Market inefficiency and spotting opportunities

As I talk about in my guide, most jobbers are not really set up to service the small buyer who cannot visit their warehouse in person (and trust me, even if you have $10,000 to spend, that is still considered small). A lot of people spot inefficiencies in the market and figure out ways to blend the opportunity with the need.

But a lot of people want to become brokers because they figure they can make god money off the commission. Let’s go over this:

First: It’s hard to make a decent enough markup on the merchandise AND still provide a fair price to the buyer. Most people are only ordering a few hundred or a few thousand dollars worth at a time, and do not like paying a high markup to a broker. Many times, the broker has to “create” a higher minimum order amount than the jobber originally has just to be able to make money on the deal.

Second: Unless you’re seeing the merchandise in person every time, you have no idea what you are selling someone. EVEN IF you are working with trustworthy, reputable companies (and most brokers are not), you still have differences in perception, judgment and taste. What one person may consider beautiful another may consider crap.

Third: If you’re a broker who hasn’t worked as a retail seller in some capacity, you just don’t have the frame of reference to be able to understand things from their perspective. Combine that with the fact that many retailers cannot adequately specify with excruciating detail what they want, and you are likely to have disappointed buyers.

Fourth: You are putting your business on the line if something goes wrong. Are you making enough money from commissions to do that? I know some people that have come across some killer deals but won’t broker them for this very reason. They don’t need to go on the line for buyers they don’t know (sometimes buyers scam too) and sellers.

People email me all the time wanting me to broker merchandise. One thing that is always true: merchandise is on the off price market for a reason. Sometimes that reason is minor and there is nothing wrong with it and sometimes that reason is major. Like people continually trying to pass off junk they cannot sell. Gosh, I don’t have time to help you dump your garbage on someone else. You know, we want to sell it, we need to sell it and they give you the sales pitch. On the surface, it sounds like a great deal. But if it’s so great, why are they selling?

A jobber with good stock doesn’t need someone like me to help them move it. They really don’t. There is such a void of good merchandise that all they really need to do is get the word out that they have it. The buyers are there, the buyers are hungry.

But if you’re a broker, going from one deal to the next, I don’t know, what can I say, you are going to burn someone sooner rather than later. And if you’re a broker that needs or wants my guide, you really don’t know enough yet to be a broker. You should know as much as, if not more than, I do.