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Wholesale Auctions

Web Wholesaler Magazine, July 2009

In a business world full of buyouts, bailouts and bankruptcies, closeout wholesaler, Via Trading Corp., is a notable exception. According to president, Alain Stambouli, the company (based in Lynwood, CA in Los Angeles) has recorded significant revenue growth over the past six years. In 2006, Via Trading took in $10.25 million, in 2007 $14.25 million, and last year $19 million. “We were on target last year for $21 million,” Stambouli says, “but the last quarter of 2008 was poor for us, as I guess it was for everybody.” Nevertheless, he says, business has rebounded nicely this year, with Via Trading on pace for $24 million in revenue and hoping for $26 million. Not bad, to put it mildly. But how does Via Trading keep succeeding while others continue to struggle? It’s no secret, Stambouli says. The popularity of the company’s monthly onsite auctions of closeout lots, as well as a longstanding commitment to smart customer relations, combine for a formidable one-two punch.

Stambouli, who with his brother (and Via Trading CEO), Jacques, started the company in 2002, says that, as is so often the case, the successful formula was a blend of solid business planning and luck. Stambouli’s background was initially in Bulgaria, where his father ran a company operating over 40 retail stores, and a distribution sales force numbering over 200, before moving on with his father’s mail order business based in Cyprus. It found him traveling around Eastern Europe (including Bulgaria, Russia, Ukraine, Uzbekistan, and Kazakhstan) and Egypt, helping to oversee a company sending out 1 to 2 million mailings per month of specialized mail order items.

Meanwhile, brother Jacques was studying at Harvard Business School and formulating a plan to launch a company in the closeout industry. He asked Alain to join him in California, where they first opened a retail store, and a few months later, added an online operation. “We were by then learning the salvage goods business,” Alain says. “We were taking on some merchandise that needed repair and some that was junk, which we threw away.” Within a few months, the ebusiness and wholesale sales from within the store were doing, “two or three times,” what the brick and mortar store was, so the brothers converted the store and opened their first 6,000 sq. ft. wholesale based warehouse, which was supplanted 18 months later by a 24,000 sq. ft. space, which itself was supplanted another 18 months later by a 65,000 sq. ft. repository. Some two years after that, in summer 2008, Via Trading moved into its current, 240,000 sq. ft. facility. By August they’d decided to add in-person auctions at the warehouse. “It was always something we’d wanted to do,” Alain recalls. “We had a steep learning curve at the beginning, because we had no background as auctioneers.”

The kinks were soon worked out, though, and now Via Trading typically attracts over 225 registered wholesale bidders to its auctions, held the first Thursday of each month. Stambouli notes that each of those registrants usually accounts for 2 to 5 people each, meaning that large screen TVs have been installed so that all the bidders can see what’s going on. While most of the prospective buyers are from the southern California area, Stambouli notes that they regularly see out of state bidders coming in as well.

“From a marketing point of view, it’s great to have over 200 wholesalers onsite,” he notes. “There’s several million dollars’ worth of merchandise that they can look at and buy. It introduces our company to a range of new potential customers who would not have otherwise thought of visiting us, as well as a wider variety of customer demographics, because there’s a different crowd that comes to auctions than the regular wholesalers we work with. And slightly larger companies take advantage of the fact that this is a channel for them to sell what they can’t through their own channels, whether it’s furniture, clothing, paper goods, or whatever.”

Sellers are required to fill out forms that can be picked up onsite or online, explaining what merchandise they’re looking to move, its condition (four categories are offered: Customer Returns (Untested); Customer Returns (Tested, Not Working); New/Overstock; and Mixed), and whether they wish to be paid by check or in-house credit, along with various other details. Each consignment must be at least six pallets in size, or at least approximately $10,000 in original retail value. “We don’t have the resources to deal with 100 different people/vendors with one or two pallets each,” Stambouli remarks.

