Coral wholesalers who sell to non store front businesses?

[RossW]

One thing to consider is DOA. I have seen many a thousand dollars lost on shipments that went wrong for many different reasons. You need to be able to absorb those when they happen... and I promise they will.

Originally Posted by keh9qd

All I am saying is that if the local fish stores are only paying 50% retail and selling at 100% (doubling their money) then that is tough business. Id need to get corals at least at 1/3 retail in order to sell at roughly 1/2 retail. If the LFS are selling 8 headed green frogspawns for $80 and Im selling for $50 we both need to be getting them for $25-30 to stay alive (just an example). If they are paying their $2,000/month rent, there 5 employees, their utilities, and their shipments on a 50% markup then that would be impressive.

With that said, I am new to this side of the business, so Id be interested in getting more detailed examples. BTW- I realize in the wholesale/retail business that prices aren't spoken of individually.

[keh9qd]

Originally Posted by RossW

One thing to consider is DOA. I have seen many a thousand dollars lost on shipments that went wrong for many different reasons. You need to be able to absorb those when they happen... and I promise they will.

I was just reading the policies of a few different wholesalers regarding Doa. Doa's that are immediately recorded are supposedly replaced in the next order while entire shipment deaths have different procedures. I'm assuming they want you to take that out on shipping companies due to delays. I can see that being a pain that might bite at times.

[Jeremy Blaze]

Better have plenty of money to fall back on. Basement operations are rarely successful.

[Jamesus]

keh9qd, where are you located?

[organism]

Originally Posted by keh9qd

All I am saying is that if the local fish stores are only paying 50% retail and selling at 100% (doubling their money) then that is tough business. Id need to get corals at least at 1/3 retail in order to sell at roughly 1/2 retail.

It is a tough business, and you should look at it ethically: local shops work hard and need to mark up to pay the bills. You undercutting at 50% retail even if it were possible (which it isn't) just wrecks the local market for shops making sure their employees can put food on the table. How would you feel if you had a shop and someone came in saying "well I saw that in this dude's basement up the street for half the price"?

Originally Posted by keh9qd

I was just reading the policies of a few different wholesalers regarding Doa. Doa's that are immediately recorded are supposedly replaced in the next order while entire shipment deaths have different procedures. I'm assuming they want you to take that out on shipping companies due to delays. I can see that being a pain that might bite at times.

Industry standard is that DOA credit is given after 5-10% (varies on the wholesaler) of your invoice amount. So if you buy $1500 of corals and fish then $75-150 is as a standard expected to die right off the bat in the first 24 hours. After 24 hours it's on you, so basically expect to eat every DOA cost, no free rides. If you lose a shipment due to the airline then kiss that money goodbye because it's gone.

[DeathWish302]

Originally Posted by organism

You can't think like a hobbyist if you plan on running a business...

The ones that stay in business either get most of their money from maintenance and/or have a very solid customer base. You wouldn't believe how many LFS close up shop just to do maintenance since that's where the real money is.

Unfortunately....organism is dead on!

For the past five years I have been flying out to Sacramento for biz. I've stopped at about every shop from Sac to LA. Moral of the story is EVERY major brick and mortar vendor cherry picks the LA wholesalers. I went with one of my fav Not-so-LFS's owner one day to pick out some stuff. I walked out with a few $50 colonies and handufls of brown frags for a couple bucks a pop. EVERY store I have been to on the West Coast has there 'special' wholesaler where they get cherry stuff every 'X' day of the week when the big shipments arrive.

I just don't see how any e-tailer can compete with those close to vendors that are moving 2+K a week of coral. Most all of the same LFS owners have stated to me that they truly dislike the types like me that just buy coral and buy the drygoods from online vendors. The equipment and drygoods are their true bread and butter along with house calls and maintenance.

And pests..... I know of at least 3 vendors in Sac alone that have redbugs and have had AEFW in the past and have done nothing. The cost of pitching some corals versus the time and cost to dose Interceptor is far less and easier in their minds. I would love to spread the word on those few stores, but that's for a different time and place.

Hate to burst your bubble, but I've pondered this idea of selling coral online and the risk versus reward is just not there for a primary form of income comparative to my current employment. It will be a tough road until your at the level of income you likely have in your plan.

Best of luck

[matt_wahoo]

this just doesnt sound like its worth it. lots of risks here

[jeff@zina.com]

Welcome to the world of business.

Jeff


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- Text mangled by iPhone spell check...

