Business Development · Ecommerce (food)

How to start this business without holding inventory first?


June 14th, 2021

The business is selling restaurant/cafe/bakery supplies like baking machines, commercial cooking machines, cooking utensils, restaurant tableware, restaurant/cafe furniture and disposables. How can I get started without holding inventory first?

herb lau

June 17th, 2021

Could not agree with Paul more.

Paul Garcia marketing exec & business advisor

June 15th, 2021

You probably can't get started without inventory. And even then it's quite challenging because there is both a primary market of new equipment and a secondary market of used equipment. Many people not specifically part of the hospitality industry cover the secondary market through auction houses, plus those that specifically handle the clearance of used equipment. Some of the new equipment dealers also handle trade-ups/ins for older equipment and then refurbish or sell as-is. It's not something one person can move around generally, so you need both warehousing, trucking, someone to confirm the working condition of used equipment, possibly someone to set up new equipment, and there's a lot of cycling in the business. You won't be entering the market as a break-out new supplier.

Some of the equipment manufacturers have dealership rules about how many reps they will allow in a territory. Some manufacturer's reps are "connected" and you could be in physical danger if you compete.

You have suggested a much wider inventory than most dealers, which makes you either a middleman that is easy to cut out through established channels, or it means you have a warehouse staggeringly large compared to other dealers. Nobody needs a middleman anymore because most equipment and supplies are available directly. So if you're not in the secondary market, you have to have a distinct benefit, such as great service contracts, repair service, delivery service, trade-ins/ups, cleaning service, or be bundling supplies with things people would otherwise order elsewhere.

There isn't really any drop-ship option that would allow you to not hold inventory. Because there's such a steady supply of used equipment, it's hard to get a finance company to give you flooring for inventory since the value fluctuates so much. Too often nobody wants the stuff and it sits for a long time, because there's always more.

If you specialize in a specific type of equipment, particularly things like "Kegorator" fridges that even consumers might buy, you might stand out. But bakery equipment/supplies seems like a dying market where fewer and fewer shops bake in-house instead of ordering from a central warehouse.

If you want to talk more, message me directly.

Manuj Aggarwal Chief Innovation Officer | Delivering maximum traction, productivity & sustainability.

June 18th, 2021

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