The Surplus Market – buying and reselling closeout and returned products in a secondary market – offers great profit potential. Success in the Surplus Merchandise Market works best with Insider Knowledge and an Expert’s Expertise.

Here’s both: insider understanding of the surplus market, plus expert guidance from Vincent P. Curtin, III, Account Manager at GENCO Marketplace , a leading B2B wholesaler of secondary inventories.

See Vincent’s article below, a Primer on Goods for Sale in the Surplus Market. And, tap a new stream of profit potential.

–Top Ten Wholesale Newsroom, Editor

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Understanding the Surplus Market:
A Primer on Goods for Sale
By Vincent P. Curtin, III
Account Manager, GENCO Marketplace

An increasing number of entrepreneurs are buying and reselling goods in the secondary market. These closeout and returned products represent just about anything sold at retail, from electronics to apparel to appliances. But which product categories offer the best potential for profit? The answer will differ for each business. A general rule of thumb: the more knowledge you have about a product category and the market for these specific goods, the more profit you will generate.

Key Questions to Market Surplus Goods

For each type of product you are considering for purchase, here are some key questions on Surplus Marketing to consider:

· Can you move the goods? Particularly when you’re starting a business, it’s best to purchase products you can move, even if you have to pay a little more. Once you build a solid base for your business, you can begin taking risks in order to generate a bigger return.

· Do you have the experience to determine a profitable purchase and sell price? Many entrepreneurs in the secondary market spent years working in retail selling on a specific category of goods. And, there are no established prices for liquidation product. If you can use insider knowledge of the product category to buy low and sell high, you will have an advantage.

· Can you repair products? A certain percent of return loads will be damaged and unsellable in their current form. This “waste factor” is reflected in the deeply discounted price for such loads. But if you can fix and generate revenue from these damaged products, your profit will grow.

· Are there any resale restrictions on the product? Some products can only be sold outside the U.S. Others have requirements for defacing (also called “delabelling”), which can add to overhead and lower your profit.

Benefits of Diversified Product Lines

While it makes sense to start with products you know, there are long-term benefits to reselling multiple categories of goods. In the investment market, they call this “diversifying your portfolio.” If you sell a “diversified portfolio” of liquidation products, it may allow you to maintain revenues if one category of goods becomes scarce.

For instance, some people are kicking off new businesses using liquidated goods from recently bankrupt Circuit City. Such goods may be plentiful for a few months; but, shortly, these new businesses must either purchase electronics from another source (probably at a premium) or simply go out of business.

The bottom line is: The more you know about a product category, the more likely you are to achieve success as a reseller. Here’s a look at the characteristics of the most common products sold in the secondary market.

Electronics
· Most sought after category due to high recovery potential. Also comes with highest risk due to high investment required to purchase product.

· Items include TV’s, iPods, cameras, and computers.

· Technical expertise helps, particularly repair capabilities. This product knowledge can also help establish the right selling price.

· Resells well in all geographic areas.

· Purchase price typically set as a percentage of retail or wholesale price.

Hardgoods
· Second most sought after category due to an attractive mixture of small electronics, tools, appliances and other popular product types.

· Generally the safest category to purchase due to immediate resale value and lack of repair requirements.

· Typically accompanied by tight resale restrictions, such as requirements for exporting and defacing.

· Purchase price typically set as a percentage of retail or wholesale price.

Softgoods
· More of a niche market.

· Clothing can be difficult category to price since items are primarily sold on a price/unit basis, not as a simple percentage of retail/wholesale.

· In most cases, retailers will designate clothing for Export Only.

· Resale potential may be limited in certain geographic areas. For instance, it’s difficult to sell winter jackets in the south in May.

Shoes
· More of a niche market.

· Many price points, depending on type of shoes. The more expensive the shoes, the greater the risk.

· Sold on price/pair basis.

· In most cases, retailers will designate shoes for Export Only.

Sporting Goods
· More of a niche market. This category is a mixture of shoes, clothing, and hardgoods.

· In most cases, designated for Export Only.

· High risk/high reward opportunity. Some loads with little damage can be highly profitable, while others with a high waste factor will not.

· For a new buyer with little experience in the category, sporting goods can be a very difficult category to price and resell until experience is gained.

These are the main categories of goods available in the secondary market. Of course, there are other sub-categories such as Bed and Bath, Housewares, and Private Brand. Each retailer has its own set of category names, prices, and specifications.