[Jeremy Blaze]

If it was easy money, everyone would be importing corals and growing in the basement, and there would be no retails.

Retail serves a purpose.

[DeathWish302]

Originally Posted by jeff@zina.com

Welcome to the world of business.

Jeff


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- Text mangled by iPhone spell check...

Hehe, I like the iPhone SC comment.

Anyways.... Not only the world of business, but the world of business in a 'luxury' sector!

keh9qd - The best advice I have is talk to your LFS owner frequently and get to know him/her. After you have their trust, talk business. I can guarantee that they will tell you in the last 5 years they have had more people coming in to sell livestock and equipment than they have had customers. At least that's what I have heard and seen. I might be biased, but I feel the need to pitch some money their way if I stop by the shop to BS. A frag here, a jar of pellets, or a odd-ball loc-line piece keeps their doors open. With an online gig, you don't have the 'usuals' that swing by to say hi and spend $20-50 bucks a week regardless if they really need to or not.

As for securing cherry pieces from wholesalers, I think that will definitely be your first hurdle. It seems that every piece of SPS, rics or BTA's that I take to the LFS are either hoarded by the owner for their grow-out system of gone within the week. Unless your moving all the 'already got it' or 'that's blah' on a consistent basis, your dead in the water for counting on what a wholesaler sends you to float your business. My advice is to get the pieces you like now and spend some serious money on a collection. Grow it out for 5 years and come back to this idea. I know of several RC'ers and a couple 'renowned' growers that make ~$2k at every swap they go to throwing $20-25 frags out the door. IMO, that's the way to go and only build on that. There's two in particular I can think of that have their named corals all over from doing it just that way.

[keh9qd]

Agreed, it is highly convincing that it isnt worth it. Selling coral is like gambing for pennies and sounds like more time and stress than its worth. Many have made good points that it isnt worth it unless you have a local vendor hookup.

[gon08]

In south Florida most LFS make their money on servicing tanks and set ups. There is greater margin in changing water than selling coral. Some shops here sub the work which is how I used to get most of my business. You would have a small overhead, and a greater profit margin without the need for keeping much inventory. On top of that some shops paid a commission for moving they're fish and coral.

[jeff@zina.com]

Originally Posted by gon08

In south Florida most LFS make their money on servicing tanks and set ups.

That's just about everywhere, especially in this economy. The shop is there to warehouse supplies and livestock for the maintenance business. Locally, service has dropped by 50-80% as most home owners have cut back or gone out of aquariums and many businesses that had aquariums (bars, restaurants, offices, etc) have gone under. As a result, many LFS have cut their stock dramatically.

Jeff

[gon08]

Originally Posted by jeff@zina.com

That's just about everywhere, especially in this economy. The shop is there to warehouse supplies and livestock for the maintenance business. Locally, service has dropped by 50-80% as most home owners have cut back or gone out of aquariums and many businesses that had aquariums (bars, restaurants, offices, etc) have gone under. As a result, many LFS have cut their stock dramatically.

Jeff

I got out of the aquarium service business for those same reasons and got into landscaping and now I'm in the same boat, however I know landscaping will pick up again while aquariums will continue to be a luxury not a necessity.

[jformani]

why not drive to a local wholesaler and pick up the corals. this would save on shipping, doa, and allow you to pick out better corals. talk to a few i have.

there are so many ways to sell corals its crazy, you have your local clubs, craigslist, ebay, frag swaps, forums like this, etc, etc. get creative and go for it, you dont have rent, ee's to pay for, and probably wont make this your primary business. it takes very little start up money to do what your talking about,

[dahenley]

Originally Posted by jformani

why not drive to a local wholesaler and pick up the corals. this would save on shipping, doa, and allow you to pick out better corals. talk to a few i have.

there are so many ways to sell corals its crazy, you have your local clubs, craigslist, ebay, frag swaps, forums like this, etc, etc. get creative and go for it, you dont have rent, ee's to pay for, and probably wont make this your primary business. it takes very little start up money to do what your talking about,

this is a great idea if you lived near LAX (where 99% of coral/fish imports come in through)

here in Texas, thats not as easy. especially since there are minimal wholesalers within driving distance. (or less then the economical cost of driving)

[shrimphead]

i live in the uk and the main wholesaler for lfs's to get their corals from is tmc. a lfs i knew said when he started importing corals directly from indonesia everything was turning up dead because the people on the other end didn't know how to pack stuff, he ended up going to indonesia to show them how to do it. but in the end he probably has some of the nicest corals i have seen for sale. i think what you need to do is import directly from the source which involves BULK purchasing more work, risk, permits and stuff but if you can find the right distributor i would say it could work well. i'm not talking from experience though. and i take it the people who mention wholesalers are talking about wholesales in the US not from the source (indonesia ect) is that right ?

