A guide to starting a bin store

Are you considering taking a leap into the bin store rush? Bin selling is an attractive and booming business model, but operating a bin store is not a guaranteed win. We will walk through everything, from how to find suppliers, strategy and ways that increase your odds of stability and success. There are unique applications you can integrate as well, for example apparel sales, VIP sections (discount retail for highly desirable items), auctions, pallet sales and e-commerce.

What is a bin store?

A bin store is a progressive price drop sales model. On the first day of week (which can be any day based on the stores preference) the sell price is the highest, price will progressively drop until the final day which is the lowest price of the cycle. Bin stores thrive on velocity sales, lots of traffic, and bulk selling/ lots of checkouts. Bin stores run on flat rate daily pricing, which means there is no need to individually price items. Here is an example of what a typical bin store price model will be:

Friday $10

Saturday $8

Sunday $6

Monday $4

Tuesday $2

Wednesday $1

Thursday (closed for restocking the bins)

Bin stores are typically anywhere from 3,000-20,000 square feet, and similar in size to small and medium sized retail stores you would see in a strip mall. There are also micro-bin stores in spaces only 1,500 square feet. There are businesses that have one location, and some have several exceeding 10-15 stores, lastly there are some warehouses that allocate a few thousand sq feet to bin sales on top of their other forms of selling. Popular, and well-run bin stores will have lines of people when the doors open, as everyone is trying to find the best items for the price. There are different types of customers, with different reasons for shopping and sourcing. We will discuss this more below.

It is important to note, there are bin stores in the United States, Mexico, South America, and Canada. Bin stores outside of the USA typically source their products that are loaded in shipping containers and imported to the USA, for Canada they import semi-loads from the United States. Additionally international bin stores, source products from retailers in their countries.

What do bin stores sell?

Bin stores sell liquidation and return items from major retailers and ecommerce sites. They run on a specific type of liquidation product, high piece count pallets and truckloads. High piece count or (HPC) are liquidation pallets containing on average anywhere from 250-1000 products per pallet, typically items that are small and medium in size from home goods, toys, books, clothes, electronics, tools and more. The unit count per pallet can vary depending on what retailer/ ecommerce site they come from, and different programs that can have higher or lower value items.

A majority of bin stores purchase product by the full semi-load, though, not all. Some will purchase by the pallet/ multiple pallets from a local pallet sales warehouse. There is no right or wrong way to purchase, however regular sized bin stores will typically need to source full semi-loads from other states. Bin stores move lots of inventory, and quickly. An active bin store will typically sell through one semi load of product per week, maybe a little less, and some a little more.

Product mix

HPC pallets, will come with nearly every category from a retailer/ or ecommerce site. A top-level look is you will get a majority of lower retail items $10-$20 and a percentage of items that can retail from $20-$200+ plus. We have evaluated data from manifested loads, and have calculated some fulfillment loads (all new, typically lower dollar items) have an average retail value per item of only $14. For return loads (that can have higher value inventory) we targeted an average retail of about $30 per item. Now these are averages, both loads had several items in the $500+ retail range, several hundred items over $100 retail, and lots of items over $50 retail. Now, they also had items from $1-$10 retail as well. What we have target is the average retail per item out of 1000's of items on these loads.

Every bin store is going to try and get the highest retail, and most desirable products. They want their customers to know there are valuable items, and this is used to market on social media and emails to drive more traffic to the stores.

Simplistic structure

An advantage to running a bin store, is the simplicity. This is what drives lots of people to take the leap into opening a bin store. Here are the ingredients:

• Business registration

• Bin tables, some people build them themselves, some people buy them

• A location, retail, warehouse, or even people that do them in their front yard.

• POS System, can be a small card reader to an enhanced POS system

• Employees, bin stores operate with only a few employees typically

• A simple sign and some marketing

• Product

From an actual business start-up perspective for a business model that can essentially start its path of grossing a million dollars per year or more in sales, it's a very simple and low maintenance concept.

It is important to emphasize that simplicity should not be interpreted as a guaranteed success, however simplicity can be leveraged as an advantage.

Suppliers

A common theme for sourcing semi-loads of HPC/ bin store product is by utilizing social media for sourcing. Other forms of sourcing are by using email networks that offer semi-loads, or by knowing someone locally who can arrange sale and delivery of HPC loads.

The simplest way to immediately source HPC semi loads is by using the liquidation groups on social media. You can join these groups and find a supplier and sometimes as soon as the next day have a semi-load at your business. This does however come with some risk, especially if you get baited by a scammer, who is going to take your money and run. Now there are ways to mitigate this risk, the main way is getting community feedback to make sure who you are dealing with is legitimate.

Here are some things that will help:

• Speak with the supplier on the phone, verify they have a legitimate business.

• Real semi-load sellers are only going to accept wire transfers, they will not take other forms of payment like applications that send money, some legitimate truckload sellers will take CC's however it is rate because they will want to prevent chargebacks.

• Use truckload groups that have 15,000+ users, be cautious as there are some groups actually built by scammers.

• You can email us to verify if the truckload group you are looking at loads in is legitimate.

• A legitimate truckload supplier is going to require you send them tax exempt/ resale information for your state.

• Avoid direct solicitation, you are at a higher risk if people privately message your offerings opposed to you seeing their deals and reaching out to them.

