Can You Make A Profit From Buying Wholesale Electronics?
On more than a few occasions I field questions from people who want to buy electronics in bulk. People that are entering the entrepreneurial arena for the first time, or who are new to auction selling, want to pursue consumer electronics believing that they have a higher than average profit margin.
And, like most people who are new to sourcing wholesale supply for this particular product category, their pricing and profit expectations are often unrealistic. Despite the popularity of consumer electronics, calculating your purchasing expenses, overhead, advertising, and the gross profit after expenses can be a disappointment to your bottom line.
Consider two companies that are the category killers of the consumer retail electronics market, Amazon and Best Buy. With hundreds of stores across the United States, and an incredible corporate support system, you would think that their overall corporate profit margin after expenses would be in the fifty to one hundred percent range.
If you guessed either number you would be woefully wrong.
The reality is that these products (computer and video game consoles) are costly to manufacture. The more expensive it is to produce a product, the slimmer the profit margin there is for the seller. Imagine what an up hill battle you would have if you ever wanted to jump into the electronics retail market game as an independent seller?
The millions of dollars spent on marketing, promotion, real estate, and payroll, while trying to achieve a fluctuating profit margin that at times can be as low as ten percent, and not much higher than thirty, would try the patience of most Entrepreneurs.
So the answer to the question: Can you make money from selling electronics? is both Yes and No.
You can never compete with the likes of Amazon.com and Best Buy, unless you have been blessed with millions of dollars, great marketing research, and a corporate infrastructure that can produce a consistent and enormous sales volume year after year.
One of the keys to successful sales of this product is to find a niche within the consumer electronics category.
The other option for carving out a competitive niche is to fish at the bottom of the consumer electronics supply pond, commonly referred to as the “surplus and salvage” industry. However, it you are unfamiliar with surplus and salvage electronics, this is not the type of product line that you want to pursue. Please refer to my article Tips for the Surplus and Salvage Industry before you even consider this type of product sourcing.
Companies like Best Buy and Amazon.com, forward whatever overstock they have to third party logistic companies that can be resold to businesses and individuals. Most of that overstock, while having a few working items, is mostly salvage merchandise and customers returns.
Unless you have experience in small appliance repair, or know how to recycle electronic parts, then purchasing surplus and salvage electronics is basically a waste of your money. The number of "junk" loads of consumers electronics merchandise that is generated from surplus dealers and reclamation centers far outweigh the saleable product.
Any surplus dealer or liquidation auction should provide you with a disclaimer before you purchase any variety of salvage electronic merchandise. On Liquidation.com, the warning listed below is featured on some auctions that sell bulk electronics.
IMPORTANT: Please note that the condition of this lot is SALVAGE. Salvage assets are intended for professional buyers, as most can be used only for parts. These assets are offered "as-is, where-is" with no returns, guarantees, or claims as to working condition
You can find some bargains, as well as working consumer electronic merchandise among the rubble but they can be few and far between. You need to actually visit the company doing the selling and physically inspect any surplus electronics they have for sale. Besides finding surplus bulk lots of electronics for sale on auction sites like Liquidation.com there is another online auction venue by which you can purchase surplus electronics.
This online auction works in partnership with Best Buy, and sells surplus and salvage electronics in bulk, by the pallet and truckload. The name of that company is Techliquidators.com. And, once again, I stress caution here.
This website (Techliquidators.com) is for professional surplus buyers and individuals who do not mind putting up with damaged customer returns and have the ability to refurbish the products for resale. You need to be present to inspect any merchandise that you might think about purchasing
Electronics, overall, can be a very hard and competitive product category to make a profit from. It requires research, and the ability to find a niche that has not already been filled by larger corporations and other consumer electronics competitors.
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