[alexandernewell]

Location really doesn't have much to do with what you can get. Its more about the relationship you build with your supplier. Everyone in this thread seems to express the opinion that if you don't live in California then everything you get will be green or brown undesirables. That is simply a falsehood. A supplier who sends out crappy corals doesn't get return business. Granted that if you are a new customer you won't get the choicest pieces but you can still get gems and things that will become gems with the proper care and lighting. I have seen plenty of trashy brown acros become beautiful over a few weeks. I have also seen plenty die off but that comes with the territory.

Moral of the story, Just because someone "cherry picks" a wholesaler doesn't mean that what they got will stay that way and the non cherry pieces won't always stay that way. Anyone one here can attest to how dynamic corals can be.

Price points: wholesaler prices will be 1/2-1/3 of retail prices. The retail markup is mostly dependent on the amount of dry goods the store sells. Its the dry stuff where they make their money. The live stuff is there to sell the dry stuff. If you buy a frag at 1/3 retail and sold it for 1/2 retail you would make money if you had zero overhead but shipping/loss/time/quarantines/holding systems all cost money. If your markup is only about 30% and your an exceptional keeper you will be lucky to break even. This is acceptable if your doing it further your maintenance operation by making yourself more desirable to future customers but as an alternate revenue stream your final price point needed to cover costs will be close to retail prices.

Scouring sites and stores looking for great pieces you are comfortable you can maintain is the most cost effective way to start. It doesn't matter how much you spend on a mother colony if you can keep it alive for several years and it makes you lots of frags. Its a much slower form of growth but as they say "nothing good ever happens fast in saltwater."

[Jeremy Blaze]

[QUOTE=alexandernewell;19345605] Everyone in this thread seems to express the opinion that if you don't live in California then everything you get will be green or brown undesirables. That is simply a falsehood. QUOTE]



I never said anything like that.

[dahenley]

[QUOTE=Jeremy Blaze;19346288]

Originally Posted by alexandernewell

Everyone in this thread seems to express the opinion that if you don't live in California then everything you get will be green or brown undesirables. That is simply a falsehood. QUOTE]



I never said anything like that.

Me either!
but i do know people that order from wholesale places, (most of which are from the West Coast). The do offer a Super nice piece every now and then, but most of the stuff is just nice. (and the bargan stuff is the "brown and green" )

you just dont get to go to the wholesaler personally, and view for your self, and "cherry Pick" what you want.

and your right. you have to build a relationship with your rep, and they do throw you a sweet shipment every now and then, but they also have to unload the mass "normal" stuff.

[MrineLfRlz]

Ive read this thread and it does seem very risky. But even as a hobbiest if you sell over X- Amount of coral or fish a year i was told you will still need to get a liscense because you can get into trouble for selling to much without one? So isnt it a good thing to at least get a reseller or retailer liscense or LLC?
Or was i totally misinformed? Can someone set me straight thanks.

[albano]

Originally Posted by MrineLfRlz

Ive read this thread and it does seem very risky. But even as a hobbiest if you sell over X- Amount of coral or fish a year i was told you will still need to get a liscense because you can get into trouble for selling to much without one? So isnt it a good thing to at least get a reseller or retailer liscense or LLC?
Or was i totally misinformed? Can someone set me straight thanks.

get in trouble with who? RC? State Tax Dept.? IRS? ...
all the above?

Which are you worried about...sounds like you'll need a license!

[MrineLfRlz]

Originally Posted by albano

get in trouble with who? RC? State Tax Dept.? IRS? ...
all the above?

Which are you worried about...sounds like you'll need a license!

yes IRS and state taxe Dept i was wanting to find out how much you can accually get away with selling before you need a liscense?

[Jeremy Blaze]

Anyone buying at wholesale and reselling needs do be licsensed at least with the state. Regardless of volume.

[dahenley]

if your just selling locally, then you dont need one. BUT, if your selling over "X" amount, then you "SHOULD" file taxes and list it. which would be nice to have a business license and would/might be better for you. (if thats what your asking)