Via Trading takes a percentage of each sale, depending on how much work, if any, Via Trading needs to do on the merchandise to make it presentable. The fees range from 25 to 50 percent. Photos of the lots being offered go up on the company’s website (www.wj20test.com) on the Friday before each auction, while onsite, a dedicated television scrolls through the same photos. Registration begins at 8 a.m. on the day of each auction, and inspections of the merchandise are offered until 11 a.m., when the bidding begins. The auctions usually last about four hours, Stambouli says, with a break for lunch that’s free to registered users. Typically they move around 100 lots per hour, so the action can be fast and furious. Via Trading advertises that they offer over 300 palettes, starting at $1, in many categories. Via Trading has considered adding online auctions to its operations, “but we’re happy with what we’re doing right now,” Stambouli says. “It’s feasible for us to have online auctions, but it would require significant development in our IT, or sub-contracting out to a third party.”

As for what sells, both in the auctions and directly from Via Trading, Stambouli says that in the salvage/closeout game, “Supply tends to be king. We’re in a position of selling what’s available. I can’t call up a department store and ask for 10 trucks of disposable diapers. That said, what we get the most requests for, and what remain very popular, are high end electronics, game systems, designer handbags, personal care items like deodorants and after-shaves, paper goods, even grocery items do well. But supply for those is usually very limited. What we tend to sell a lot of,” he continues, “is tools, clothing, footwear, and general merchandise.”

The other major factor in Via Trading’s ongoing success, customer service, has been a focal point from day one, Stambouli says. “Selling one time to a customer is a very easy thing,” he declares. “But to sell to the same customer the next time, the time after that, month after month, that’s where the skill comes into it.” As such, Via Trading trains all its staff to take a long term approach to transactions. “It’s very difficult to get rich in one day, or one week or one month,” he admits. “But we put right in our sales manual, ‘Don’t try to sell as much as you can the first time.’ We want the customer’s business, of course, but not just today; for months and years to come.” And with salvage and closeout merchandise, he adds, “If customers don’t make money themselves down the line, they won’t come back here and buy again.”

Via Trading currently employs 11 salespeople, of whom three are sales managers. “They all have laptops and BlackBerrys, and we now do quite a bit of business through text messaging,” Stambouli notes. In addition, “Customers will always get a human voice at the other end of the phone during business hours. I hate having to go through automated menus myself. We recently added a second receptionist, because we monitor our phone wait times and saw that business was getting to be a bit too much for just one. “Everyone who answers the phone is trained fairly well,” he continues, “and can answer most questions, or direct callers to someone who can. All voicemail and email is answered, not within 24 hours, but the same day it’s received.”

First time customers routinely receive follow up email surveys about their experience, often with an added incentive (for example, a $25 off coupon for their next order) to respond. The company also offers a “live online help,” tab on its site, which is usually open during business hours (7 a.m.-7 p.m. Monday-Friday, 9 a.m.-5 p.m. Saturday). “It’s something we definitely believe in,” Stambouli says. “It’s a very nice benefit to have for some of our customers, and many times can lead to a sales conversion.” Stambouli decries what he sees at too many other websites. “They want you to register just to ask a question, then you have to email back and forth before you can get access or an answer. Ours is a much more normal approach.” Add in the facts that no appointments are necessary and that most forms of payment, cash, credit, PayPal, are accepted, and the picture of Via Trading Corp. as a, “customer first,” operation becomes complete.

“Look, there’s always room for improvement,” Stambouli says. “We’re human, and we make mistakes. But when we mess up, we admit it, and where necessary we compensate the customer. We also offer for sale typically only what’s in our warehouse, and usually can provide a tracking number for orders the same day.” The long term approach may take more effort, Stambouli asserts, but it’s the most logical, and as Via Trading’s numbers indicate, the most successful approach. “Everyone always wants to move beyond the basics and move quickly ahead to the next steps,” he says. “But if you don’t do A-B-C well, what’s the point of even learning X-Y-Z?”

Click here to read the article on www.webwholesalermagazine.com.

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