“The American Entrepreneur – East Coast Edition”

E&A Worldwide Traders

Every product has a shelf life, meaning the length of time it can be kept in a store or at home before it becomes too old, too obsolete, or too out of fashion. But just because an item is pulled from the shelves doesn’t mean it ends up in the local landfill or at Goodwill. There are secondary sales channels that help manufacturers’ bottom lines, provide merchandise for an array of businesses, and offer consumers the ability to purchase quality items at reduced costs. While some companies may have branded outlets stores, most rely on wholesalers that purchase, distribute, and sell brand-name closeouts.

Since 2002 E&A Worldwide Traders has specialized in acquiring surplus inventory from major brands. Founded by Elan Eliav, E&A is a national wholesale company with annual revenues of $5 million that buys general consumer goods from thousands of companies around the world that are excess, overstock, or general closeouts as well as items from package changes, buybacks, and canceled orders.

“Simply put, we purchase unwanted stocks from product manufacturers who want to turn their surplus merchandise into profit,” Elan explains. “We review and buy surplus inventories or stocks that are no longer usable then sell them to casinos, hotels and resorts, airlines, travel shops, restaurants, amusement parks, correctional facilities, food banks, and vending merchants. Our customers love the deals we’re known for. We also carry attractive home furnishings, seasonal merchandise, and hundreds of everyday items that consumers can buy at tremendous savings. We also put together corporate gift packs and promotional baskets for special events.”

Elan says the roots of his entrepreneurial spirit can be traced back to his family’s strong work ethic. He grew up in a blue-collar family and starting working various jobs at a young age.

“My father was a very hard worker and a business owner. He also lost many businesses too, so I had to go out and make something of myself. School wasn’t really my forte, and I knew I had to do something to live the American dream. I always wanted to be an entrepreneur. I wanted to work for myself. I didn’t want to make money for somebody else,” he says with a laugh. “I had the drive, the determination, and of course, the motivation to go out and be successful.”

Elan eventually got a job with a trading company that bought excess inventory in exchange for advertising media or other goods and services. Essentially it was a barter company.

“Corporate barter has probably been around a long time, and it’s really for a public company that has assets on its books but doesn’t want to go out to the marketplace and take a loss. So what they’re able to do is take whatever asset they have and receive full value for it in the form of trade credits, which they can utilize to offset any operational expenditure that they have—outside of payroll and postage. It’s a genius concept because there’s no loss reported. They’re just taking their excess inventory to leverage operational expenditures. It’s a win-win situation for a public company.”

Elan says he had to learn the business mostly through trial and error. The extent of the training offered was a handbook the company gave new employees.

“The barter companies I worked for just told us to make cold calls. They didn’t really teach us the ins and outs of the business, so I had to learn everything by myself. But I always had a knack for buying and selling. I used to do it with my baseball card collection. In junior high and high school that I was always buying and selling something.”

Elan says ended up staying at the company for four years. Then he got the entrepreneurial itch.

“I said to myself: You know what? There is a niche for me in the business, but there’s really not much more that I can achieve here at this company. I need to go out and do it on my own. Not so much in trading inventory for media but more trading inventory for cash,” he says. “I took what I’d learned from the barter companies and just did it on my own. I had no mentor, wasn’t taught the business. I began using the basics. I started E&A in December of 2002 to buy excess inventory directly from manufacturers for pennies on the dollar. Then I would resell it to discount retailers all across the country, including Big Lots, Tuesday Morning, Dollar Tree, and many of the other discounters that are out there.”

Even though many companies go direct themselves, Elan says his company maintains a niche because when it comes to excess inventory and closeouts, manufacturers don’t really have the time or inclination to hire someone in-house to focus their sole attention on it.

“It’s the end of life for a product that they’ve tried to sell through or a product going out of production, and it’s not worth their time. So companies like E&A exist because of that. In addition the manufacturers we work with don’t have to wait thirty, sixty, or ninety days to get paid. We pre-pay for that merchandise upfront, so that money is wired to them right away.”

