make a sale as easily as they could make a purchase. ABU is successful because it found a relatively underserved niche that it could market to and an easy way to source merchandise for resale.
As a second example, I know a reseller that specializes in high-end chain saws. He sources his woodcutters by placing wanted ads on Craigslist or buying them at storage unit auctions. After giving the saws an overhaul he resells them on eBay for three or four times what he paid. He is successful because he was able to identify an underserved market and service it.
In both of these examples, the merchants were experts in their products and generally interested in the items they sold. And they both found non-traditional sources for their products.
To find your niche:
- Look for a product or product family that interests you;
- Seek an underserved market;
- Find a market that is comfortable purchasing used, refurbished, or new surplus items.
Attend Auctions, Read Classifieds And Look for Bargains
Once you have found your niche (or niches) begin to look for auctions or individual sales, and be very price sensitive. Computers, for example, are an area where there is a huge market for refurbished or new surplus products. And by paying careful attention, smart ecommerce businesses can source computer products for pennies on the dollar, but this is also an area were buying from auctions and individuals can be costly.
For example, last week MPC, a maker of computers, servers, and related products, held a bankruptcy auction, putting up an estimated $50 million in new or refurbished products. But the auction, which attracted a lot of consumers and former MPC employees, was no bargain-hunting paradise, as many of the buyers paid 80-percent of retail value for the MPC and Gateway branded systems. At those prices, making a profit on resale would be unlikely.
By contrast, auctions conducted by GoIndustry DoveBid are often an ecommerce merchants dream with very resalable items, including similar computers, going for a fraction of retail.
My own personal experience includes sourcing at auctions collectible toys and comic books that I was able to resell in mass in my online stores and on eBay. Classified ads can also be a great source for used or refurbished goods. But, again, take care to be sure you’re getting a bargain.
To source valuable merchandise for your ecommerce business:
- Stick with your niche, an auction is no place to expand into new lines;
- Know the retail value of the items you’re bidding on;
- Never pay more than 25 percent of the retail value;
- Beware of high buyers’ premiums.
There is a lot of money to be made selling used, refurbished, or surplus new items on ecommerce and auction sites. The secrets are (a) to find underserved and interesting niches that can provide a profitable income and (b) to be very price sensitive as you shop for merchandise at auctions or from individuals.
- GoIndustry DoveBid online auctions
- Great American Group’s Wholesale Inventory Disposition services
- Liquidation.com wholesale online auction
- U.S. Government auctions