Paperwork and other buzzwords

A friend (who sells off price merchandise) and I were having a discussion recently about this often mentioned "paperwork". Often, a new buyer may ask me if a supplier provides "paperwork" or they will ask a supplier if they provide "paperwork". It seems as though this has become so used that it's just an industry buzzword and few people even understand the meaning.

What kind of paperwork do you want?

That's really a good question because most people can't answer that.

Some might say, well I want a copy of the invoice from the company the jobber purchased the merchandise from. Tough luck getting that. No one likes to reveal their sources, or in the case where a jobber purchases directly from the manufacturer, you are asking for a copy of their confidential business documents when you want a copy of their paperwork.

And for what?

Any reputable jobber will back a client up if the authenticity of the merchandise is ever questioned. Will they send YOU a copy of their invoice? Probably not, most likely they will handle it with the attorneys themselves. It's sensitive.

In a lot of international transactions, people talk about paperwork and sanitized invoices. But I don't really get into that as my suppliers are all based in the US. I'm not sending you to Pakistan to get merchandise.

And don't forget-- any scammer can forge "paperwork".

Finding a distributor of a specific brand

From time to time I get questions from people asking about a distributor of a product. Most want to get as close to the source as possible and do not want to deal with middlemen. Now middlemen have their place, as in the guide I cover (in depth) the purpose middlemen serve for small and large buyers. But anyhoo, this question comes up so much, I need to answer it.

There are no "distributors" in the designer apparel industry.

Don't take the business model for another industry and try and apply it here.

If you have a full priced regular retail store, you either buy your merchandise directly from the company or from a sales rep that is paid a commission by the company. Not having a sales rep will not lower your cost of merchandise because the sales rep does not **add on** to the price, they are paid a commission by the company whose goods they are selling.

Please believe me when I say that. Ralph Lauren, Seven Jeans, whatever, they don't have distributors here in the United States. They really don't.

Now, there are exceptions to this. And generally that is when foreign brands enter into a country other than the one in which they are based. For example, a company that is smaller like Seven Jeans may have distributors in Europe, Asia and whatever. These are companies they contract with to handle the sales of their goods to retail stores in a specific territory. Or a smaller foreign brand might have a US distributor to handle the sales and import of their merchandise to service their American retail accounts.

Might.

Because a large company will often have their own foreign sales offices and handle this themselves.

Okay, are you with me so far?

When you buy discount/off price merchandise, you are not dealing with a distributor, you are dealing with a JOBBER. A jobber is in the business of trading excess stock. Now a jobber might have an agreement for exclusive distribution of a particular brand to the off price market, but they are not a distributor the way you are looking at it. So, from now on when people ask me how they can find a distributor of a product I will point them here to this article. You'll know, they will know, we're all on the same page.

Now that leads me to another thing...

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.

I want to be a broker

I received this question quite a few times in the past week, so I'm combining all my answers here:

Question
I just reviewed your website and I found the information very helpful. I am an apparel broker just getting started in the business. We specialize in locating quality apparel at 20 cents or less on the dollar for our retail customers. I supply primarily smaller retail businesses, ones that have 5 stores or less. As you probably know, these folks don't buy in great volume and therefore can't get the price breaks that the bigger guys get. I'm still learning the business and trying to build a customer base.

After one month of faxing and calling my "potential customers" I still have not made a sale, so I'm looking to get every edge that I can to present my stores with excellent, name brand merchandise at very low prices.

As a broker, I don't buy or warehouse merchandise. I don't do e-bay. I simply try to get the seller and buyer together and collect a commission. I don't know if your book covers techniques that I could employ to get more buyer interest. I'm wondering if your book covers the kind of techniques required to build a successful brokerage like the one I just started? I appreciate your insight on this.

