Minimum Order Quantity (MOQ)
The minimum number of units you are required to purchase of a particular product. MOQ’s are in place so that its “worth their time” for wholesalers to deal with their customers or so a minimum profit margin may be obtained.
A below retail price that allows the retailer or reseller enough room to make a profit after expenses. There is no standard formula to arrive at such a price but is instead influenced by many factors and then further differs among industries, geographical borders, etc…
Terms that define when and how payments will be made by the buyer. For B2B sales, payment terms are generally flexible and allow the buyer ample time to pay for their purchase. This encourages larger orders, and in some cases, allow the retailer to start selling the goods in order to pay for the purchase. Terms can be any length of time but are typically immediate, Net 15, and Net 30 days. In other words, the payment is due immediately, in 15 days, or in 30 days from the time of purchase.
Minimum Suggested Retail Price (MSRP)
The minimum price a product should be sold at. This is set by the manufacturer of the product and is often used more as a bench mark for prices within the greater supply chain. The MSRP has little weight in the liquidation industry and becomes merely a reference for the original value of the product.
Freight on Board (FOB)
This is where the products ship from geographically. For example, FOB Albany, NY would mean the products are located in Albany, NY. This info is useful for calculating freight quotes.
The number of days or weeks it takes from the time an order is placed until the time it will ship or be delivered. This term is also referred to as “turnaround” time.
The profit that a seller hopes to make by “marking up” their cost. Can often be expressed as a percentage, formula, or certain dollar amount.
This typically refers to the amount of units that come in a case from the manufacturer. For example, an item may have a case pack of 8, meaning there are 8 units of that product to a case. This is significant because wholesalers may use this as their MOQ, or may be the most efficient way to ship the product.
This means the product may still be ordered but is not currently available. Backorders can happen for a variety of reasons but typically, the supply is lagging behind the demand for the product.
Purchase Order (PO)
A formal request to buy products submitted by a buyer. A PO will list the products, quantities, and other purchase details of the transaction. A PO will also signal to the seller to generate an invoice for the buyer.
A business model where customer orders are placed with a retailer, but the order is fulfilled and shipped directly from the supplier, distributor, or manufacturer.
A brand or product that is sourced directly from the manufacturer and is wholly-owned by an entity.
Line Sheet/Excel Sheet
Exactly what it sounds like-a list of products that are for sale by the wholesaler. It contains prices, quantity, MOQ’s, pictures, and other ordering info so a buyer can quickly and efficiently place orders. This is often sent through email so a buyer can “check-mark” the items and quantity they want to order.
Exactly that-samples of the item before you purchase. Depending on the cost of the item, a wholesaler may send them at no cost, at their cost, ask for them back when finished, or figure them into the order in some way upon a sizeable purchase.
Point of Sale (POS)
This refers to the physical location of the sale or when a sale is made in person rather than online. Although, some software may be referred to as POS software and have the ability to facilitate ecommerce transactions as well as swipe plastic credit cards on the spot. POS transactions can happen anywhere now thanks to credit card and chip readers that attach to your smart phone.
How to Source Product
Purchasing wholesale is perhaps one of the easiest and most efficient ways of sourcing products for resale. When working with a reputable source, products can be ordered quickly and without hassle. Inventory may be consistently ordered and reordered in a way that keeps supply predictable and sustainable. Because wholesale is a formal link in the supply chain, products are delivered in retail-ready condition which makes reselling efficient. Margins on wholesale are typically razor thin and often calculated to the penny. Some barriers that resellers face using the wholesale method are: becoming an authorized reseller of a brand, meeting the minimum order quantity (MOQ), meeting the minimum order amount (MO), warehouse or storage space, industry knowledge or experience, material handling capability, or the proper channels to quickly and efficiently sell the products. When properly leveraging the wholesale model, your business has the means to be scalable with the potential for ever-increasing profitability.
Companies liquidate their product for a variety of reasons but it generally boils down to the fact that it didn't sell as quickly as they had hoped and now it must dissapear in order to make room for new products. It is usually the result of an over-supply for the amount of demand for the products. Again, there are many other scenarios but this is generally the case. Liquidation merchandise is generally retail-ready but has the potential to show signs of being through the distribution process. This type of product often allows the buyer to submit their "best offer" to buy-out all of a particular product/s. There is unlimited potential in liquidation and often the things that make or break a great deal is an industry connection, negotiation skills, or just being in the right place at the right time.
Although Pine Island Trading Co. does not distribute this type of product, it is available out there as well. Customer returns are products that have reached the end-user. These products are not retail-ready and require the reseller to inspect, fix, or rehab the product or its package to some extent. The reseller then must often list these as "returns" when reselling the product. Returns and salvage are most often the least expensive to buy but require the most amount of time and effort to resell. Its often the type of product that those starting out in the business prefer to buy initially. Amazon is not a good channel for this product and is better suited to Ebay or in-person sales of some kind.
Amazon is by far the largest and one of the most lucrative selling outlets for any reseller. Even manufacturers and private companies report an average revenue increase of 40% when utilizing the channel compared to selling their product independently.
Amazon offers two selling plans, a professional selling plan and an individual plan. A professional selling plan will cost you $39.99 per month plus selling fees and the individual plan will cost $.99c per item sold plus selling fees. What are the "selling fees" you ask? Well, detailing every fee Amazon charges is beyond the scope of this discussion but we will say that the fees are plentiful. Amazon Seller Central is super easy to use, well designed, and thorough. The platform is truelly industry-leading and gives sellers maximum exposure through their world-class ecommerce solution.
Amazonn FBA (Fulfilled by Amazon), is a fulfillment solution whereby sellers send their merchandise to Amazon fulfillment warehouses. Amazon then picks, packs, and ships the products to the customer when they sell. This system frees up the sellers time and allows their efforts to be directed elsewhere, like growing other parts of their business. FBA gives sellers access to Amazon Prime members which makes their product stand out over other "merchant-fulfilled" sellers. These services come with fees, which again, are plentiful and costly. Despite what you may hear, there is also a steep learning curve with utilizing the FBA syatem. Although its not rocket science, there are many scenarios that can mean the difference between whether you are profitable or not. If done correctly, FBA can dramatically increase sell-through. The FBA Program is a program predicated on rules and regulations. You must understand this. Uncle Jeff (Jeff Bezos), considers it a privledge to sell on his site and expects compliance with his customer-centric processes and ideology. Many people are turned off by the idea because they hear others voice frustration over the system and its fee structure. FBA has many advantages and every seller owes themselves a prodding to discover if its right for their operation or if it isn't.
Ahh, good 'ol Ebay. Ebay pretty much revolutionized online sales back in the late 90's. It wasn't long before anyone could sell anything, anytime. Today Ebay gives even the most novice reseller an international customer base, user-friendly interface, and a seamless payment protocol. From individuals selling household junk to large companies selling thousands of units, Ebay has been a "man's man" in ecommerce.
With over 100 million visitors a month to its online marketplace, Walmart is considered not only a brick and mortar giant, but an online giant as well. Although it's platform pales in comparison to Amazon's millenial-minded and seamless user interface, the opportunity is still there. The software clearly lacks features and almost seems inadequate to resellers alike. However, the potential is clear, and with it's customer base of online visitors steadily expanding, Walmart is a wise investment by anyones standards. The commission-based platform requires sellers to submit an apllication for selling privileges, which we believe is pretty watered-down as far as requirements. There are no monthly or initial set-up fees. Walmart.com is certainly worth checking out for any serious reseller.