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.
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.
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!