Answer
If you're just getting started, you don't have the knowledge yet to be a good broker. Most of the good brokers/"finders" sold retail for at least a year, maybe two or more, before brokering. They had the knowledge of the market, and the relationship with the jobbers to do this. The markup is not killer. To put yourself on the line when you're new and don't know that much is a recipe for disaster. Believe it or not, some people that ended up being scammers started out like you-- brokering. But since they didn't really know enough about what they were doing, they would lose someone's money on a bad deal. Then they would try and find another to get out of the hole, only that would be a bad deal too, then another, and pretty soon they lost $50-60,000 of other people's money because they didn't know what they were doing.

That is the downside of brokering. I don't think, for the retailer, buying from a broker is a healthy long term strategy. The retail buyer is always better off dealing with the person that owns the merchandise and that is always their ultimate goal. There is a level of communication that is missing when everything gets filtered through a third party. Are you going to visit every jobber in person and check out each deal to make sure it's what the client is looking for? Do you embellish sometimes and a salvage load becomes one with "minor damages" because you are trying to sell it? Is your taste the same as the buyer's and the seller's so that when you say something is "great", you're all on the same page?

It's very difficult to do that and to be completely honest. An exception would be if you already found a jobber or two that had quality, consistent merchandise and good prices and just did not want to go after low volume business. That's the exception. But finding buyers and then finding sellers (or vice versa)--- recipe for disaster. I know you haven't bought as a buyer yourself because you don't understand where the problems lie with this. I can't blame someone for not buying from you. I wouldn't.

Put it this way: When someone says I want designer suits and you say, okay I'll find a seller. Well how does the buyer know the seller is legit? How do they know the merchandise is what they want? What does it look like? Is the merchandise in good condition? They haven't seen it. How do they know the seller will ultimately deliver? WHO IS RESPONSIBLE WHEN SOMETHING GOES WRONG?

It's not just about the name. Maybe if I told you I had Gucci men's shoes, 100 pair for $90 each, you would think that's a great deal. And you might sell it. But then your buyer will get it and find out they are 3 seasons old and all size 9. That would be a bad deal. Do you have the experience and the relationship with the seller to make sure things like that do not happen?

Put yourself in the buyer's shoes.

I advise my buyers to stay away from brokers for this reason and many others. Apparel is not a commodities market like saying "I want 100 factory refurbished 10 GB iPods." There really is not that much standardization where buyers can consistently "buy blind".

I'll write more about this topic later

When People Don't Listen

One of the reasons my guide is better than many others out there is because it's not hit and run. I don't just find some companies throw up a list and take your money, I answer your questions. But I get so tired of people asking me questions that are covered in detail in my guide.

Let me change that, it's not just any questions, it's the constant question from someone looking for "the source" for Vuitton, Prada or whatever. Sometimes I want to ignore these emails but I don't want people to think I am rude. But if someone is promising you the hookup with a wholesaler of Vuitton, it's not happening and I think from now on, when people ask me, I'm just going to stop explaining.

None of the high end designers have a "wholesaler". They sell direct or through their showroom. I wish people would listen to me when I tell them that. I cover it in the guide and in this blog (read the archives). But sometimes I want to tell them to buy from the "wholesaler" and just throw their money away because they only want to hear what they want to hear.

If this is what you are going to do for money, educate yourself and learn how the industry works. It will save you a lot of stress, and a lot of money.

Defining who's who

Lots of times I get questions about distributors, wholesalers and stuff along those lines. I figure it's a good idea for me to set aside the time to really clarify who is who in the apparel industry.

Designer/Design Company
For lack of a better word for this, this is what I'm going to call it. This is the company behind the brand. The people that are creating the styles, designing the items. They usually manufacture themselves or outsource manufacturing and handle the distribution of product to their retail stores (or outsource that too).

Manufacturer
For the most part, everyone uses contract manufacturers. Some companies (few) own their own manufacturing facilities, but most outsource the production of their merchandise. Many times you will find a company that's producing designer merchandise for more than a few companies. Sometimes those brands will have striking similarities.

Sometimes a company gets a license to produce merchandise under a brand name. In many cases, they are designing the merchandise themselves and just producing it under another brand. This happens a lot when a company ventures outside their normal product line.

