1. Feature Article: How To Maximize Profits
And Minimize Financial Risk
CLOSEOUT: this merchandise results when stores have too many widgets; or when they change their styles, even though the old ones are still just fine, thank you very much; or when a fad is starting to die, and there are "left overs"; or many other such reasons.
Pro: the prices can be outstanding! You might pay as little as 2-3% of retail, and the potential profits are enormous.
Con: you usually have to buy a lot of the merchandise. You will also have to act fast. Think about it too long, and you lose.
Just like any investment, the higher the risk, the greater the potential profits. If you know the merchandise, you can make piles of money, but you can also lose your money if you're wrong. Some closeout companies will allow samples, so that you can see what you're buying, but many will not.
WHOLESALE: these are below retail prices. How low? Depends on the wholesaler and the merchandise. Prices generally range from 40 – 75% of retail, although I have seen many items that are 80% off.
Pros: regular wholesale is safer than closeout. Many wholesalers offer discounts for volume, but you can often buy one of an item – which is definitely the safest way to begin selling any item.
Cons: your profits won't be nearly as great as closeout, although they are respectable.
DROPSHIPPING: if you sell an item through a dropshipper, the company will mail the item directly to your buyer, and you never have to handle it at all.
Pros: the convenience is wonderful. It's like having your own shipping department. All you need to do is send an email or make a phone call, usually to a toll-free number.
Cons: the prices are usually much less wonderful than either wholesale or closeout.
Also, you need to be careful. Unless you absolutely know your merchandise because it's a brand name, you had better take delivery of your item the first time you sell it. After all, if you don't see it yourself, how do you know what your customer is getting?
Dropshipping is recommended only for more expensive items. Some companies charge a few dollars for dropshipping. If you're selling a $300 item, $4 may not matter. If you're selling a CD, $4 is a big percentage of your price.
Dropshipping can also be great if what you're selling is very heavy, very large or otherwise a pain to ship. For example, I have sold lots of exercise equipment through drop shippers. Even though I may make only $20-30/item, it's a simple matter to make a quick phone call and have someone else mail that heavy, awkward stuff. If I had to take delivery and then mail this myself, it wouldn't be worth that small profit.
