Truckload o' tools

[tinknal]

I have an oppertunity to buy tools by the semiload. 26 pallets of new tools, power tools, air compressors, battery chargers, welders, tool boxes, etc. I'm thinking I could sell at weekly auctions, flea markets, small discount stores, or wholesale to other flea marketers. I'm expecting a copy of a manifest to get an idea of what will be on a load. (the loads are available on an ongoing basis). The loads are $20,000.

Any thoughts on this?

[m39fan]

Well, the old saying that it takes money to make money is often true. What I mean is, do you have enough to live on and pay your obligations (bills, etc) having paid out the $20k??? Is it essentially extra? You may be able to make a profit, but it may take a while to even cover your purchase price. Flea markets, etc can be a way to make extra money and even a simple living if you work at it enough but it's often slow and hard. Just my observations having watched friends go down this road before.

Would you need to take out a loan or "rob Peter to pay Paul"? If so, I'd think long and hard about jumping in. Many people are spending less right now and at least in our area, they are mainly spending on necessities. Every "flea marketer" I've talked to said last year was lean and this year looks leaner.

HTH,
Mike

[desertrat - 1]

hmmm ... its worth considering . You need to see the manifesto to see what all you are getting for your money . Remember other people can buy a truckload too unless you have some kind of inside deal , and the competition on tools is pretty fierce . All this stuff is from China no doubt . You have Harbor Frieght as a competitor , they sell cheap and with a warranty to offer people .

Do you need tools ? You could cull out everything you need and sell the rest hopefully for a nice return . Make sure its a good selection and not just crap nobody wants . Welders , lathes , drill presses , power tools people like .

If you have $20K to invest and possibly loose it just might work out fine . If its your last $20K I'd be carefull . Might take a long time to recoup your investment while you are eating beans and crackers .

I've also thought along these same lines as you . But I'm single and used to eating beans and crackers

Bob

[tinknal]

Thanks for the input. I have the money and am not going to starve if the goods sell slowly. The tools are (or at least include) Harbor Freight.

[moopups]

There are often tool tent sales in this area, the market seems to be saturated, the tools are China made, meaning not extreme quality. Without a guaranteed market I would not venture there. China metal steel is not yet up to world wide standards. But they are approaching quickly.

I would expect such could be profitable in remote areas, but certainly not in dense population areas. It all been here before. Hint, the suckers all have been taken.

[tinknal]

Originally Posted by moopups

There are often tool tent sales in this area, the market seems to be saturated, the tools are China made, meaning not extreme quality. Without a guaranteed market I would not venture there. China metal steel is not yet up to world wide standards. But they are approaching quickly.

I would expect such could be profitable in remote areas, but certainly not in dense population areas. It all been here before. Hint, the suckers all have been taken.

I've been to FL, you can't cross a rural intersection without finding a sale of some kind......LOL. The market is not as saturated here. We have a number of weekly auctions in this area that are well attended. I was thinking along the lines of bringing one of each item to the auctions every week ( or at least one week to see how they sell). I could even enlist some trusted friends to sell at flea markets on a commision basis.

[Macybaby]

I see this stuff all the time at places you mention. Always wondered where all those vendors picked up the same type of stuff.

Cathy

[KCM]

Can you realistically double your money in 6 months to 1 years time?

[tinknal]

Originally Posted by KCM

Can you realistically double your money in 6 months to 1 years time?

I don't know, but right now the money is in CDs that are making about 4%, so I wouldn't have to double my money to improve my return significantly.

[clovis]

I would be a little leery of this deal.

20 grand??? I think I would start with one skid, and see how you do. That is alot of jack to risk on a unproven venture.

Most of the tools are of cheap quality. Please keep that in mind. When I am at a flea market, I don't even waste my time looking at the Chinese tool imports. I think there are alot of guys like me, who love tools, but wouldn't layout a dime for that stuff.

I am set up selling used stuff in a local indoor fleamarket. One of the vendors has three full booths of cheap Chinese tools. He used to sell alot of the stuff, especially when the place opened. They do have ALOT of returns, even though the stuff looks nice in the package. Because the flea market has a no return policy, they have ALOT of very ANGRY (former) customers. The manager tells me that the tool guys sales have fallen off significantly, and is surprised that he still rents three booths.

The return issue has gotten so bad that the sales clerks have been steering buyers away from those booths, and turned them to used tools that I and others sell.

Again, I would start small, and see how it goes. I would much rather lose 2 grand instead of 20 grand.
Clove

[FreightTrain]

how much is your time worth?
how long do you think it will take to sell?
do you have a place to store a semi trailer of tools for possibly a year+? storage places are extremly costly
do you have a means of moving, loading and transporting then moving loading and transporting back what didnt sell on a weekly basis ?
nuttin like forfieting possibly all your weekends for the next year, and for how much profit
sure is alot of scratch to gamble with

[Windy in Kansas]

I also offer my opinion.

I was in two different Harbor Freight tool stores in March. The quality of some items justifies a purchase, other quality not at all.

I expect that there would be a number of items that you would find next to impossible to move. I base that from observation of the tent tool sales that come into town where I live. Some of the slower moving items show some rusting.

At a Homier tool sale I overheard the manager tell a couple a certain sized generator had a 40% return rate while another size of unit had no returns at all. Just something to think about--what you would do with returns that don't work.

Seems to me that you could eat quite a bit of the items and still improve upon the current 4% return.

Too bad you can't pick and choose which items you'd like to stock. Also remember that the market may saturate after you have sold for awhile.

Keep us posted on how this works if you go for it. Best wishes.

[texican]

I'd have to ask myself...

if I can't sell it, can I use it myself...