For example, domestics (sheets, comforters and stuff like that). Ralph Lauren, Donna Karen and all those brands with bed and bath lines usually license that out to a company that specializes in producing bed & bath items. Sometimes the factory making the high priced Ralph Lauren Home is the same one making the low priced store brands.

The reason I am taking the time to point out the manufacturer and explain things is because, lots of questions arise about where a jobber might get their merchandise.

Distributor
Very few designer apparel companies have distributors here in the US. Very few. And for the most part, many are foreign companies that need a US distributor to handle their retail accounts.

Jobber
A jobber is basically someone that buyer off price merchandise and re-sells it.

Now, let me give you a brief explanation of how stuff gets to the off price market.

There are many people that could have merchandise to sell:

1- The designer/design company. They may have produced more than they needed to meet demand, they may have cancelled orders or slow moving styles. They may have damaged or irregular items that slipped through production. Rare is the company that is completely sold out at the end of the selling season.

2- The manufacturer. Sometimes the manufacturer gets stuck with excess production, cancelled orders or something along those lines. many times a manufacturer will overproduce by 5 or 10% just to make sure they can meet the quota after damages and irregulars are accounted for. In the case of large production runs, that 5 or 10% can be a lot of items.

3- The retailer. Buyers aren't perfect, nearly every retailer ends up with some quantity of stock they can't move before they need to pull it from their shelves.

4- The showroom. Most companies either have their own showrooms or have independent sales reps that maintain multi-line showrooms. Though this is usually not a large source of merchandise, it is a source.

5- Another jobber. Sometimes a jobber buys something and does not have the appropriate clientele to move it to and sells it to another jobber.

There are others, but these five cover most of the stuff that's out on the market.

Now some of you want to know how a store or a jobber gets merchandise because you want to get closer to the source. Your big off price chains like Loehmann's, Filene's Basement and such sometimes buy from a jobber, but they have the buying power to go directly to the company and negotiate with them. Your larger jobbers, for the most part, do not have a middleman involved in their transaction. So to get better pricing than them, you would need to buy directly from the designer or manufacturer or retailer or whatever.

The problem is that most of you don't have enough money to make a deal like that and even if you did, probably could not deal with the downsides of doing so. What you don't realize is that when a buy has damages, that jobber is sorting those out and selling those separately. When part of the buy sucks, they are dealing with that. You have to realize that these buys are not always pristine and perfect and sometimes the markup you pay to a jobber compensates for the undesirable stuff that you do not have to deal with.

Retailers (which most of you are) are picky. If you were going directly to a company (for example, let's use Diesel Jeans as an example), you wouldn't be able to say that you don't want those 260 pieces of that style because it was hideous, or you don't want all size 26 because your customers are larger than that, you don't get that. You take it or you don't.

Most jobbers aren't marking up tremendously. So the little more that you pay sometimes compensates for that.

And if you think the jobber IS getting a steal of a deal and marking it up like there's no tomorrow, well then, that's the benefit they get for having resources (whether it's money, knowledge or something else) that you don't:)

Drop Shippers and All That Stuff (from June's Newsletter)

For most of you, you read this in the guide. But this question comes up so much, that I decided to run it again.

I don't think any company in this industry drop ships authentic, legitimate designer apparel and handbags. I mean, why would they? If you were selling them, would you drop ship them? You can sell one at a time at discounted prices. You can sell bulk at a "wholesale" price. But why would you sell one at a time slightly above wholesale price? Most people don't understand the nature of drop shipping and how it came to be. Drop shipping doesn't exist to serve money hungry wanna-be eBay sellers and internet merchants. Drop shipping exists as a fulfillment model for ecommerce businesses and businesses that need the flexibility in stock to be able to provide single-unit fulfillment. So it leans towards industries where this is likely to be the case.

