Yesterday, I received a nice email from one of our blog readers who had a question about brokering merchandise, which is the act of putting a seller together with a buyer and collecting a markup or percentage as a profit. In basic terms, a broker is a middleman. Here is the text from his email…..
“How would you handle this situation? I was asked by a gentlemen from South America if I can find tools because he can sell them back home. I found a company that can consistently supply me with used quality tools. I went to visit them and really like their operation. What I want to do is broker a deal. I do not want the gentlemen from South America to know who my supplier is. How can I do that so I do not get cut out? Also how can I build trust with the South American gentlemen so that he will give me money to broker the deal without showing him my contact? Thanks, Love your book and blog!!!!!!!”
Thanks for sending the question! To maintain your source for goods, make sure to be as transparent as possible with both the seller and buyer. Meaning, let the supplier know you will be acting as a broker and would like to maintain your own customer. There is absolutely nothing wrong with letting your buyer know you are representing the seller assisting in facilitating the movement of said inventory. The term Broker does not have to be a “red flag” or cause for concern within the mind of the liquidation buyer.
Often, brokers become so concerned about hiding the fact that they do not own inventory, they will scare away potential buyers being too elusive with details.
A potential supplier, wishing to move stagnant goods, should understand that in order to have a Broker act as an independent sales person, anonymity should be kept. If the supplier does not subscribe to this theory, move on to the next product source. Trust me, there are plenty of inventory suppliers who would love to work with brokers willing to help liquidate stock.
When I acted as a Broker and put a deal together shipping from one of my suppliers I would have them [shipper] list their name as “Warehouse” on any Bill of Lading (for pallet quantities) or UPS Label for smaller loads. When my buyer would receive a shipment of merchandise, the shipping suppliers name would be “warehouse,” and therefor my source was not compromised. Was my source always hidden? No, but most of the time my buyer never tracked down where I was sourcing goods from.
As far as building trust with your buyer…that is not something I can offer advice to other than be a straight-shooter. Most contacts looking for large quantities of liquidation merchandise are what I call, “tire kickers,” but out of 20-30 leads you should be able close a sale. Be honest, fair, and keep a high ethical standard when putting together brokered deals. Serious buyers will sense your honesty and you will end up fostering a long term repeat liquidation buyer.
“Thanks, Love your Broker’s Guide and Blog!!!!!!!” Shawn J.
Our 2020 Liquidators Guide chronicles 12 years of wholesale product sourcing experience and includes my personal black book of direct source contacts! As an industry expert, I'll share the success I've enjoyed along with the mistakes I've made buying and reselling liquidation merchandise.
If you are thinking about buying pallets of liquidation merchandise from a liquidator, broker, or direct from department stores, you need to check out The Liquidators Guide