A reader writes: “Hi Rob! My name is Alexander and I have bought and read two of your guides, the liquidation guide and the food salvage guide. I have found both of them to be very informative and useful for a novice looking to start a business in this industry, so thank you very much!!)
The reason for my email is I’d like to ask for your advice on my particular situation. My partner and I are looking to start a serious business venture and are able to invest a pretty significant amount into our startup. What I would like to know is what avenue in this business offers the biggest return potential?! (We have a Very large family between the two of us with very large grocery bills) Please assess the three business models we are considering and give us your invaluable opinion on what would be the best fit for us.
First potential business model: deal exclusively with liquidation mattresses. We see a lot of potential in the mattress market with it being a
17 billion industry. We were thinking of opening a warehouse and selling through Craigslist, eBay and our website. Or instead of a warehouse opening a retail location to attract additional sales as walk in traffic. If you like this business model can you offer some advice on the best way to source the mattresses, direct from manufacturer or from a liquidator to start? As I understand a mattress specific liquidator would process (prepare) the mattress and send it in a retail ready state.
Second potential business model: open a wholesale liquidation storefront with a mix of different product and compete with stores like TJ Maxx etc, but position ourselves in a cheaper niche, kind of like a flea market store.
And third potential business model: open a salvage food store in a highly populated low income area.
Which of these business models would you say can potentially make us the most profit, given our lack of experience in this particular industry.
Your advice is HIGHLY appreciated! Waiting anxiously for your reply). Respectfully, Alexander”
Listen to what Rob has to say:
Hi Alex, thanks for sending the email! To me it sounds as though your being cautious… I like that! No need to start plowing through, buying truckloads before you’ve done full research in terms of market and profitability.
As I rambled in the audio recording, I like the idea of selling something everyone needs on a regular basis. I think the best businesses are those that appeal to a very wide market. Kind of funny, but it reminds me of this energy drink that cropped up a few years ago. On the west coast we have an energy drink called “Go Girl.” It must sell well because its been on the market for years, but you’re not going to catch me buying one because it’s in a pink can and it says “Go Girl” for crying out loud!
My point it is this: reach for the widest audience as possible. Mattresses may do well, but I know food is needed daily.
I would take it a step further. I would combine your suggested models two and three together. Sell salvage food and offer general merchandise as well. You don’t have to offer all products, but maybe a selection of 3-5 departments within your salvage food store.
I think kitchenware, pet products, toys, and possibly hardware/tools might be a good choice.
Salvage food is available by the truckload, on a daily basis. Grocery goods do not have high margins, but your selling something everyone needs on a regular basis, so you make up for low margins by selling in tremendous volume. Remember, pantries and cupboards run bare on a regular basis. How old is the mattress your sleeping on?
Continue to email questions Alex, I’m excited about your business!