Most of the drop shippers are manufacturers, authorized distributors or distributors that build the drop shipping model to serve a specific line of businesses. Designer apparel just isn't one of them because there are no distributors (in the US), just manufacturers/sales reps (selling at full wholesale) and jobbers (selling at below wholesale prices). Manufacturers/sales reps are in business to sell to retailers that stock merchandise and jobbers want to move a lot of stock quickly, not one at a time. There are some types of garments that can be drop-shipped (directly from the manufacturer), but most are branded and you might not be familiar with those brands (if you must know what it is, it's usually stuff like kinky-erotic lingerie, beachwear, clubwear and things like that).

Another thing people must realize about drop shipping is that it is highly saturated. If you would normally have a few competitors for a product that you stock, you are going to have ten times as many for a drop shipped product. And those competitors will range from crappy fly by night to professional, yet another reason many companies don't want to tarnish their name by drop shipping merchandise. Most designers are already highly selective about the internet merchants they sell to (if they sell to internet merchants at all).

Now people think I am wrong because they find a site that defies logic and drop ships designer bags. They are, most likely, counterfeit, or unauthorized production/unauthorized sales, what some people call "back door goods" because they literally snuck out the back door.

I talk to designer showrooms, sales reps and companies all the time. None of them have any interest whatsoever in drop shipping. Remember, these companies sell to retailers that put up the cash to stock their merchandise. You cannot make an argument as to why it would be lucrative to incur the higher costs of providing single unit fulfillment to people who do not want to invest in their own business and who will probably be out of business in a few months. Not to mention the fact that they can even take weeks to turnaround a regular order, they are not set up for shipping within a matter of 1-3 days.

That's not to say that I think drop shipping is bad. I believe it is a perfectly legitimate business model for specific categories of merchandise. If you are smart, you know why this will and will not work in certain industries. If you are not bright, you can't see why someone won't drop ship because you want to make money that way.

Bottom line- if this is the industry you want to be in, be prepared to stock merchandise.

I also want to add something because I was talking to a colleague about this. She mentioned that there are several eBay sellers that sell handbags and they all ship from Italy but the sellers are not in Italy, so possibly there is an Italian company that drop ships. That's possible. BUT, what is more likely is this: there are very smart eBay sellers out there that know how to take advantage of price differences. They scour websites and find a low priced item and sell it eBay. When they get a winning bidder, they then buy the merchandise from the website and have it shipped directly to the bidder. This is more likely than an international drop shippper.

Years ago, when Sony Mavica digital cameras were really hot, many sellers found them on sale at certain websites where they could buy them for $100-$300 less than the average eBay closing bid. And this is exactly what they did. Things like this happen all the time where people bid higher than the going price. If you really want to find out, invest the money to buy the bag (or other item) and see where it comes from. That will tell you whether it's drop shipped or not.

Most drop shippers use a method that's called "Blind Drop Shipping" where all markings on the invoice/packing slip and shipping label indicate that it comes from your seller/retailer OR has no indication of the company it comes from. If the bag comes like this, then you can be sure that there is a drop shipper. If not, then you have just found the source of the merchandise. It's easier to track a domestic company than an international company because when a US based company ships something to you via UPS, FedEx, Airborne or whatever, you can call their customer service center and ask for the shipper's information. What they will give you is the shipper's name and address as registered on their account. For example, I have a UPS account and on my shipping label, I can put whatever I want. I can put Acme Incorporated, 515 Main Street, Nowehere CA and whatever telephone number I want. But, when you call UPS, they will give you my actual address and telephone number that is registered with that account. Another way of locating a source if you actually find something that is drop shipped.

If you truly believe that someone is drop shipping authentic merchandise, then the price to pay to have an item sent to you is worth the knowledge and the potential profit you can make from that information.

Why Won't A Vendor Answer My Emails/ Return My Phone Calls? (from June's newsletter)

First, many are extremely busy and just not able to follow up efficiently. Secondly, many of you have the wrong approach. What you have to understand sometimes is what it's like being on the other end of that email. You may get dozens or hundreds a day. It takes time to answer them. You will answer the ones that you can understand and then the ones that are sensible. Some others, you may not have the time or the will to get around to.

