A Presidential Retail Offering

An overstock of shoes means that small retailers can pay as little as $5.50 per pair.

Image: Courtesy of Via Trading Corp.

Black Friday, the day after Thanksgiving, is known the nation over as the official start of the holiday shopping season. And this President’s Day also marks a retail landmark, albeit a less-known one: the start of the secondary sales.

The secondary-sales economy has always existed in some way, although it’s been a more-watched indicator since the recession. The middle of February marks a tricky time in retail: Inventory that hasn’t sold over the holidays and post-holiday sales is still taking up valuable shelf space while spring lines that are coming in may add a burst of color and newness to a retail floor, but when it’s snowing outside and the weather forecast calls for a week of frigid temperatures, the non-luxury set isn’t going to shell out full price for swimsuits, capris, tanks, and shorts.

This dichotomy presents retailers big, medium, and small with a twofold opportunity—sell excess inventory to secondary retails, and woo the top two percent of the population with a limited-run of sizes.

Most retailers learned in the fall of 2009 that having excess inventory is costly. That season marked the first of the 70-to-80-percent-reduction bins. Back then, stores didn’t have anywhere near the options they do now to get rid of the extras and still eke out a small profit. Today, we have flash-sale sites like designer reseller giant Gilt Group—reportedly gearing up for an IPO; HauteLook, which just sold to Nordstrom last week for a cool $180 million; and dozens of others. Retailers can go the more traditional route of selling to off-brand stores such as Marshall’s, Filene’s Basement, TJ Maxx, Loehmann’s, and others. And then there are those who essentially hedge that a big retailer’s excess inventory is a small seller’s steady income.

Via Trading Corp, based in Lynwood, California, is a wholesale supplier of overstock and clearance merchandise representative of the second retail economy. Founded in 2002 as a family business, CEO Jacques Stambouli launched the company after drafting the business model for a project he did as a Harvard MBA student. He set out to learn how independent sellers can leverage goods not sold by big-box retailers and came out with a bulk clearance buying power that’s equal only to major multichannel discounters like Home Shopping Network, QVC, and ShopNBC, to name a few.

Trying to compete in this space isn’t easy. So Stambouli takes a holistic approach: He offers to ship product at competitive rates, export globally, sell by condition—customer return, damaged, never sold, discontinued, etc.—and by bulk price starting as low as $200 and going up to multiple cases in the thousands of dollars. His primary customers are small retailers that don’t want to risk millions of dollars in inventory liabilities, eBay sellers, flea markets, and yard-sale sellers. Anyone can create a free account and place an order within 24 hours. For those concerned that they won’t be satisfied with the goods, Stambouli warns that this “is not a 100 percent accurate and "straight-forward" business.” His disclaimer is that while the company and staff “do our best to be as descriptive as possible with the information available to us, we would be lying if we said mistakes don't happen—they do.” While he offers to work with unhappy clients who contact the company within 48 hours of receiving the goods, all sales are final.

For budding retail entrepreneurs, experimenting with a wholesaler who specializes in liquidation merchandise could be a good way to test the market and get a fast education in what sells and what doesn’t. It can also provide enterprising businesspeople with insight into pricing, supply, and demand—business school 101s. And since starting a Web-based company can be done for virtually no capital, an investment as small as $1,000 can be the start of a business, if carried out correctly. Which isn’t to say that just anyone can purchase goods from a company like Via Trading Corp. and flip a fortune. As with anything, this line of work carries risk, and the more educated the entrepreneur is at the onset and the more opportunity he or she can spot, the higher the likelihood of success.

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