Do yourself a favor - how to get contacts to obtain discontinued or discounted merchandise; Direct Line - Brief Article

Nation's Business, March, 1996 by Laura Litvan

My company sells party favors to hotels and other outlets. I am interested in purchasing discontinued or excess merchandise. How do I make the fight contacts? M.B, Jacksonville, Fla.

It might be easiest for you to start within your industry, says Jerome Manning, president of Jerome J. Manning and Co. Inc., a Boston-based firm that handles business liquidations.

Manning says manufacturers sometimes have "overruns"--more of a product than customers demand--and will sell the excess items cheaply. Sometimes distributors also find themselves with too much of an item and are willing to negotiate low prices with those prepared to buy in bulk. Manning says this might work best if you buy party favors associated with a holiday a month or so after the holiday has passed. For example, you might find good deals on Valentine's Day favors soon.

Here are a few other suggestions:

* Use a mailing-list broker to buy the names and addresses of liquidators, who purchase aM then resell inventory from financially troubled or overstocked companies. Use postcards to tell the liquidators you're in the market for party favors, and request a call from those who have such merchandise. List brokers commonly advertise in the Yellow Pages.

* Call major insurance companies arid obtain names of liquidators they use to dispose of merchandise recovered after insurance claims. Salvageable goods from fire-damaged buildings, for example, are typically sold by insurance companies through liquidators.

* Call the National Auctioneers Association, in Overland Park, Kan.--(913) 541-8084--for a copy of its directory. It costs $5, lists the names and addresses of the association's 6,000 members, and notes whether they handle business liquidations. You could send a card to those who do, informing them of your interest. (For tips about buying at auctions, see Managing Your Small Business in the February issue.)

* The U.S. Customs Service holds periodic auctions of forfeited and seized items at locations across the country, including Miami. To get your name on a mailing list for sales advisories, call (703) 351-7887.

Manning says that when you buy liquidated merchandise, you can find items for anywhere from 2 cents to 50 cents on the wholesale dollar, depending on quality, supply, and demand.

On the downside, you have to pay in cash, and you can't take only the best items. Generally, you're expected to buy large quantities of goods--taking both items that are in good condition and those that aren't. "You can't be a cheney-picker," Manning says.