In the last few years, my cousin, who’s a few years older than I am, has been moving between jobs. This last move was not voluntary, and he was unemployed for a while. He finally had enough and started looking for opportunities to sell items that he can buy wholesale. I’m a business major, so I decided to help him do some research and planning. He wants to be his own boss and sell items that are in high demand in the different online marketplaces. Amazon stock keeps going higher, and more people are buying online. My cousin wants a piece of the action. I see offers for buying wholesale electronics, and some just seem too good to be true. How do I ensure that what he buys is in demand and profitable?
Congratulations to your cousin, and kudos to you for helping him achieve his dreams! Owning a business is not only rewarding and exciting, but it also helps create jobs. According to the Small Business Administration, small businesses account for more than half of new jobs and revitalize the economy during economic downturns. Therefore, you both deserve a fair share of gratitude and appreciation! It is because of brave and resilient people like you that this country’s economy is strong and continually provide opportunity to millions. Seven in ten small businesses end up closing, though, so it is critical to understand numbers, understand product demand, and remain profitable.
The first step is to find a product or product category. A basic rule of thumb is to look for a product/product category where there is an innate interest. The reason is that passion and knowledge sell. If you sell a product that you know well and are enthusiastic about, people will inherently feel the connection. Buyers will gravitate toward product knowledge. Even if you are selling online, the way that a product is described and the way that a question is answered will make a difference to buyers. Remember that customers are not only aware, but they also want to purchase from those that are passionate and knowledgeable.
The next step is to ensure that the selected product or category is purchased at the right price so that your cousin can always find buyers quickly and effectively. Basic laws of economics apply. To make a sale, there must be a buyer and a seller. In other words, demand must be satisfied. If there is too much supply and little demand, price will decrease while also decreasing profitability. The higher the supply and the lower the demand, the lower the price. The trick is to find products with high demand and a relatively low number of competitors so that profitability is as high as possible. Tools such as Terapeak allow analysis of vendors and products in marketplaces such as eBay and Amazon. Amazon also has the top selling items per category, which helps determine a product’s demand.
Finally, the product must be sourced from a reputable vendor and at price levels that provide sufficient room for profitability. Essentially, you are in business to make a profit. If you cannot source the product cheap enough to make a profit, there is no sense in selling. One excellent way of ensuring that products are sourced low enough to make a profit is to look for closeout and overstock merchandise. Most of this merchandise are products that a business needs to liquidate as said merchandise is just occupying space in a warehouse. Some of these items have never been touched. Therefore, buying wholesale electronics that are in high demand is relatively easy and accessible regardless of purchasing power or company size. This is because liquidators consolidate such merchandise from multiple retailers and wholesalers and provide small businesses with access to this type of merchandise, without requiring large orders that would typically be required if going straight to the retailers or wholesalers.
The key to being successful is owning the numbers. Your cousin should know exactly what it costs to buy, list, and ship as these numbers are tied directly to profitability. Ultimately, if you purchase merchandise low enough and account for shipping and listing fees, profitability will be achieved.
“A person who never made a mistake never tried anything new.” — Albert Einstein
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