Sourcing and selling liquidation products can be highly profitable –or something that can sting your pocketbook. The key is avoiding the pitfalls. Let’s start with some definitions first.
Liquidation products go by several names. You will see them called surplus, overstock and closeout – they all mean the same thing. So when I use any one of these words it refers to all of them.
Types of Liquidation Products:
- Shelf pulls – this is new unsold merchandise that was pulled from the retailer’s shelf and sold to a liquidator. These are the best type of goods for resale. They may have been pulled because they would not sell, or because a new model came out, or for seasonal reasons to make room for new stock. Shelf pulls often have the store’s price tags attached – but some retailers remove them before selling to a liquidator.
- Refurbished or Re-manufactured – these are products that were returned by a customer usually under warranty. The factory fixes the product and runs it through their QC procedure, boxes it and sells it as new/refurbished They usually come with a full or partial factory warranty.
- Seconds – Seconds are sold into the liquidation market by the manufacturers or importers. These are products that have a flaw of some type. It could be cosmetic, or in the case of clothing the flaw is usually in an inconspicuous area. You tend to see a lot of these types of goods at flea markets although I have seen them occasionally on eBay and/or Amazon. I once bought an expensive electric smoker from a manufacturer that had a small scratch on the side. Normal retail was $695 and I got it for $200 including free shipping. I used it for two years, cleaned it up and sold it as used on eBay for $245.00 + shipping.
- Returns – This is the worst type of merchandise to buy. Returns can happen for a lot of reasons. It may have been something simple such as the wrong color or size which you can deal with easily But usually, it’s something more serious such as the product was broken or defective. Returns are typically sold by the pallet load. The problem is you have to take the bad with the good and you have no way of knowing what you are getting. Personally, I never buy returns.
Now that you understand the various types of products, you can go shopping. Liquidators come in all sizes. Companies such as Liquidation.com and Via Trading are huge operations that sell millions of dollars per year; Both of them are used by eBay and Amazon sellers. Then there are smaller more specialized companies such as United Apparel Liquidators – a company that sells clothing to many eBay & Amazon sellers.
If you want to find more liquidators, just do a Google search for the terms liquidator, overstock or closeout dealer. There is a web site where lots of closeout dealers are listed – It is www.closeoutcentral.com. However, remember this is a website where any dealer can advertise – so be careful. Before ordering, don’t hesitate to call the liquidator on the phone and ask them questions about the goods you want to buy. If they sound at all scammy, then take a pass and look elsewhere. I also like to Google their name and see if there are any scam reports online.
The other issue that can bite you is shipping charges. This is one of the biggest complaints about deals on Liquidation.com. You can find some fabulous deals on Liquidation.com, but there are a few sellers who low ball the merchandise price and then overcharge you for shipping. Liquidation.com has some plans to deal with this including guaranteed shipping rates but you should check with them to be sure these are in effect.
No matter which company you buy from, pay attention to shipping costs. There are liquidators all over the country. I tend to buy from those located close to me to cut down on shipping costs. If you live in California, it doesn’t really make sense to buy from a closeout dealer in New Jersey and pay to ship something clear across the country.
The other thing to be aware of is counterfeit merchandise. If you see famous brand names being sold as overstock, they are often fakes that find their way into the less scrupulous overstock dealers who sell them as shelf pulls, when in reality the just landed from China last week.
Lastly – this is an industry where “caveat emptor” (Latin for buyer beware) really applies. Be careful. You can find great deals and make a lot of money selling liquidation products, but you can also get stung. I would not invest a large sum in any one deal until you get some experience with smaller deals. That way if something does go wrong, you are not out a large amount of money.
Now that you have read this you are probably thinking, that sounds way too risky to me. It is, but as long as you deal with established companies you are far less likely to have a problem –and the profit potential is phenomenal. I have bought liquidation products that I can mark up 200% to 300% and the sold really quickly. Recently I bought a small lot of CRTK (I am an approved seller of that brand) knives for $9 each that I am selling on Amazon for $34.95, which is $10 under what the other dealers are selling that same knife. So I can sell them quickly and still make good money.
Another thing to be careful with are buying restricted brands. I use a service called Check Permission that tells me if an item can be sold on Amazon.
So go ahead and dip your toe into the liquidation market –but just take it slow and small at first.
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