One advantage Elan had when starting E&A was not being burdened by a non-compete from his previous company. Even so, he started the business with just $500, no clients, and working out of rat-infested basement office space.

“I definitely paid my dues. I left the previous company with my phone, my pen, and my notebook. I used every bit of money I had to bootstrap the company. I just put my head down and did what I had to do to learn the business and build it from scratch. I did a lot of cold calling in the beginning. I was determined to stay with it even though it was a lot of hard work. I’d leave home eight o’clock in the morning and not come back until ten o’clock at night, hardly seeing my family. I faced a lot of obstacles, but I knew if I got past them, I was going to see light at the end of the tunnel. I believed hard work always pays off. So it was belief and faith.”

Elan says all things considered, the business took off fairly quickly. And within the first year the company was bringing in significant revenue.

“I was lucky enough to run into some inventories that I was able to flip fairly quickly,” he says. “I was also fortunate to find some discount retailers who believed in me, and I was able to deliver. My word is my bond, so whatever I said I was going to do, I did it.”

From the beginning Elan went for the buckshot approach, targeting every category and product rather than trying to focus on any one type of vendor.

“Today we specialize in everything from apparel to sporting goods to food,” he says. “Consumables comprise about 35 percent of our business because food goes short-dated, in other words it has an expiration date, so we do a tremendous amount of volume with food because of those reasons. From a manufacturer’s perspective, products don’t get better with age. It’s not wine.”

In the beginning stages of E&A, Elan says he wasn’t focused on food. But over the last several years, that has changed as the number of opportunities for food deals have significantly increased.

“Our business has taken a significant shift because food has become such a big commodity. A lot of these discount retailers are constantly on the treasure hunt for food opportunities. So we’re out there searching for food deals that we can supply to our customers.”

An interesting legal quirk is that while manufacturers have to comply with any number of rules and regulations, a company like E&A doesn’t, not even with food products. Elan says it’s why he wouldn’t want to be a manufacturer.

“Regulations tend to be the bane of many companies’ existence, but especially when food’s involved. There are too many headaches; there’s too much risk involved. But with us, should there be a recall on any food, it goes back to the manufacturer. We have no liability or responsibility, even though we are a third-party seller of that food.”

That same principle is why E&A can move wine, beer, and spirits without having a liquor license. “We’re able to provide a retailer’s liquor license to buy their merchandise and sell their merchandise. There are many different facets of our business; it’s really anything across the board. Our motto is: We buy low, we sell low, and we make a profit. There’s no business in America that can do that.”

Elan says that despite the vibrancy of their industry and its importance to so many businesses’ bottom line, few people are aware of what a company likes E&A does because it  operates largely out of the public eye.

“My parents don’t even know what I do, to be honest with you,” he laughs. “It’s a very underground business. Many people go into a TJ Maxx, into a Marshalls, into a Big Lots, into a Dollar Tree without ever knowing where those product comes from or why everything is so much cheaper. They don’t know it comes from companies like our that can negotiate pennies on the dollar for a large quantity of goods, sell it to a discount retailer, which in turn offers it to consumers at considerable savings to them while still turning a profit. It’s a win-win-win-win.”

While the discount industry might fly under the public’s radar, Elan has noticed that more entrepreneurs are getting into the business. He says when he first started, there was minimal competition.

“There were two, maybe three big close-out companies. But it’s been growing of late. Now everybody has a niche and does it differently. We can say that we’re grandfathers in this business, having started in 2002 when there weren’t as many other close-out companies. Our longevity, our history, and our experience have given us many advantages and a lot of ammunition. We’ve learned from the best. We’ve had some significant mentors, and we know buying and selling. There is an art and a psychology to our business that you have to master. But once you do, there are endless amounts of money you can make. And we have mastered that psychology.”

