Resellers are always on the hunt for good buys and the best bargains. It’s an edge that enables them to thrive despite tough competition. In the past, they obtained items through middlemen and survived on minimal profits. Now, liquidation retail has allowed them to obtain goods in bulk directly from big retail suppliers, and sell them at market value. Liquidated retail business is a new trend, and a promising business venture for any budding risktakers out there.
If your business motto is ‘cheaper by the dozen’ and greater profit margins excite you, then you could be interested in the liquidated retail business. The following is a brief guide as to how it works, and some tips on how you can get the most out of your buying experience.
What Are Liquidated Retail Goods?
Liquidation stocks come from huge retail stores that try to sell ‘shelf pull’ items, surplus and customer returns to online resellers, flea markets, and small retail shops. A ‘shelf pull’ is a brand-new commodity that goes unnoticed either because it was displayed in the wrong section of the store or because it’s a seasonal item. Surplus means the commodities produced by the manufacturer in excess, while customer returns most often tend to be unclaimed gifts from the previous Christmas season.
Since these stocks take time to process and consume space in the warehouse, large retailers find ways to dispose of them through liquidation retail.
- Large liquidation companies are awarded contracts from retail stores and receive their stocks in truckloads.
- Other buyers get their stocks directly from the retailers, and take a trailer filled with 24 pallets. These pallets may contain food, tools, general merchandise, electronics, clothing or sporting goods.
- Retailers then sell individual items in their brick-and-mortar shops, either through online platforms or as part of flea markets and garage sales.
- Liquidated products can also come from online liquidation sites. Auctions like this one often sell palettes of similar items at as much as 30% off. Bids are placed, and the highest bidder wins.
Tips for Buying Liquidated Retail Goods
1. Obtain A Resale Certificate
A resale certificate entitles you to bid with liquidation companies. Having a resale certificate speaks to your deep interest in the business. It also gives you the advantage of not paying sales tax on your purchases.
2. Research Item
Cheap prices can be enticing, but as a salesman, you need to consider which items are in highest demand. Make sure that the product you intend to buy only has a few competitors, so that you can sell it at close to market value. You’ll have more customers if you specialize in a less-saturated market.
3. Know The Website’s Terms
Online liquidation sites have their own terms and pricing. Take the time to learn their rates, and whether these are actual prices or mere estimates. Look for statements that indicate additional sales tax and service fees, as these can raise the costs.
4. Understand The Manifest
A manifest is a list of all the items in a lot. It gives you a general idea of what brands are included, what the various products are (ex. electronic appliances, toys, cosmetics), as well as the quality and quantity of the products you intend to purchase. You can even perform a self-inventory, by checking each and every barcode to determine the contents.
5. Check Quality
Quality is one of the main concerns, since these products must be fit for resale. Liquidation stocks are given general ratings regarding the condition of the items, but this does not guarantee that all the boxes are in mint condition or that all the products are brand-new.
What you can do is to see the goods for yourself, either by heading to the nearest location or participating in live auctions. If it’s your first time purchasing liquidated goods, look for brand-new items, and have electronics tested, as some retailers have a ‘no return policy.’
6. Factor In Costs
Shipping is an additional cost that you need to factor in. Shipping pallet costs between $100 to $300 depending on the size, weight and location. It costs more than regular shipping, so you should opt for sellers closer to your area to decrease overheads.
Trucking companies serve as alternative transport for your products. You should check the courier rates to compare, and choose the most convenient one for your business.
All business involves risk, and this holds true with buying liquidated retail goods. The tips above can guide you in this new venture, and provide you with a sense of security that buying in bulk can guarantee bulk profits in turn.