Fly and buy Stock

I get asked all the time why distributors wont do 100% fly and buy on products. Since this forum is about cell phones I will keep the post on that subject. When I first got started in the business I use to think the same thing. Well if someone is legit they will offer 100% fly and buy no matter how large the quantity. But since I have started working direct with a distributor and have had talks with them I have found out why. What I have learned in this industry is that people equate payment terms often as the sole indicator on the legitimacy of a company. This could not be further from the truth. There are a lot of legitimate business people who do business by wire transfer, and on the flip side people get scammed all the time making payment by L/C or Escrow. So before you make hasty decisions on whether a company is good or bad based on how they take payment it is in your best interest to do some research. I notice people like to scream scam when a seller won\'t front 5 or 10 million dollars of inventory for a fly and buy. Yet ironically the only thing a buyer wants to provide the seller to place this large order is a piece of paper saying he is coming. Even with an irrevocable PO unless the seller wants to spend time taking the buyer to court it’s just a meaningless piece of paper. Buyers want every document under the sun and then on top of that they want you to front millions of dollars for these items basically only on \"their word\" that they will come. People asking for fly and buys should think of it from the seller\'s point of view. People accuse any seller not willing to do fly and buy as a \"scammer\" or not a serious seller. Well how does the seller know this person he is dealing with is a serious buyer? Is the seller supposed to order millions and millions of dollars worth of inventory for every buyer that comes along and asks them to do so? Think about it, if you were the seller with the contract and it was your business, would you purchase $5-10 million plus worth of product because someone you have never met somewhere across the world tells you he is coming to get it? Of course you wouldn\'t. Now definitely I understand the buyer\'s point of view in wanting to protect their money, as this industry is full of fraudulent characters. However not everybody who doesn\'t offer fly and buys or letters of credit are scammers, and vice versa not everyone who offers these options are honest people. Now you would think that people would flock to a dealer who has access directly to a regional Distributor for Nokia and can get anything and the best LEGITIMATE PRICING around. But yet they don’t they are to busy trying to chase some stock that might exist somewhere else even though they have no proof its there and have been offered no proof. People come to us we offer them more proof of stock then anyone else can. We offer them to come down and meet with a Nokia distributor and have access to an unlimited amount of phones and they hear a rumor about some stock somewhere else a little cheaper and yet are offered NOTHING and yet they go after it anyway. For example, we work with a 100% legitimate authorized distributor for Nokia. These people can be verified with Nokia themselves, and we offer our clients to come down and visit our facilities, and us as well as inspect and pick up whatever is in stock. However we request for large orders (1k pcs and up) that they place it with their own money. We know some people are uncomfortable with placing orders with money upfront, so we offer that they do business with us on a smaller scale so they can pick up for a while until we build trust and they feel comfortable doing so. So because we don\'t offer large fly and buys, does that mean we are not legit? No, it just means that we actually have A REAL BUSINESS and we have to consider these factors. Some companies are more willing to keep larger amounts of stock on hand. But these usually are large corporations who can afford to take such risks as this. If you are a legitimate business owner in this industry, you know that overstocked inventory can be catastrophic to your business. What if this person who asks you to front $5-10 million worth of inventory does not come to pick them up? Something like this could cause serious strain on any business, especially in an industry like this where technology becomes obsolete every day. The hot item today may not be so hot next week, so generally keeping inventory at a low level with regards to electronics is the savvy way to do business. On a flip side of the coin, just because someone says the transaction will be done by L/C or fly and buy DOES NOT mean that the transaction is legit. For example, I am sure all of you know of someone who has flown across the country to inspect some \"Fly and Buy\" shipment and ended up at an address that didn\'t exist or a warehouse full of counterfeits or even empty! Sadly it happens more often than you think. Also transactions done by L/Cs or Escrow should be heavily scrutinized, as these methods are also not 100% full proof. These methods of payment often incur fees that need to be paid even if the transaction does not go through, and these methods of payment have also been used to scam people as well. So just because a seller uses these methods, it is still in your best interest to find out everything about the seller. The ironic part is people in this industry fly all over the world on a whim for fly and buys with little to zero verified information. They hear about stock in NY from a guy in FL, and they are on the first plane out there to investigate this \"rumor\". They assume that just because payment is done this way that it has to be legit. This could not be further from the truth. You would think this would be true, but this is a wacky industry, and weird things happen. I get it all the time people saying there are fly and buys in Hong Kong, Ney York, Florida, India and so on and yet they can not show any proof its actually there. If you are flying all over the world to investigate fly and buys with little to zero evidence it is there, you are going to lose a lot of money. If you use escrows and bank letters of credits without verifying who the seller is or requiring more proof the seller actually has the goods, you are going to lose a lot of money. Always always always ask for more proof. Legitimate sellers can always offer you this. Another thing to think about is why would someone who is offering you fly and buy ask you to post an LC or a deposit either by cash or into escrow in order to come and pick up the phones? If they are legit they wont. There is no reason to ask such things. If the person or persons who have the phones is offering fly and buy that means they already have them. They have already fronted the money so why do they need to know you’re serious by putting up escrow, LC or cash? If you do not show they are not out any money and it in no way affects them. True legit sellers do not ask for money up front to look at product. Again I cannot stress this enough. Never just fly on a whim unless you are given 100% Proof of stock and never put money up front in order to see stock for fly and buy. I guess the point that I am trying to get across here is that every transaction has to be individually scrutinized. People who don\'t offer fly and buys are not always scammers, and vice versa those that do are not necessarily legitimate. Payment terms are not always the best indicators of legitimacy, and you should not base your decision to do business with a company solely based on this. When someone says that they have physical stock in hand ask for proof. When someone says a heard there was an LC transaction in the UK or NY or Hong Kong and that person is somewhere else and is just going by that they “heard” there was stock somewhere again ASK FOR PROOF!! If they cannot provide you with pictures its not there period no ifs ands or butts about it. The most important part in this business is to gather the facts yourself. Gather all the evidence, do some research, request documents and photos, ask around. Regardless of the payment terms presented by the seller the process of investigation should be the same. Do not travel, open an escrow, wire money, etc. until you have a mountain of evidence that you are indeed working with legitimate and capable suppliers. This will help you to save a lot of money, time and headaches in the future. Good luck.