Elan compares E&A to Wall Street day traders, except of product instead of stock. “We take possession of the inventory. We have the capital, and we’re risk-takers; we’re not afraid. We believe bigger the risk, bigger the reward. And that’s what we do on a day-in and day-out basis.”

More often than not, the risk has reaped rewards. But every now and then the gamble doesn’t pan out. Elan recalls the time he lost a half-million dollars.

“It was on a slipper deal that I had purchased and sold to Family Dollar right before the Black Friday. But I was a week late shipping the product, and Family Dollar canceled the order. I was left with $500,000 loss. I was able to sell the slippers but only for about $50,000. So I took a $450,000 hit. Fortunately I was able to regroup, start again, and rebound, and here we’re still here today. But that loss almost crippled our company.”

The near-disaster—which was self-inflicted because of a systems breakdown that led to a late shipment—was a lasting learning experience. The moral was you can never be too comfortable on a deal.

“You have to be very proactive. After that deal we became a lot more proactive in communication, in delivery, in implementing new procedures, in developing a different company culture, and in establishing a different mission statement that we cannot get comfortable. Deals come and go, and it only takes one to sever this company. So we became a lot more aware of staying on top of each deal from start to finish.”

The commitment to being proactive also necessitated a significant staff overall. The slipper disaster made Elan turn a more objective, critical eye at his operations, and he realized many of his employees were not a good fit for the company culture he needed to build.

“We fixed the situation. We hired new people and let go of others. It’s all about change and growth. So I was able to see the silver lining of that huge loss. I thought: You know what? I just have to get up. You learn from failure; success comes with failure, and I can’t let this stop me. And I didn’t; I moved forward.”

That’s not say there haven’t been other risks that didn’t turn out as hoped. But they were intentional, calculated risks that had no direct impact on E&A. One risk was shooting a pilot for a potential television series called The Haggle King. Another was an online business where Elan was selling on Amazon and eBay.

“I poured a lot of money into that, but I lost money,” he says. “Then in 2013 I started my own website called UHaggled.com that I was very close to raising venture capital for. “

The idea behind the site was to offer a variety products—electronics, watches, sleep masks, perfume, wireless chargers, and even toothbrushes—and prior to each purchase the buyer would haggle to get the lowest possible price. Even though the site never got enough traffic to gain traction when self-funded, Elan remains bullish on the idea.

“It was actually written up in the Daily News and a couple of other newspapers because the concept was fun and unique,” he says. “I’m still waiting for that magic person to come along and say: I love the idea. Here’s the funding for it.”

 Like any entrepreneur, Elan’s role has changed as E&A went from start-up to young company to a sustainable mature business. But his perception of himself hasn’t changed much since he first founded the company.

“While I consider myself a leader, I’ve never considered myself a CEO. I don’t come to manage. I’m not a good manager of people, and the reason why is because I have a soft side to me, and my heart gets in the way. That’s one of the reasons why I was never able to catapult this company to the next level; I’m not that individual to lead, to be that CEO. I consider myself as an entrepreneur. And what that means for me day in and day out is that I still come for the thrill of the deal. That my bread and butter and that’s what I need to focus my attention on because without me there’s really no company.”

Elan says he once hired someone to function as a CEO. It didn’t work out, so he decided to just have faith that being himself would work out okay for the company.

“If there’s nobody I can hire that can do this job, I need to bank on myself. And that’s what I do day in and day out. So I’m not necessarily that big leader CEO; I’m the thrill-seeking guy that gets the deals done. I’m a religious guy and come from a religious background. My father was a cantor in a temple. I’ve always believed in God, so I leave it up to Him. Listen, I’ve had times when I had zero dollars as the end of the month was approaching. Then on the last day, I’d get an inventory I was able to buy and sell and would make $20,000 profit. So I always have faith and believe that if you put your head down and work hard, it’s going to come.”

Of course, working hard usually means having to sacrifice other things like time with friends, times with family, and sleep. Elan says it’s a matter of what your priorities are. His was making E&A a success.

