Avoid Becoming the Next Victim of a Wholesale Buyers Scam
Posted: Tuesday, July 11, 2006
by Tremel ennis
http://www.ibuildstar.com
Read this article before you consider buying wholesale Attention:
Wholesale Distributors and Drop-shippers: Stop getting scammed by sending your money to Western Union or Bank Wire scammers to pay for wholesale merchandise!
What are secure payment terms?
"Your money is protected even after it leaves your pocket"
It is always good to trust the seller you are buying from, but it is better to protect yourself when you do business with companies from afar. Just as important as the suppliers prices is their payment terms. Secure Payment Terms exist when the supplier will accept credit card, Paypal, L/C, Escrow.com or COD. These are secure payment options because the seller will not be able to scam you of your money when you use these methods to pay.
The scammers love to ask for Western Union and Bank Wire (TT) payments. These payment options will allow the seller to get away with your money without sending you anything at all. These are un-secure payment options that you should avoid. The true legit sellers will never ask you for these un-secure payment terms because they are in business to deliver your goods, and not to scam you and run away.
The wholesale, drop-shipping and distribution industry is the powerful system that transports everyday merchandise from the manufacturer to the end-user or consumer. The product changes hands several times and gets diverted to many different locations before actually making it to the consumers that purchase these at the retail level.
Anyone working in the merchandising industry must decide what 'business' level on which they will operate manufacturer, distributor, wholesaler, sub-wholesaler, drop-shipper or retailer. At every business level there are different market pricing structures, minimum ordering requirements and payment terms.
We have been in the wholesale resource industry for several years and have encountered buyers coming to us with unrealistic expectations, that often lead to them getting scammed and losing $1000's of dollars very quickly.
This article is intended to reveal the facts about the buying wholesale in an effort to educate buyers and sellers alike on the reality of this industry. In order to reveal the truth we must disclose the wholesale buyer's myths.
Myth #1: There are manufacturers out there willing to do drop-shipping.
The Truth: You may have seen some of those selling wholesale lists claiming that they have in their directory manufacturers that will drop-ship single items a a product to your buyers at manufacturer prices.
A manufacturer is a mass-producer of a product, with means they are set up to produce a quantity of several thousands of each item. Their staff are trained and equipped to inventory, package and load bulk quantities for shipping by either container shipping, tractor trailers or rail cars. These goods are then transported to designated distributors, who then re-sell in lower quantities to wholesalers.
Manufacturers do not usually drop-ship because it is not profitable for them to sell in small quantities. Most manufacturers will not even sell to just anybody who wants to make a purchase, you would have to be an authorized distributor that can prove you have the financial resources to even purchase from the factory. The truth is that the lower quantities you sell the higher your operating expenses, and the higher the prices you must charge to your buyers. You will never find a supplier that can drop-ship goods at manufacturers prices.
Myth #2: I can make good profits selling on ebay using drop-shippers to ship the goods direct to your customers.
The Truth: Those buying goods from an ebay auction are looking for a lower price on a product that they usually get in the stores at retail prices. Most legitimate drop-shippers offer prices similar to, or even a little higher than those offered on ebay for a specific item. Ebay is an auction site not an ordinary marketplace. Third party drop-shippers cannot compete with the prices for goods being sold on ebay because the buyers there have an expectation to pay less than retail, and sometimes less than wholesale.
I talked with a rep from a reputable drop-shipping company after buying their drop-shipping membership 2 years ago and he told me that the ebay buyers expect lower prices than they can offer.
The best way to profit on ebay is to purchase your merchandise in bulk quantities from a legitimate wholesaler at bulk prices, and then ship to your ebay buyers yourself. By ordering in bulk and getting the volume discounts, you can fulfill the 'lower price' expectations of ebay buyers. If you desire to go into the drop-shipping business, it is best to sell the goods on your own website or even offline than on ebay.
Myth #3: I can make a huge profit margin percentage selling electronics.
The Truth: There are more electronics wholesalers and retailers in business than any other type of product. The only way to increase your profit margin is to buy in huge quantity of 10,000 of each item and re-ell then direct in your own retail store-thus eliminating the 'middle man' wholesaler. If you are a wholesaler purchasing electronics to re-sell at retail prices then expect your profit margin to be 10%-20% depending on the item.
The fact is that electronics prices are controlled by the industry makers and cannot be purchased 'dirt cheap' unless you buy it from some guy on the street who may have stolen it and wishes to unload it for a couple of bucks. There is no way you can buy from a legitimate supplier, an Apple Ipod Nano 2GB that retails for $199 at only $75 each. This would be the same as paying $2.79 for a gallon of regular gasoline in California, and then finding the same regular gasoline for only $1.12 in Arizona. The set wholesale prices for a various electronic product is uniform and will not vary that much.
The best way to earn good money on electronics is to concentrate on the volume of sales and not the profit margin percentage. If the average profit on an electronic product is $5 each, then work on selling 2,000-3000 units per month for an average profit of $10,000-$15,000 per month. As a rule of thumb, if you set your prices a little lower and can take a lower profit margin, you will make up for this with more steady buyers and more repeat orders. Besides a 10% profit of $50,000 in sales is only $5,000 but a 5% profit of $200,000 in sales is a much higher $10,000.
