A South African Con Man Nearly Ruined Me

27 April 2010

If you haven't read part 1 and part 2 of this series, checkout these links first.

I Sold My Internet Business in July of 2009

Expanding Beyond CDs and DVDs

When I started my business, eBay was 100% of my revenue. I was pretty naive back then and didn't really see a problem with it. That's until they decided to suspend my account one day.

If you've been on eBay for some time, then you know eBay changes the rules a lot. They are experts at creating rules that are open to interpretation. Then they take some $8 an hour worker with a Napoleon complex, put them in a cublicle 1,500 miles away, and place them in charge of enforcing the rules. It was that way 9 years ago and it has only gotten worse today.

Some eBay rep decided they didn't like a certain aspect of my wallet auctions and they would end them. I would wait on hold for hours to finally talk to someone in customer support and would be told the auction was ended in error and I could restart it. A few days later, another rep would come along and use another interpretation of the rule to end the auctions again. I'd spend hours on hold to finally talk to someone and would be given the green light only to repeat the process over and over. Finally, someone decided my account should be suspended.

Overnight, 100% of my revenue was gone, I had thousands of dollars in inventory, and there was nothing I could do about it. Lucky for me, I had saved dozens of emails from different account reps that all had different opinions on how the rule should be interpreted. One email would say the auction was in error and another would say it looked fine. I sent all those emails to then CEO of eBay Meg Whitman and within the week, I was talking to Meg's assistant Gabriel and my account was turned back on. Gabriel assured me that I would not have any further problem with my account and I didn't for many years.

This was an eye opener on why it was important to diversify. I immediately opened a web hosting account and did one of the most pitiful jobs you've ever seen at setting up my own site. I used a host that is no longer in business, but for anyone interested in moving in this direction, I'd recommend using Host Gator. (affiliate link) I still have accounts at Host Gator today.

Another venue that I moved to that has grown tremendously over the years is Amazon. This is an e-commerce site that has it together and really appreciates the sellers on the site. They have a great fee structure, great support, and a ton of traffic. Just to give you an idea, in December 2009, I grossed 10K on eBay and over 75K on Amazon. Amazon is a venue that you shouldn't overlook.

By the time we had moved our focus to leather wallets, jackets, and purses, it became clear the next step was to start cutting out all the U.S. distributors and buy directly from the factories in China. The problem was neither Priscilla or I had any idea how to do that.

As fate would have it, about this time a man named Greg called and claimed he represented some leather factories in China. Greg claimed to be living in Florida after moving there from South Africa. He offered to help us source our products directly. After one conversation, Greg was on an airplane on his way to Nashville to meet us that same week.

Greg got off the plane with suitcases full of all types of leather products. Many were the exact same products we were selling. We spent the day talking about prices. It was much cheaper than we were currently paying and I placed a $15K order that afternoon. Greg didn't require any payment up front. We agreed I didn't have to pay until the good shipped from China.

A few months later, Greg sent me the shipping documents showing the goods had shipped. In return, I paid Greg the $15K and picked the merchandise up a few weeks later here in Nashville. The merchandise was perfect. It was exactly what we were wanting.

Greg pushed me to place another $30K order. He seemed very disappointed that I refused to double the order and we finally agreed on another $15K order.

A few months later, Greg faxed me the shipping documents showing the merchandise was on its way. I sent the payment and expected to pick up my goods in Nashville just like before. Unfortunately, I was about to learn a hard lesson about the laws that govern merchandise transit.

I was under the assumption that since the goods were already in transit with my address, there was no way to keep me from receiving them. Wrong! What I learned was shipments come with a Bill of Lading. That Bill of Lading is much like a title is to an automobile. Whoever holds the Bill of Lading owns the goods. The shipping company cannot release the goods until the rightful owner presents the Bill of Lading.

The way the process works is the factory ships the goods but hangs onto the Bill of Lading. This is their insurance policy to make sure they eventually get paid. When the factory does receive payment, they will Fed Ex the Bill of Lading to the purchaser. This is required to release the goods when they reach the final destination.

You see, I paid Greg, but Greg never paid the factory. He fell off the face of the Earth. I never heard from him again. Without payment, the factory held the Bill of Lading and they remained the owner of the merchandise.

At this point, Greg had kept the factory information secret from me. I had no idea who the factory was and had no way to contact them. After several hundred dollars in legal bills and just days before the U.S. Customs Service destroyed the shipment, I was finally able to get the contact information for the factory in China.

