42 Years In The Surplus Biz

1975. The Watergate verdict. Minimum wage $2.10/hr. Wheel of Fortune premiered on NBC. And… I started this grand experiment upon graduation from Burke High School. Tens of thousands of sales have been completed over the years and, I am happy to report, it is as exciting today as it was at the beginning.

After 42 years in this business, I have learned a great deal about the Surplus Electronics/Etc., market. Here’s the “Grinnell Mini-MBA lesson” (free online version):

1. Establish a fair sale price for each item.

Mark the price too low and sell out overnight. Mark it too high and buyers are few. The goal is to find the price that will clear out the inventory in a reasonable amount of time, allow the business to recover the initial investment, and keep the lights on.

“Strategic advice for the Surplus Electronics shopper: Buy early, and in enough quantity to see your project through.”

Typically, we buy an item and sell as much as we can up front to defray the acquisition costs.  Depending on demand, we may stride through the majority of the inventory, and then at the very end, raise the price for the last few pieces. Then the law of Supply and Demand kicks in: those last few pieces may literally be the only ones available, anywhere. Strategic advice for the Surplus Electronics shopper: Buy early, and in enough quantity to see your project through.

2. By definition, and in general, Surplus inventory is not replenish-able.

We buy by the lot (usually by the multiple truckload!) and sell by the piece. I have purchased 19 entire businesses in 42 years, and have filled close to 120,000 square feet of warehouse space. The challenge is to be aware of any new opportunities for surplus inventory purchase, while being careful not to duplicate current line items. Product continuity and price points are essential to our business.

3. Each line item, or individual web listing, must carry its own weight.

“An item must earn its place on the website by achieving a minimum gross profit in its lifetime”

At last count, we have about 200,000 Line items. Every item must earn its place on the website by achieving a minimum gross profit in its lifetime. When the value or total quantity is too low, it usually doesn’t earn enough profit to pay for its place in our system. (See my grab bag discussion below). For this reason, some esoteric parts may be priced higher than other similar parts on our website, or elsewhere. In those cases, we likely started out with very low inventory and the item is earning it’s place on the shelf.

Grab Bags are an excellent opportunity to snag perfectly good, NOS (New Old Stock) parts. All of the low count parts that can’t make our website end up in various miscellaneous bins that are used to make our Grab Bag assortments. The value in each assortment is enormous and can’t be beat for adding depth to any builder’s spare parts supply. We are currently developing the Grab Bag section of the site so keep a close watch.

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Most often asked question (for the last 35 years):

“How long will Surplus Sales keep the lights on?”

My answer always contains fragments of my 5-year plan. Now layered into the plan is the eminent shift of use in our North Downtown Omaha location.

New Building

Someday soon, our current 130-year-old historic warehouse will make fine apartment homes and cozy havens for start-up businesses. Maybe a restaurant or two. The massive, ancient, Douglas fir columns and beams, maple flooring and original brickwork, give this building a timeless charm that embodies the essence of Downtown Omaha.

As luck would have it, I stumbled on to our next big thing…. a great new warehouse. It is 6 million cubic feet, compared to 1.5 million on our Ashton Building. We are currently transforming the new building into my ideal dream warehouse. If a warehouse can be sexy, this is it.

Alas, historic Ashton is now for- sale-by-owner (yours truly). P.J. Morgan Real Estate – 1218 Nicholas St, Warehouse, Omaha, NE

The fact that well over 50% of our current inventory has not even made it to the website yet presents Conundrum 33 of my 5 year plan. Will I live long enough. My father always planned to live to see 100. I lost him at 53 years old.

Me at almost 60

While we never know what the good Lord has in mind for us, I know I will be close to my true bliss in this new set up. If I take a little more time along the way to thread a worm onto my hook, or play a game of pinball, just let the phone ring. Someone will always be here to take your order or answer your questions. To learn more about Surplus Sales and to see our warehouse, take a look at this video we created just for you! 

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QUALITY PARTS ARE INDEED “HARD-TO-FIND”

Forty one years of searching for good quality parts has been a blast. A treasure hunt. I have had moderate luck finding vintage components and enjoy selling them worldwide. Occasionally, we can no longer locate certain mechanical parts that our customers desire. So we contract to have them made. Fighting the urge to stock what everyone else does. Import that. Knock-off this. Well,  recently we were put in the corner by a manufacturer we have used for decades. One product they made for us for many years has slowly degraded with poor workmanship and inferior components. The last batch was rejected for multiple reasons and I needed to decide whether to continue with our trademark Turns Counter we have sold for 25 years, or retire it. What happened next was a complete upgrade and rebuild. My dad always said “If it’s worth doing – it’s worth doing right!” We took on the full production of our magnificent counter and now have something we are proud of.

Turns Counter

SHW-TCV Turns Counter – Mechanical

 

“Since every piece of equipment that uses a turns counter has no capacity for skipped turns, we solved the problem.”

We started over at ground level. The main problem other knock-off counters have is the shaft moves laterally when the knob is cranked. This action in turn causes slop in the gear placement which in turn interrupts the counting. Since every piece of equipment that uses a turns counter has no capacity for skipped turns, we solved the problem.