So people say hire someone to answer your emails. Yeah, if there was sufficient reason to believe that it would be worthwhile.

The problem with a jobber is that very few prospects turn into customers. That means out of 50-100 of you that call or email, maybe 1-2 will actually buy. So paying someone to deal with the first level response is almost always dependent on how much you think it will benefit you financially to do so. If someone can't even write a decently written email, how likely are they to become a customer? Not likely at all.

I email companies all the time. And with the exception of those that only read their email when they make their biweekly trip to the public library to use the computer, I always get replies. Why? Because I compose an email knowing in my head that it's a one way conversation. So, your emails should include your name, your company name, contact information, what you are looking for.

I've had some emails forwarded to me by vendors. Here's an example of one:

"I want Seven Jeans how much are they and when can you ship them?"

For the first contact with a company, many are going to hit delete.

More appropriate:

"My name is Lucy Blue. I own a retail store in Atlanta Georgia. I currently have a need for Seven Jeans. Please let me know if your company has access to this merchandise, the pricing and the approximate turnaround time from order to shipping. Please also send the name of the appropriate person to speak to so that I can follow up via telephone.

Thank you,

Lucy Blue
Company Name
Company Address
Phone Number

That, my people, is one of the ways to compose an email. It is more professional and gives people the sense that you know how to work with a company in that capacity. But also, you are contacting a business and potentially establishing a relationship with them and it's important to convey that you know how to communicate effectively and be professional.

Now if you still don't get a response, then try again. People do get backlogged and can't always reply to every email, some do fall through the cracks.

Now here's the thing you have to look out for. Scammers are notoriously good at keeping up contact. You can email or call them anytime of the day or night and they are always there to respond. I have one customer that said "company xyz was unbelievably good to deal with, they always responded to my emails, called back immediately, sent me all kinds of documentation and pro forma invoices, gave me their Dun & Bradstreet number and everything else to instill a sense of confidence. And they ripped me off for so much money it wasn't even funny." You can't always judge a company by how they respond to your correspondence. A scammer, who won't deliver anything or will deliver counterfeit merchandise, will make a lot more profit from your order than a legitimate jobber, so they have more incentive to work with you.

Buying Directly From Manufacturers/Companies (from June's newsletter)

I get my fair share of emails from people asking me how to get in touch with Company XYZ to buy their merchandise. You can find out just about anything you want to know using a decent search engine. If you are looking for Diesel, go to Diesel.com. If you didn't know that Diesel.com is their domain name, then just to to google.com and type in Diesel jeans and get the domain name. Look for the company contact information and call them.

Companies are not in business to sell to just anybody. Any brand that is worth having will have some type of criteria for establishing a retail account. All you people that want to sell out of the trunk of your car, not have a legitimate business set up, tax ID number or seller's permit, business license or whatever, this is where you come up short.

For the most part, companies want you to have a retail store. If you do not have a retail store, you must have a decent website (and even then, some won't sell to you). Some will check you out to make sure that your merchandising (whether in a store or on a website) is up to par with their brand image. There are some companies that kind of don't really care who they sell to, but they are typically not the ones you are looking for. Will they sell to you if you are going to sell their merchandise on eBay? No. Not unless you are sneaky and don't tell them. And then when they find out, they may revoke your account. Only if they truly don't care, but I haven't seen a designer clothing company yet that doesn't care.

The tricky thing is that an APPAREL company does not exist to sell to retailers that are going to undercut normal retail pricing. In other industries (i.e. electronics) price competition is common. But not in clothing. Designers don't like this, companies don't like this. So they stick with retailers that are going to uphold pricing integrity. The objective of a retailer is to get the most for their money, not the least, so a lot of you trying to be the cheapest have it backwards.