This turned out to be a very valuable connection. Greg had actually done me a favor! What I learned was Greg had only paid $8K for the merchandise he had charged me $15K for. I made a great friend with the owner of the factory in China and he released the merchandise to me without getting paid. The only condition was I placed future orders directly with him. Uhm...can you say no brainer?

With my new Chinese connection, there was no way we could stay in the house any longer. Priscilla won that battle and we finally found a building we could afford. (I wished I would have saved some pictures.) This was a huge 60,000 square foot complex that consisted of several large buildings tied together by walkways and bridges. It was used during WWII to make blankets for the soldiers. It was very dark and to say it was spooky was an understatement. I didn't believe in ghosts until I had spent a few months in that place. Other than us and a man that lived in one of the sections, it was all but abandoned. At $750 a month for rent and electricity, it was perfect!

The combination of that move and the Chinese connection took our business to another level. The year before, we did 200K working out of our home. The following year our revenues more than tripled to over 660K that year.

We also hired our first full time employee who had a son the same age as my daughter Jillian. It worked out perfect for everyone. Both kids were there during the day to play with one another and my wife had the opportunity to be with Jillian during the day like we had planned. It was perfect.

I hope to have everything finished in one more post! I still want to cover the purchase of our new building, the reason we sold the business, and what we are up to now. Keep the questions coming!

Jillian Entertainment CD and DVD Wholesale Directory

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Voice Your Thoughts

  1. Brent,

    Just a quick note to THANK YOU! That $30 for your CD & DVD Wholesale Directory was the best investment I’ve ever made. Thank you SO much for sharing such an incredible wealth of information, not only via your directory but in all the follow-up eMails and information like this series you’ve sent and made available to me and others. You ARE “one of a kind” and an inspiration and role model for us all. Thank you again!!! I wish you, Priscilla and your children the BESTt of and in everything you do! Thanks again! Eric

  2. Brent:

    @Eric – Thanks for taking the time to comment. I’m glad to know you’ve been happy with my directory. Thanks so much for the feedback.

  3. danielle:

    I was so glad to see your email come in, thinking I could start buying from you guys again. When I read your story, it reminded me of my situation two years ago when I tried to do just that very thing. Ordering overseas for small purchase of $100-$350 worked well, but the moment I placed an order for $2800, things went drastically wrong. As soon as the money cleared, all the phone numbers, email accounts and instant messaging names were disabled. I contacted every possible law enforcement agency I could think of and they all told me the same thing, “sorry we can’t govern illegal actions outside the US”. Had it happened to me the way your story goes, I could have had the person tracked down and prosecuted. I was so heart broken and broke! I had no inventory and the money I saved selling small orders was gone. Needless to say, I spent 1000’s of hours and $15,000 setting up my new company and I failed. I gave up my dream of working from home and still continue to look for employment else where. When you take two years off to start your own business that does nothing but flop out of the starting gate, no one wants to hire you. Especially with the economy the way it is.

    Getting to the point of why I’m sharing my story with you. I want to thank you for posting all of your business ventures and story. I spent countless days searching for an honest person to buy from or wholesale directory to contact and came up with nothing, but scams! I was shocked to see that someone finally was willing to share their experience and knowledge. You are what I would consider the greatest gift from God for people like me, who still have a dream. Thank you so much for taking the time and effort to share with us. I am very greatful and wish you and your family complete bliss!

    Danielle H
    Warrenton, VA

  4. Brent:

    @Danielle – Wow!

    First let me say I’m sorry for just now approving your comment. I somehow overlooked it.

    Thanks for sharing about your situation. It sounds so familiar. Not only have I lived it, I hear it from a lot of people that take the time to contact me. Breaking into this internet game was tough 9 years ago when I started. It’s even tougher today.

    If anything I’d encourage you not to give up on your dream. You are so far ahead of many people in that you’ve actually tried something. Some people are just dreamers and never do anything about it. That’s not you.

    Why don’t you send me an email at brent AT brentcrouch.com and fill me in on what you are up to now. I’d like to help you if I can. Maybe we can share stories, tips, and experiences and help each other. I get 100s of email everyday. Please put something like Jillian Entertainment in the subject and I’ll be looking for it.

  5. Chris Osborn:

    Brent, I had started selling authentic Disney dvds on Amazon and after 4 days had sold nearly 50 dvds through Amazon and was happy to be moving in a good direction. Amazon then decided to suspend my account for no reason(said copied media) but after providing receipts directly from Disney, they still kept my account closed still holding my funds for 90 days, and it has hurt me and my family very much. What is your advice on dealing with Amazon because I found them to be uncaring idiots even when I provided facts to their unjustified suspension of my selling account which has been closed permantly?

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