How’s that recession treating you? The conventional wisdom is that a down economy is bad for business, but when you narrow the focus, especially to wholesalers who sell new products to flea market vendors, many distribution companies say that discount goods sellers can thrive while store fronts on Fifth Avenue are closing shop.
It’s been a banner year for MDM International, a manufacturer and wholesaler of tie-dye t-shirts, tank tops, shorts, dresses, and hats. “Since the recession started, we’ve only gotten stronger,” says president and owner Mark Herman. “I think that as more people are unemployed, they’re looking for an item they can take out to the flea market and just make some quick cash. I think the recession is actually helping our business.”
Herman says that he just added a lot of new merchandise to his Web site. But most customers use the site for product info, and phone in their orders. “About 80 to 90 percent of our customer base is flea markets and fairs and festivals. We do have stores as customers too, but in the winter months, we’re pretty dead. April to September is our season,” he says.
The latest hot seller, according to Herman: “We put a peace sign on some of our tie-dye shirts, and those are a huge hit. Anything with a peace sign seems to be very popular.” he also says that there is a lot of demand for products with hemp leaf designs.
Business has been more challenging for Golden Resource Trading, according to manager Jason Chen, but the purse and wallet wholesaler is altering its product mix to fit current trends. “People like fresh products,” says Chen. “Big purses with many pockets are popular. The more colorful, the better.” But more important than style is novelty. “A lot of people are looking for new stuff. If it is new, they like it. Every time we offer new stuff, it sells. And our sales through the Web site are growing.”
The company offers hundreds of styles, each in a range of colors, out of its own warehouse. But it also has a showroom in Manhattan, on 30th Street. “We get a lot of walk in traffic,” says Chen. “Local street vendors and retailers come to our store to buy. They like to be able to touch the merchandise.”
In addition to street sellers and retailers, Golden Resource does significant wholesale business with flea market sellers. “Our store front is wholesale only,” says Chen. “Our minimum order is $150, we offer a 5 percent discount on orders over $500, and we offer free shipping for orders over $1,000.”
Stockwell Greetings was founded 12 years ago, and the owners have been in the greeting card business for 25 years. With experience like that, owner John Fenwick is confident about surviving the recession. Even in a down economy, the company is doing just fine. “Consumers always need greeting cards,” says Fenwick. “They might not be able to afford the gift, but they always buy the card! Business is good because our product sells well, it’s made in America, and it’s offered at the best price in the market.”
As a wholesaler, Fenwick feels that his company offers flea market vendors some strong incentives. “We are a very reliable and steady source of greeting cards for our customers.” And he means it when he talks about price. Cards are 23 cents each, packed in 6-packs for $1.38. Orders over 150 packs get free freight, and retailers buying large orders can get volume discounts that go as low as 18 cents per card. The minimum order is $50.
Reliability and low prices are also key selling points for Liquidity Services, the parent company of overstocks-auction house Liquidation.com. “You can trust us as a source for product,” says Patrick Landis, a director of marketing at the wholesaler. “We are a fully transparent wholesaler online.” What Landis is getting at is the company’s status as a publicly traded firm. Any company that trades on a public stock exchange is required by law to disclose a deep set of data that privately owned companies keep tight to the chest.
For example, in 2009, the company reported actual revenue of $236 million, down 10.5 percent from 2008’s record $264 million. The company still turned a profit of $5.7 million in 2009, just about half what it earned in 2008.
The company sells to all types of buyers, including flea market and swap meet vendors. The range of product sold is huge. “We sell everything from iPods to pneumatic drills to fire truck and ambulance supplies,” he says. “Our biggest categories are apparel, consumer electronics, and computer equipment.
Landis says that the companies who sell on the site are being affected by the economy in a way that actually helps Liquidation.com. “Primarily our sellers are major retailers who have warehouse overstocks, stock that was on the store floor that has been pulled from shelves, and merchandise that customers have returned.” And consumers are returning more than usual. “There’s more buyer remorse, so we’ve seen an uptick in returned goods.”
That gives an edge to buyers. According to Landis, “we are a source for small businesses to find product at a very low cost. They are able to source product cheaply.”
Scott McMillin, co-owner of Michelle and Scotts Wholesale Imports, also wants his customers to do well buying low and selling high. “You need to sell product that your customers can sell and make money on. That is our one driving idea.”
He is doing a good business in ladies’ fashion accessories. “We have about 6,000 active skus at any one time,” he says, and sales are doing quite well. “We have seen increases in our business during this ‘recession.’ We did see a slowdown in the rate of growth for the last six months of 2009. But 2010 has been good.”
This is the second part of a two-part report on how the economy is affecting the flea market and swap meet business. Read the first part here.