Brief Summary
This episode of The Koerner Office Podcast features Shannon, a seasoned reseller and liquidator, who shares actionable strategies for building a successful reselling business. He emphasizes starting with minimal capital, focusing on systems over specific categories, and building strong relationships with platform representatives. Shannon highlights opportunities in overlooked markets like industrial reselling and provides real-life examples of profitable auction deals, illustrating the potential for significant returns with the right approach and mathematical mindset.
- Starting with reselling requires minimal capital and is accessible to anyone with the right knowledge and drive.
- Building strong relationships with platform representatives can provide an "insurance policy" against account issues and algorithm changes.
- Opportunities exist in overlooked markets like industrial reselling, where large liquidation lots can be acquired for pennies on the dollar.
Starting from Scratch: The Reselling Journey
The episode starts by highlighting the accessibility of reselling, emphasizing that a lack of capital isn't a barrier to entry. Shannon recounts his experience selling $4 million worth of handbags over three years, resulting in a $557,000 net profit, starting from a $28,000 investment that was sold for $103,000. He stresses that the primary obstacle is often mental, not financial, and encourages listeners to take action.
Building Systems for Success in Reselling
Shannon discusses his journey from selling iPhones to luxury handbags, driven by curiosity and a desire to monetize new interests. He initially aimed to make $500 a day selling lower-end bags but found greater efficiency in selling higher-end items. He highlights the importance of building systems that can be applied across different product categories, noting that selling a $1,000 item requires similar effort to selling a $10 item.
Networking and Building Relationships in E-commerce
Shannon emphasizes the importance of networking with platform representatives on sites like Poshmark and eBay. He advises connecting with product and category managers via LinkedIn to build rapport and gain a direct line of communication. This proactive approach serves as an "insurance policy" against potential account issues or algorithm changes. He shares how speaking at eBay events and sharing his story with executives significantly improved his standing on the platform, resulting in a $5 billion selling limit.
Finding Your Niche: The Handbag Market
Shannon explains that he spent a year researching the handbag market to determine the right category and platform. He chose handbags after noticing the excitement they generated among the women in his life, contrasting with the lack of interest in his iPhone inventory. He recommends studying competitors, experimenting with photography, and creating credibility statements to build trust with customers.
Customer Service as a Competitive Advantage
Shannon identifies customer service as his "unfair advantage" in the reselling business. He advocates for free returns and exceptional shipping and packaging to build trust with customers who are often skeptical of online purchases. He introduces the concept of "two tokens customer service," where sellers should always choose the "end of the world" token, offering immediate solutions and empathy to address customer concerns and prevent negative feedback.
Navigating Low Margin Categories
Shannon discusses the challenges of providing generous customer service in low-margin categories. He advises against selling consumer electronics due to limited profit margins and suggests exploring alternative strategies like selling components. He emphasizes the need to continually evolve and adapt to market changes, moving from computers and laptops to phones and iPads as opportunities shift.
Identifying Opportunities in Industrial Reselling
Shannon identifies industrial reselling as a current opportunity due to tariffs and increased domestic purchasing. He shares an example of a Signature Hardware liquidation sale where items with a store price of $1.8 million sold for just $13,000. He highlights the potential for significant profits by finding buyers for these discounted industrial products.
The Importance of Systems vs. Category
Shannon asserts that a good system and process are more critical to success than the specific category being sold. He estimates that 70% of success depends on having a solid system, while only 30% depends on the category. He emphasizes using math to bid on items, researching market trends, and identifying opportunities based on regional demand.
Real-Life Auction Success Stories
Shannon shares a story about an auction for a thousand specialty door hinges that were initially overlooked. One of his associates bought the hinges for $985, recognizing their scrap value. The associate then contacted the hinge company, which was out of stock, and sold a portion of the hinges for $8,000, retaining the remaining stock. He also shares another example of plumbing supplies originally priced at almost $24,000 selling for $500.
The Mathematics of Reselling
Shannon shares his mathematical approach to reselling, using a "product equation" to determine the maximum price he's willing to pay for an item. He typically aims to pay no more than 10% of the item's value, including shipping. He emphasizes that reselling is not passive income and requires hard work, consistency, and a willingness to learn the system.
Closing Thoughts and Future Opportunities
Shannon shares a story about purchasing a large lot of NFL apparel, initially believing it was a mistake due to the sizes being extra-large. However, he discovered a strong demand for these sizes among fans and sold the lot for a significant profit. He emphasizes the importance of phone calls in the reselling process, using them to research prices and find buyers. He also advises against rushing into purchases and encourages studying the market before making a bid.