“On Saturday nights while my friends were out clubbing and going to parties, I was at my office working. But hard work does pay off. I believe everything is up to God, but if you have faith, go out there, and are a hard worker, you will reap the benefits. I say this to every person that’s come through my doors, and it works.”

In the beginning Elan built the business by seeking out clients. While he still does that, he also gets business now from a combination of word of mouth, referrals, or because of their reputation.

“At the end of 2019, we bought and sold from around six hundred manufacturers. Roughly 25 percent of that was repeat business. Many of those manufacturers share our information with other manufacturers. On average we see about one hundred inventories a day, which is above the industry standard. That’s because we provide cash upfront. To a manufacturer, cash is king, especially for a small- to medium-sized company. Suppose a company produced a protein bar that failed in the marketplace. They want to get as much cash as they can to move onto the next great idea. With us there are no returns, no chargebacks, and no headaches. We wire transfer the funds, we send in a truck to pick up the merchandise, and then they’re done with it. They’ll never hear from us again—until the next time they us.”

Besides loving to make deals, Elan says what he enjoys most about his business is he never knows what the day will bring—or more accurately, how much the day might bring. “One day can change your life. I’ve made $300,000 in one day. So you never know. On any given day I might come into the office and strike a deal for $100,000. Every day is a new day.”

Unlike the barter companies he worked for when starting out, Elan takes the time to train his employees, but also looks for people who have certain intangibles. “I only look for individuals who have a knack for buying and selling, and who are street smart. It’s not so much being book smart; it’s having common sense because what we do is psychological. At the end of the day, we are middlemen between the manufacturer and the discount retailer. A buyer needs to be comfortable that you are in the where you can really acquire that inventory on their behalf, even though 99 percent of the time when we call we don’t have physical possession of the inventory yet. So you need people you can present that assurance.”

While Elan loves to wheel and deal, he says there are times you have to turn down business if the financials or terms don’t meet certain standards. “We pre-negotiate a certain price, and if that price is able to be met, we pass on that opportunity. We don’t try to create a miracle. We have a certain threshold and a certain pricing structure that we must follow. The discipline to do that is the result of hard-earned experience. I try not to get into the buyer’s mind. I’m not a buyer at a TJ Maxx. I’m not a buyer at a Big Lots. I’m not looking to figure out what their pricing structures are and what their models are. That doesn’t concern me. At the end of the day, I just need to know that I can buy it at a certain price and then sell it. To be honest, 99.9 percent of the time I don’t know what that price is; I’m just making an educated guess. You have to buy it right, but as a rule the less you pay, the better chances you have to sell it and make a profit.”

Even though E&A continues prosper and grow, Elan admits that it is still difficult for him to take time off to go on vacation. He says the most time he’s taken off since 2002 was probably a week.

“And even for that week, I was still tuned in. I had my phone, I had my laptop, so I never was completely away from this business,” he says. “It’s just nearly impossible to turn off the phone. We’re on call twenty-four hours a day, seven days a week; we’re like urgent care for a manufacturer,” Elan says. “You never know when a manufacturer is going to have a million-dollar inventory problem. If they need to move quickly, then we need to respond quickly. We need to look at the inventory, make an offer on the inventory, then go out and shop the inventory to see if we can find the buyer for it. These things happen very quickly, so you always have to be tuned in.”

One thing Elan has learned during his years running E&A is that to thrive as an entrepreneur, regardless of your industry, you must have a passion for it. You should wake up every morning excited about going to work.

“Being an entrepreneur is about motivation, shifting out negativity, staying positive. It’s about getting rid of the distractions in your life and whatever else is not serving you or preventing you from growing as an individual. It’s about looking at yourself in the mirror and asking yourself how badly do you want to succeed. It’s about believing you can overcome all the challenges. And more than anything, it’s about hard work and faith. If you have that, you’ll get you where you want to go.”