The reason this comes up is because some of you contact me because you wanted to go direct and buy whatever brand you were interested in. But the brand is so hot, they aren't taking new accounts right now, or they have a long waitlist. Well, the problem is, even when they start taking accounts, they aren't going to sell to the flea market sellers, the eBay sellers, the trunk of my car sellers. They will work with established retailers.

But you see people selling on eBay that are obviously getting it directly from such and such designer brand company. And here it goes: I'll bet you a the company does not know they are selling the designer merchandise eBay. Again, with other industries, it's not an issue, but with designer apparel, it's a BIG issue. Sometimes companies can get away with clearing out old styles on eBay, or some companies, in very niche markets, just don't ask where you are selling their merchandise. But all in all, most designers don't want current season merchandise being sold on eBay.

Tell Vendors the Truth About Where You Sell (from January's newsletter)

This one comes back to me time and time again. Because some of you eBay sellers still think eBay is a really big secret and don't want to tell vendors that you sell on eBay. Hey, it's not a secret so don't tell them you have a store or something else when you know you're listing everything on eBay. The reason this comes up is that many vendors have restrictions on the merchandise they receive, and they have to be careful about whom they sell it to.

For example, some companies don't want their merchandise sold in certain geographic regions, on eBay, on the internet, or whatever. And people who don't tell the truth about their business, get the merchandise, and sell it on eBay, cause problems for the vendor, which makes it hard for anyone to get anything in the future because now these companies would rather sell overseas or to Podunk Off-Price in the middle of nowhere to avoid having the stuff show up where they didn't want it.

And now vendors are going to start asking for proof that you have a store instead of just taking your word for it.

But here's another problem. If you sell certain brands, you may know that certain companies are starting to close down auctions left and right, like Gucci (more on that later). Well, many vendors are aware of this. You tell them you have a store and you want Gucci, you will get Gucci. You go and sell it on eBay and then your auctions are nixed, don't get mad at the vendor because you didn't tell the truth. Had you said you were going to sell on eBay, that vendor probably would have told you that Gucci is shutting down eBay auctions left and right.

There are other reasons, but I think you eBay sellers should be more straightforward with vendors because they might be able to give you better advice on what to buy if you do. There are just some things that are better for eBay and others that are better for a store.

The truth about buying department store closeouts

I thought long and hard before writing this. I'm an honest person. I'm also a fair person. I run an honest business. There are a lot of people who are brokering closeout apparel. While only a few are blatantly dishonest, most just quite frankly don't know their merchandise and don't know what they are doing. This is a very, very long article, but hopefully you will learn a lot from this.

First of all, everything I speak of will pertain to the apparel industry exclusively because this is all we deal in.

Closeouts basically fall into two categories: salvage and job-outs. Salvage merchandise consists of customer returns, floor damages and samples. With a salvage load there is usually a percentage of merchandise that is damaged, irreparable or just not cost-effective to repair. This can range from 10-50% sometimes higher. What's left may be saleable, depending on what you can sell. Some people can invest the time or money into repairing ripped seams or missing buttons, some cannot.

Job out merchandise is pretty much merchandise that was marked down and did not sell. When it's time to stock the floors with new merchandise, the old merchandise is "pulled" from the shelves or racks. Job out merchandise is often called closeout, floor overstock, or shelf pulls. The amount of damage in a job out is minimal, but make no mistake, there will be damages, typically ranging from 5-10%.

It takes a considerable amount of money to purchase trailers of merchandise. This can range from $26,000 for a mixed Federated load (Macy's, Burdines, Bloomingdales, Rich's, etc.) to well over $100,000 for a high end department store like Saks Fifth Avenue. Because of this, the actual number of companies that buy and own trailers of merchandise are few and most of the people you will deal with are brokers.

Most of the brokers you will deal with broker anything. They will sell electronics, housewares, clothes, toys, anything that can be resold for a profit. As a result, they have very little knowledge of any specific category. They would not know the difference between Hilfiger and Hermes.

If you are a clothing retailer and you specialize in clothing, it is best to deal with a supplier who specializes in clothing as knowledge of brands is extremely important.