Turns Counter - Front

Turns Counter – Front

In our counter, the shaft is locked in place both in forward and aft lateral moments. Another feature of the rejected counter are extremely cheap plastic gears. They are held in place with friction and are inferior at best. We have solved the problem with stainless steel miter gears made exclusively for our counter.  Our new SHW-TCV Turns Counter is now flying off the shelves and can be found on commercially produced equipment in the medical world as well in amateur radio projects.

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We Ain’t No Engineers

We love to sell parts. Let me correct that. We love to sell the right parts.

We get calls from many customers who, after looking at our web site decide they can’t decide what to buy. That’s ok. We have some experience with parts.   They tell us about their equipment and what happened and what they think they need. But… they aren’t sure.

… four of us are ham radio operators with over 100 years of experience…

Now we have touched a lot of parts and equipment; four of us are ham radio operators with over 100 years of experience in that area. We’ve touched almost every piece of ham radio and test equipment made in the last 60+ years at some point or another. We’re pretty strong in the analog area and we even have one guy who has heard of digital and can talk some digital. We know a little about RF; both low and high power. Yes, we’ve burned up a few parts but we’ve probably successfully repaired more equipment than the average shmoo.

So what’s the problem? Well, we probably can fix the broken equipment but it’s hard to do over the phone AND we don’t know what was going on when it died AND we can’t use all our senses and test equipment to evaluate what’s ‘on the bench’. You the customer must do that. Also, there is the time thing. Someone once said “time is money”. We cannot troubleshoot your equipment on the telephone. We do not repair equipment, other than our own. Another problem with asking us to troubleshoot over the phone is, what happens when we are wrong. Now you purchased a part that we recommended and it didn’t bring your equipment back to life. That sets up a bad situation that there is no happy ending to.

Get some help. Seek another opinion from someone who’s on the scene and has some knowledge. More information is available online today that can assist with almost any repair. Contact the manufacturer. Study the manuals. They say that people who ask for advice are seeking an accomplice. That may be true but additional insight almost never hurts.

I am personally a cheapskate. If I can fix it at no cost I’m there. Many times that’s not possible so I have to buy parts. I do so cautiously so as not to buy parts I don’t need… just like you.

Many times we get calls about parts that we don’t have because they were specially made one time only for that piece of equipment. Just because we have boat loads of weird one off parts does not mean we have the part you need. Sometimes, you can only get those parts from the manufacturer – if he still has them in stock for the thing they made 30 years ago.

Sometimes…

Sometimes the calls are about parts the customer can get from the manufacturer and the parts seem extremely high priced. It may be because they were expensive to make and/or the manufacturer controls the supply and has priced them accordingly. These parts are usually marked with cryptic part numbers that don’t relate in any way to the value or function of the part. Sorry, but we can’t usually help with that.

Sometimes that piece of production equipment was made a long time ago and now that it’s broken it’s time to replace it with something that can be repaired.

These are all economic questions that can mostly be answered by the engineers and, unfortunately sometimes, the accountants. You might even have to involve management.

Please don’t call us to try to place us in any of the roles just mentioned. Mostly what we know is our parts and sometimes we know what they’re used for.

Call us about our parts and we’ll tell you what we know about them. We pretty much put everything we know about a part on our web site but don’t be surprised if we miss a fact once in a while. We have about 100,000 parts (line items, not part count) on hand and listed on our website. Another 100,000-200,000 have been purchased, now sitting in boxes in our warehouse. Slowly, they emerge, as time permits, and get cycled through our system to bring them up on the website. It is of no use to call us about parts you hope we have, that are not found on our website. Watch and search the site often. It changes daily. Dozens of items are added and subtracted each day of the week.

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Making Our New Surplus Sales Video – Pro vs. Amateur

Producing a video about your business requires multiple major decisions be made first. Chief among them is who to hire and what is the end goal. In the fourteen-month process we started from a GoPro strapped to my Giant Schnauzer’s head, bounced to an interview style fixed camera storyteller and made our way to a professional full service production company. Our choice was the latter and we hired Torchwerks to create our masterpiece.

Dozens of hours of footage of ad-lib interviews, b-roll footage and a dynamite narrative were woven into a seven-minute play-by-play video that describes what we do to a T. Seriously though, the crew nailed it! We agreed early on that nothing would be scripted. When you give total control to a good producer, they can tell a story that makes sense to them, notwithstanding the fact they know little about our particular business. They ask and answer fundamental questions about the business in such a way that I found myself glued to this 7:33 film while watching it for the first time. And second. And third. I didn’t want it to stop. They told me the normal attention span for such an informational video is 2-3 minutes. We took the risk with this extended version primarily to provide answers. I have no doubt that the subject matter was covered in a much more dramatic, less technical style than what we could have accomplished with Sirius Black and the GoPro. If left up to us nerds, we would have bored the audience into a deep sleep with part numbers, dates and useless information.

Mr. Ben Drickey, owner of Torchwerks, struck home with a note when I asked him if our movie had too much content. He reminded me what the Emperor of Austria told Amadeus Mozart when criticizing an opera he had composed. He said, “You have too many notes”. Mozart famously replied, “There are just as many notes as I require – no more, no less”. Indeed, I agree, our Surplus Sales presentation is as balanced as The Abduction from the Seraglio.

A big thank-you goes to Josh and Jennifer for their perspectives. I was not present during their individual interviews and was humbled by the stories they told. This year I have now survived 40 years in this wonderful surplus business and hope to last a few more. Each and every day is an adventure.

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