...didn't think of the 'returns' issue till someone else mentioned it...

that issue alone would probably kill it for me.

Now if it were a truckload of brand name tools... ridgid, milwaukee, dewalt, etc., and I could get it 40% off, I'd jump on it, knowing I could always sell em on ebay for close to 80 or 90% of list, or break up the sets and sell for even more.

best of luck to you, whichever way you decide...

[tinknal]

According to what they claim is on each load if I average $20 per item across the board there will be a $10,000 net over cost.

[SquashNut]

We sell the tools your talking about. The mark up is not as good as your being told. Like if you pay $10. They sell for $15. We've sold in both Idaho and California markets.
we're lucky that our suppliers warrenty the things that don't work or we would go in the hole with them. The worst offender are the rechargeble tools and the car jacks. the screw drivers come out of the handles and strip out easily.
I wouldn't do it if the supplier would not stand behind the product. If you sell in a permanant place your customers will bring stuff back for replacement and you'll end up having to replace the stuff out of your own pocket.
Another problem with this is you don't get to pick and choose what you need to restock your inventory with. if jacks aren't selling will they be included with each truck load or can you ask not to get them? With out being able to pick and choose what you can sell your profit ends up in your warehouse in ugly looking stacks, instead of in your bank account.
I also think they may be asking alot more for the stuff than what the real whole sale on the stuff is at the wholesalers where we get the stuff. They are middle men with a very high mark up. If you want to do this you need to go around them to the importer.

[SquashNut]

Originally Posted by tinknal

According to what they claim is on each load if I average $20 per item across the board there will be a $10,000 net over cost.

I don't want to be rude, just straight forward on this. They are pulling your leg on this. They will be the only one to make money on this.
Please keep your money. Take a nice vacation or look for a different investment.

[gregbaka]

Hi Tinknal,

I'm new here, but thought I would jump in anyways...

Remember the hidden costs of your business idea. Such as:
Storage or Warehousing
Shipping, hauling, loading/unloading
Business license, permits, accounting fees
Self-employment tax of 15%
Damaged, un-sellable, or Return items
Auction or Vendor fees

I have recent experience from my own online business of selling digging tools for gardening and construction at EasyDigging.com

All those little hidden costs can really nickle-and-dime you to death.

Hope this helps,

Greg in MO

[tinknal]

Originally Posted by SquashNut

I don't want to be rude, just straight forward on this. They are pulling your leg on this. They will be the only one to make money on this.
Please keep your money. Take a nice vacation or look for a different investment.

Squashnut, they never made these claims, they are my estimates. Actually your figure of $15 for a $10 item is real close to my estimates. 50% return is not a bad profit if the turnover isn't unreasonable.

[tinknal]

Originally Posted by gregbaka

Hi Tinknal,

I'm new here, but thought I would jump in anyways...

Remember the hidden costs of your business idea. Such as:
Storage or Warehousing
Shipping, hauling, loading/unloading
Business license, permits, accounting fees
Self-employment tax of 15%
Damaged, un-sellable, or Return items
Auction or Vendor fees

I have recent experience from my own online business of selling digging tools for gardening and construction at EasyDigging.com

All those little hidden costs can really nickle-and-dime you to death.

Hope this helps,

Greg in MO

Thanks Greg, I should be able to avoid most of those costs. I don't believe I need any permits or licenses to sell in my area. I plan on putting up a pole shed this year anyway so storage will not be a problem. Since I'll be using the pole shed in the business I should be able to write most or all of this off as a business expense, as well as the pickup I just bought. As bad as I hate going to them we have quite a few buyer premium auctions here so I should be able to avoid commisions to some extent.

[Jim S.]

I've been involved with these types of sales before. My suggestion is that, if you want to do this and it is not a common thing where you are, you minimize your risk by buying a truckload and contracting an auctioneer to auction it off in an advertised point of sale auction, all in one day.

Set up your auction deal, receive your goods, and sell out 10 to 14 days later. It is possible to incentivize the auctioneer's end of the deal based on gross sales by bumping the commission up a point at certain gross sales level targets. The better he gets you on the gross, the more commission he earns. The auctioneer handles all money collections for you.

To your buyers, this is the same pitch as the marketing scheme of Homier..."we're only gonna be here a day or two!"

I would strongly encourage you to avoid comparing a 4% CD return which requires ZERO effort on your part with all the work and increased risk it would take to do a tool sale. That's apples and oranges.

If all you seek is higher return, place your $20,000 in a growth stock mutual fund. I have several earning 8% to 19% at present. There is actually less risk in that than in the tool sale idea, cuz you can jerk your cash back out anytime you want to or need to.

With the tool gig or any other form of retailing, once you buy an inventory, that is no longer a liquid investment until it is all sold and converted back into cash. Plus -- and never lose sight of this -- once you buy it, you have a fixed cost in it -- BUT what you sell it for can be highly variable. You might make 3-4 times your money on one item, yet wind up selling something else at a big loss just to get some cash back out of it.

Like I say, I been there and done that. It takes a very shrewd person to stay on top in that game, it is a matter of what moves and what doesn't, and the public can be very fickle. Mutual funds are a lot easier.

Best of luck, whatever you do.

UNDER EDIT: On your return estimates, let me just tell you for a fact that retail averages 100% markup over wholesale, and that is still a tight margin biz after costs come out of that 100% markup. I know this biz, been there many years. At 50% markup, it is NOT worth the risk level you are taking. I can see by your posts here that you are dramatically minimizing those risks. Get rid of your emotions in your deal and look at cold, hard figures of what it is really going to cost vs. your return. Just trying to help boost you on the learning curve by my experience.