And also, most of the brokers have never, ever, ever seen the merchandise they broker.

As you can see, this can create a lot of problems. Let's go over a few scenarios. These scenarios are 100% real.

Buyer #1

Buyer #1 purchased 200 pieces of mixed men's apparel from Macy's department store from a closeout dealer for $5 a unit. This company owned their merchandise. Buyer was told that the lot would contain no more than 5% accessories and included Polo, Hilfiger, Ralph Lauren, Nautica, Fubu and others. When the merchandise arrived, there were approximately 20 pair of socks, 15 neckties, and 15 other miscellaneous accessories. Out of the remaining 150 pieces, only 40 were desirable designer brands. The remainder was Charter Club, Alfani and miscellaneous surfboarder and skateboarder-style brands. Buyer barely broke even on the lot.

Buyer #2

Buyer #2 purchased 100 pieces of women's mixed Federated apparel from a closeout dealer and was assured a good load. Buyer paid $7 a unit. When the merchandise arrived, there were 40 pair of bras and panties in the load. Buyer lost money on this deal.

Buyer #3
Buyer #3 was referred to a company by a good friend. The company sent a manifest of a trailer of "Bloomingdales" store stock at $3.50 a unit. Buyer was told that the trailer contained men's, women's, children's and some accessories and domestics. Buyer asked me if this was a good deal. I informed him that there was not a chance he would get Bloomingdales at $3.50 and that their trailers were not sold as mixed lots, they were sold as one category only (for example, women's ready to wear) and that if he asked a few more questions, I was sure he would find out that this was no a Bloomingdales only load, but rather a mixed federated load. Buyer asked more questions and found out that it was, in fact, a mixed Federated load. Buyer didn't buy the trailer.

Buyer #4
Buyer #4 purchased merchandise from a "broker" that was a little to slick with their presentation. This broker literally took ads from other websites, pre-sold the merchandise, used the proceeds to buy the merchandise and shipped it out. Problem was this broker was not that savvy and spent thousands of dollars on unsaleable garbage and counterfeit merchandise. Buyer #4 may have to sue to recover his money.

These are real people and these are real problems.

Let's go over some of the problems:

Some brokers/ jobbers are not honest about damages
While it is true that no person can guarantee a certain minimum or absence of damage, most should have an idea of how damaged their loads are, based on experience. If someone cannot give you a decent estimated percentage of damage, move on.

Most brokers have limited knowledge of brands
For the most part, the brands you see named in ads represent a small percentage of what's in that load. I know one buyer who purchased 250 pieces of Macy's and was expecting a reasonable percentage of designer brands (like Ralph Lauren/ Polo, Tommy Hilfiger, Elie Tahara, Theory, BCBG and others) and received 90% Charter Club. Now here, I am going to be 100% honest with you. If you want to know what a load will look like, walk into the store and look at what they have on the racks. Now, consider that what sells really well in the stores doesn't get closed out and go from there. Macy's sells Hilfiger, Nautica, Polo, DKNY, Calvin Klein and others. But they also sell Charter Club, Alfani, Sag Harbor, Norton McNaughton, Carole Little, Jennifer Moore and others. Around 30-40% of a Macy's load will have "desirable designer brands"—if it hasn't been cherry picked (or creamed as some call it). Bloomingdales merchandise is much, much better as they don't carry as many marginal brands. The higher up you go, the better the store, the better the brands.

Most jobbers mix in accessories and lingerie to keep their costs low
When you buy a mixed trailer from Federated, for the most part you get the whole kit and caboodle, accessories, hosiery, clothes, etc. Most people don't want the accessories, but the jobber has to get rid of them. So, sometimes, when you are paying $5 a unit, you are getting cheapie accessories, bras and panties because these things cost basically nothing and the jobber has to get rid of them. By adding in this inexpensive merchandise and still charging you a flat price whether it's clothes or accessories, they make a better profit. Most people think their biggest concern is that the jobber cherry picks, no your biggest concern is paying for apparel and getting accessories and lingerie mixed in.