I think you are right on the mark, although there are two points that I\'d like to refine. You said: \"Some companies are more willing to keep larger amounts of stock on hand. But these usually are large corporations who can afford to take such risks as this.\" \"If you are a legitimate business owner in this industry, you know that overstocked inventory can be catastrophic to your business.\" Risk, regardless of size should be analyzed, measured, and carefully considered. We recruited our operational and logistics manager from General Motors where he carried similar responsibilities. I\'ve had the pleasure of listening to him speak about the nature of GM\'s PO facilities, operations, and their inventory management systems. The essence of those discussions can best be summurized in saying that I\'ve never been more certain that warehousing is fiscally detrimental to an organizatios balance sheet. GM\'s strategy with regard to their after market PO facilities has been exceedingly streamlined through decades of improvements to such processes. He points out that in order to manage logistics operations optimally, forecasting market demands and fluctuations is critical particullarly in an exceedingly competitive 21st century marketplace. In an environment where profitability is paramount, yet margins are exactly that, marginal, efficiency is the name of the game. Warehousing inventory is an impractical and a wastefully archaic model. Furthermore, I\'d like to point out just how complicated the organizational side of logistics operations can be. Our logistics team, including transportation, masterfully orchestrate 6 dozen or more short-haul and long-haul carriers, pick-n-pack, order fulfillment, cross-docking, loading & unloading, conveyors, robotics, scanning, and many other tangential functions. The point that I would like to make is that will-call or fly and buy as referred to here, is simply unrealistic due to the highly complex nature of such operatons. Metaphorically, a busy airport is a more appropriate way of looking at the function of a warehouse. A flight arrives, unloads passengers who go to another area and are taxied away, while new passengers are loaded onto the waiting and recently vacated aircraft. Everyone is moving from here to there, sitting only briefly. Similarly at each airport their are dozens of aircraft jockeying for entrance and exit position at any given moment. I was recently asked an important question from one of our resellers. He asked why it is neccessary for us to have so many different warehouses? He asked why we would have our product spread around the country? It was the first time that I had been asked such a question, the answer to which is quit simply, efficiency. Moving product is all about efficiency. A single warehouse simply doesn\'t make sense when considering distribution zones, transport times, fuel costs, insurance costs, product fulfillment, product management, and many other associated responsibilites. The bottom line is that multiple managed facilities means reduced costs, improved customer experience, and most importantly greater profitability to our customers through reduced costs and value added services such as dropshipments. Thank you for the post. This is the first that I\'ve located here with a slant toward the supply side obsticals we face.

Acromedia thank you very much for your response. What you speak is the truth. I think the problem with the cell phone industry is that it is so riddled with fraud that everyone is very skeptical about any other payment besides \"fly and buy\". If you don\'t offer it people scream fraud, but people have to realize that because we are a legitimate business we face legitimate problems. In this business \"money talks and bullsh!t walks\". If we ordered everything everyone has ever told us to we\'d surely be out of business due to overstocked inventory. For example, because we work with a Nokia Distributor, we have a lot of people as us \"well if you work with a distributor, why is fly and buy a problem???\" Well the answer is simple. At the end of the day, our Distributor is a separate private entity from Nokia. Brightpoint, Ingram Micro, etc. are all separate private entities from Nokia. Items have to be purchased upfront, and cash has to be laid out. Nokia doesn\'t give us these phones on consignment, they have to be purchased. That being said, we welcome people to come down and to visit us and do business face to face. We offer that they can pick up whatever we have in stock and to discuss business. Yet these people say stuff like \"Well if the full 10k pieces aren\'t there, its not worth our time, so call us when it is there\". Well sorry, thats not how business works. If you aren\'t even serious enough to come meet us face to face, you are not a serious buyer and will be treated as such. We are not going to lay out millions of dollars hoping that you show up, and this is what people need to understand. Anyway my hope from this post is that people need to thoroughly investigate the facts about a seller before they make a decision. I see clowns selling on here using methods like fly and buy, escrow, L/C etc. which are the supposed \"safe methods\", however looking at the pricing I can tell that there is no way that product is real as the pricing is just not possible. The best thing people can do is to gather all the facts and make an informed decision.