The brilliance of entrepreneurs isn't their ability to solve problems, but their ability to identify them. It was 1974 and Lloyd Ross found himself working at Rathcon, Inc., a manufacturer and importer of gift merchandise. While working at the company, the Canadian-born entrepreneur observed a rather unassuming market inefficiency. He noticed that when forecasting the sales potential for a particular product, the company would often over-anticipate the market demand, resulting in an inventory surplus. This estimation error resulted in the manufacturer disposing of the excess inventory and writing off the loss. Ross pondered the possibility of a marketplace for this inventory surplus.
He decided to approach different manufacturers, offering to purchase their surplus inventories at deep discounts. In...
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