Some brokers slightly misrepresent the stores
Some brokers sell a mixed Federated load as Bloomingdales, and even worse, some sell a Saks Inc load as Saks Fifth Avenue. Not long ago, Saks Inc. was working with Tradeout (which is now Retail Exchange) to offer their salvage merchandise for sale via the internet. Saks Incorporated owns many department stores, regional stores like Younkers and Profitts. These stores are very similar to Macy's in their selection. Saks Fifth Avenue is a divsion of Saks and is operated separately. Saks Inc is based in Birmingham and Saks Fifth Avenue is based in New York.

When Saks Inc started selling off their salvage, they sold it dirt cheap. Somewhere around $2 a unit or less. Well lots of brokers were selling this as Saks Fifth Avenue at $4 a unit (and up) and even claiming that it included Armani and Versace. Well if it did, you probably had one Armani glove! Now you get a buyer coming along, who wants top brands for next to nothing, who thinks they hit the jackpot, spends thousands on this merchandise only to receive box after box of disappointments.

Saks Fifth Avenue does not sell off a lot of merchandise. A few times a year they sell their closeouts and salvage. Saks Fifth Avenue is a very high-end store; their average retail price is around $250-300. Most jobbers won't touch it because it costs too much—they deal in inexpensive merchandise they can sell quickly. As a result, there are very, very few jobbers buying Saks Fifth Avenue (Bergdorf, Neiman Marcus, fill in the blank) merchandise. And let me be honest with you—even though Saks Fifth Avenue sells Chanel, Gucci, Prada and Armani, you won't get much of it in their closeout loads because they can mark it down in the store and sell it like crazy or sell it in their Off-Fifth stores or at employee sales.

You may have better luck with their salvage merchandise, but you won't get a lot of it. If you want to know what you will get, you will get a lot of DKNY, CK, Ellen Tracy, Eileen Fisher, Dana Buchman, Laundry, ABS, and a few other brands, and a LOT of their private label brands which includes Real Clothes, Folio and others. The better stores are better. Neiman can be heavy in damages (just walk into a Last Call and imagine getting what didn't sell there) and so forth.

Some brokers don't care about authenticity
If you are buying store closeouts, this is less of a concern. But there are a lot of brokers selling stocklots of designer apparel. Some at fire-sale prices. One of the biggest problems is that these brokers don't know and don't care if you receive counterfeit merchandise. This is particularly the case with high end Italian designer apparel and urban brands. I get email after email from people who are considering a deal and I just can't believe how blatantly fake some of this stuff is. Some people assume that if it's well made, it can't be fake. Whatever. Some people assume that just having a tag or an authenticity card (Certificate of Authenticity) is enough. Like you can't make those as well. Buyer beware.

So what does this mean to you?
Buyer beware. If a deal sounds too good to be true, it probably is. We get email after email from people wanting top tier brands for pennies on the dollar. They are ripe to get scammed. Let's be real. If you were a jobber, and by some miracle, you were able to buy Chanel suits for $10, how much would you sell it for? Would you sell them for the $20 that a lot of these prospective buyers think they are going to pay? No, you would want top dollar, and so does everyone else.

If at all possible, try to go to the nearest warehouse of a closeout dealer and see the merchandise before you buy.

If what I am are saying is true, then how do people get all the good stuff?
Some people are very well connected and have an "in" with a store or a jobber. Some people import directly from overseas. And to be honest, many people look like dinky little sellers on the surface, but in fact are huge corporations with tremendous buying power. Money talks, if you go to Saks and have a quarter of a million dollars to spend, then you can see how you will have an easier time than someone who is only looking to spend a few thousand.

And let's keep it real. $5,000 may be a lot to many people, but to these large national retailers, it's nothing. You have to spend major money to really get your foot in the door. And in many instances, you have to be prepared to take everything on that trailer.