• Before sending money, take a screenshot of the supplier's profile and post it in several truckload groups and ask for feedback on the seller.

It is important to be aware, there are two legitimate ways to purchase:

• Directly from a supplier, you can visit in person, or see their inventory on a video call

• From a broker, a broker is essentially a middleman that has expertise and sourcing with lots of connections

There are excellent suppliers in this market, and other bin stores will work to protect their sources as well as brokers. These businesses have worked very hard to vet out their suppliers and take the risk to see who is good to purchase from. There is value in that, and not many people are going to dish that information out for free to someone entering the market. Lots of other companies will leverage their connections, if you make contact with a legitimate person who can connect you with truckloads, it is typically going to come with some sort of facilitation fee, however for a new buyer in a chaotic market it is safe to say that paying a small fee to be involved in a safe transaction is worth it.

Vibrance does broker and facilitate truckload sales, we also help our active buyers grow their sourcing base by introducing them to other suppliers. We have a unique process once we establish a buying relationship, we will help you in other ways to drive sustainability into your business. This is a very unique market, contracts roll over, who is carrying the loads can change every month and we specialize in that movement of product to give our customers consistency and security in purchasing.

We do not name retailers, or any other companies for that matter for privacy/ compliance purposes however here is a breakdown of what pricing typically looks like:

• Online retailer 3-foot tall processed HPC 7,000 units average $8000

• Online retailer 4-foot tall unprocessed (higher value items) 7,200 units $15,000

• Online retailer 5-foot tall unprocessed hpc 12,000+ units $16,000-$18,000

• Online retailer 6-7 foot tall processed 17,000 units $12,000-$14,000

• Brick and mortar retailer more colorful boxes/ brands HPC 8,400 units $16,000-$17,000

Those are just a few very brief examples, there is also 3PL HPC (third party logistics), various other retailers and other online sellers. Some facilities will do mixed retail HPC where they blend different retailers into one truckload.

A common effective way to purchase is a mix, of very high unit count cheaper items, with some higher value pallets or truckloads which can be mixed to have a good selection of inventory for the higher dollar days and for the lower dollar days.

Strategy & Start-up

A top-focal point of sustaining a bin store is velocity, from the beginning it is very important to target your daily cost of doing business, or weekly cost. You can add up all your expense and factor in purchasing to make sure you are hitting your marker. This is not a get rich quick business and success is 100% driven by sustainability and integrating traditional business principles. It is incredibly important to keep costs, and labor as low as possible and your main investment week after week should be effective product that is displaying results. If you are displaying an effective business model you can make slight pivots to purchase better signage, grow your business and make good choices in purchasing non-necessary yet enhancing purchases that can grow your business.

We highly suggest writing a business plan in advance of opening a bin store. This can help with funding and determining your pricing structure and how many employees you will need. You can identify how much cash reserves you want to keep on hand and write out a sourcing schedule, so you are not stuck with no product before your restock day and high dollar days.

It is important to try and stay a week ahead on inventory, in case your suppliers are out of inventory, incase semi deliveries are late or if the tractor breaks down on the road and prevents on time delivery.

What is going to drive the best sales, profit and repeat customers is how you mix your inventory. There is a science to it, for example, if you just dump all your best inventory your customers will love it, but this will be a tough business model to sustain, and customers will only come to you for the best inventory and not what is actually making you money. We find it is best to slowly blend in the higher value pallets and spread them out, this keeps customers coming in to find "treasure" items and creates a realistic and sustainable model that works financially as well as customer satisfaction.

You can integrate prizes such as hiding a medallion in the bins and the customer who finds it gets a special item, can be anything from a high-end toy to a video game system. People will come to your store just to look for the medallion and the foot traffic will generate sales.

A goal on your high dollar days will be to have a line of people, large bin stores can have 100+ people waiting out front. People wait before the doors open because they know if they are towards the front of the line, they will have the best chance at scoring the best items in the bins.

Different integrations

Some bin stores will implement a "VIP" Section, also known as discount retail. These sections will have fixed priced items anywhere from 25-50% off retail pricing. Typically, the VIP sections will be filled with very valuable and desirable items. Or they can be fixed price lower dollar items that you have lots of, for instance a full pallet of the same item.

Bin stores can integrate pallet sales, where you offer full pallets of inventory for a markup of a couple hundred dollars.

Lastly some bin stores will utilize ecommerce for items that are $100-$200+ to recover some of the spending capital on truckloads. If you are paying $625 a pallet and can pull 5 items out over $200 retail, you can recover the whole cost of the pallet and run the rest of the inventory in the bins for a 100% win.

Conclusion

The best advice we can give is to be aware and ask questions. Learn from other bin store owners, some will help you, and some will not. Be very careful who you purchase from, and feel free to reach out to us if you need any help with that.

A bin store is like the restaurant business 50% are going to fail in the first year. Being very hands on and involved in your own business can enhance your chances of winning. Delegation is important but to put your own skin into the business you will have the best chances to succeed. Be adaptable, carry the know that this market is volatile and has its good days and bad days, it has days where low-cost amazing loads are easy to access and can have its days where the inventory is skyrocketing in price.

The main focal point should be to have as much cash reserves as possible, be creative and pierce the veil of boundless sustainability.