Myth #4: I can purchase in small quantities and get 'dirt cheap' wholesale prices
The Truth:
People that come to us have such unrealistic expectations about buying wholesale goods. They want to buy
all the popular authentic apparel, shoes and electronics very cheap, with low quantities, pay by secure
payment terms and have an unlimited supply to order. In the real world no one can fulfill all of these
terms. If you want the goods to be at low prices then you must buy at least 10,000 units at one time to get
low wholesale prices they expect.
What we do is bring in wholesalers that have connections to the factory reps. They buy in large bulk and then
re-sell in smaller bulk quantities. Or they put together a buying co-op that allows several smaller buyers to
place orders that will add up to the factory required minimum order before shipping out to the wholesalers.
The wholesaler that is able to sell as few as 25 units may have purchased their stock from a supplier that can
sell as few a 500 units. Every time the merchandise changes hands after they leave the factory, the higher the
prices will be paid by the end buyer.
Myth #5: Locating a supplier willing to sell at low prices, with low minimum order quantities and secure payment terms us very easy.
The Truth:
There are countless thousands of sellers claiming to get all these authentic goods and at very low
prices, but there is a catch. If you are to purchase at low prices then you will have to buy in very high quantity
amounts. If you can't purchase in large quantities then you will have to pay higher prices. When someone
promises you very low prices such as a Nokia 8800 phone for $200 or an Xbox 360 for $200 each, then
you should question about their required payment terms.
Others will promise you the lowest prices, but most of these sellers are overseas companies that ask you to
send untraceable payments by Western Union or bank wire. Ask yourself, Is the potential of getting the
lowest prices worth risking $10,000-$15,000 of your money? See the following price list submitted to us by a UK seller. Notice that these prices are extremely low and check out the payment terms required by this seller. MOQ is 20 units
THIS IS OUR FULL STOCK LIST AND PRICES:
Play station 1......... $120 Play station 2 ....$130 Play station 3.....$150 Xbox 360.........$200 GARMIN 396........$150 Game boy latest edition..$110 These games are brand new sealed in original company Box.
Apple 4 GB ipod nano =us$69.00 Apple 2 GB ipod nano =us$62.00 Apple 4 GB ipod mini silver m9160ll/a=us$49.00 Apple 60 GB ipod photo m9830ll/a =us$86.00 Apple 60 GB ipod photo =us$49.00 Apple 30 GB ipod photo m9829ll/a =us$73.00 Apple 512 mb ipod shuffle mp3 player m9724ll/a =us$56.00 Apple 4 GB ipod mini bluem9436ll/a =us$49.00 Payment method: payment: bank to bank t/t, we also use western union and money gram.
The true fact is that those legit sellers offering secure payment terms do charge higher prices because the
expense of a merchant account, and Paypal. If you are ordering very large orders from a legit seller then you
need to pay by a Letter of Credit (L/C) and not Paypal or credit cards.
Conclusion The truth about buying wholesale is that everyone who sells wholesale is either a middleman or a broker. Otherwise you would have to buy direct from the manufacturer. Not many people can afford to do this because the manufacturer requires bulk minimum orders of 10,000 or 50,000 or more. The manufacturers do not deal with small time buyers like you and me because it is not worth it to sell 1, or 2 or 10 items.
Most people are looking to buy direct from the manufacturer and get low minimum quantity and factory direct prices. This is not possible. If so then we can put Walmart or Target out of business. The wholesale industry is well protected to keep these low prices out of the mainstream, so that the number of those who have the access is limited.
Those telling you they can get you factory direct prices are selling products that you can get anyplace. The suppliers we have in our Suppliers Network have websites but do not advertise in the search engines and you cannot find their links in the first 10 pages on the search engines.
This Article has been viewed 2,901 times. (Not updated in real-time.)
Top-level comments on this article: (10 total)Yes it was very helpful, I am dis appointed that I am just a lil person trying to get ahead and make and save a few bucks. THANKS
Do not buy iPods or anything else for that matter from electrogears dot com located in Indonesia. It is a scam!!! You will only lose your hard-earned money!!! Once you have wired your money, you will never hear from them again. A public service announcement regarding this fraudulent company/website can be seen at electrogears dot org. You've been warned!!!
Thanks for the advise really help
is egold a safe or secure way to pay or is it another scam
Thanks for the advise. But do you know about the hole salers mobile compnies that we can trust them ?
Malcom Stacey, e-gold is untraceable and non-reversable. It is basically online cash. The payments are anonymous (because the information you give them to set up an account is in no way verified), and the payments are NON-REVERSABLE. There is no recourse of any type if you get scammed.
Hi, an US company is providing me with moq of 1 unit and i hope to order a PSP slim which costs USD 150. Payment terms in Western Union. So is the company trustable?
Good advise.....too bad it also is an ad.......
Is your drop ship list any better than the scams you speak of? lol, I heard your list is full of tradekey and alibaba scammers!
An order to buy Iphone 3G s was submitted as explained in the wholesaler-electronic web site and, money was transfered by the western union(other payment methods mentioned in the web site do not work!!!). I suppose to receive an email immediately confirming payment received(as stated by the bank, payment was actually received in the same time of money transfer transaction!!!), I waited for (3) days before I decide to contact them thru their emails and phone numbers.I found out that the emails addresses do not exist as well as phone and fax numbers!
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