So, liquidators...do they only sell liquid?
How much does it cost to buy from a liquidation supplier?
How would they help my business?
There are a lot of questions about liquidators, and it can be difficult to find truthful answers. If you are interested finding out how liquidators can get you access to below-cost prices and a huge range of products, then stay tuned!
What Is a Liquidation Supplier?
Liquidation suppliers, liquidators, salvage and surplus suppliers are all essentially the same thing: Suppliers who buy stock from stores, manufacturers or businesses that are clearing old or unwanted merchandise to generate quick cash flow.
Businesses or stores need to get rid of stock for many reasons. Some businesses need to liquidate their assets very quickly when they dissolve in order to repay outstanding debts. A manufacturer might have a lot of faulty goods which cannot be sold at retail prices. A store may need to shift some stock to make room for new season stock or need to quickly move slow-moving items.
In each case, a liquidator will swoop in and buy up all the stock, which they then break up into pallets and resell at amazing prices.
What Do Liquidators Sell?
All kinds of stuff! ...And no, they don't sell usually sell anything that comes in liquid form!
Liquidators buy and sell everything from home wares, giftware, health and beauty items, pet care items, clothing, TVs, sports equipment and jewelry.
In fact, liquidators are likely to bring you more variety than any other supplier. This is because they have access to brand-name consumer products like clothing, toys and electronics which they get from a huge variety of stores, including some of the top department stores, boutiques, mom-and-pop stores and manufacturers. They also buy from businesses or companies that are closing down, so they access building materials and supplies, industrial cooking equipment and treasures like an office-full of used computers, printers and telephones and mobiles.
This means liquidators have something to offer everyone, although exactly what they have in stock varies from day to day.
Because liquidators get their stock from such a range of companies, and for lots of different reasons, it comes in a range of conditions. There are six typical classifications for liquidation buys:
- Closeouts: Closeouts come from stores or businesses that are closing down and need to liquidate their remaining stock.
- Surplus: Surplus comes from stores that have ordered more stock than they have sold. These items might be last season's fads, such as clothing and handbags.
- Seconds: Seconds stock usually comes from manufacturers who run a line of products incorrectly, resulting in faulty or 'seconds' goods which cannot be sold at retail prices.
- Refurbished: Refurbished stock may come from customer returns or items which have been damaged and then restored but cannot be sold at retail prices.
- Shelf pulls: Shelf pulls are items that didn't sell well in the store for whatever reason, and have been removed to make way for new merchandise.
- Salvage: Salvage is damaged or faulty merchandise, often from customer returns. Salvage can yield a few gems, but more often than not is garbage. Salvage items are often missing components or severely damaged.
It's really important to find out what type of liquidation goods you are buying, and where they have come from before you purchase them, so that you know what to expect. This will help you have a better chance at predicting what kind of profits you can get.
For example, if you are buying a lot of clothing, it is usually preferable to get surplus and shelf pulls, rather than seconds, because older stock will usually sell better than seconds' stock.
How Much Does It Cost To Buy Stock From a Liquidation Supplier?
Liquidation is usually sold by the pallet or truckload, so you're generally looking at anywhere from US$500-US$2,000 for a pallet - depending on what type of goods you are buying, and exactly how big the pallet is. If you are buying by the truckload, the cost will be even higher.
Some liquidators also sell in smaller lots, which means your spend might be more like US$200.
Don't forget that you'll also need to factor in shipping as well. Some liquidators will arrange this, but more often than not you'll have to organize shipping yourself.
The Pros of Using a Liquidation Supplier
- Unbelievable prices: Using a liquidation supplier is certainly one of the best ways a retailer can source all sorts of items for bargain-basement prices. For example, at the time of writing, a liquidator in the SaleHoo directory was stocking designer dresses that usually retail for over US$300. This liquidator was offering them for only US$50! That same supplier sells Ralph Lauren denim jackets which retail for US$100 for only US$18. Now that's enough to put dollar signs in anyone's eyes!
- Variety: We have already touched on this, but it is worth a mention again because the variety liquidation suppliers can offer is so vast. The best liquidators can provide you with such a wide range of products because they have contacts in so many stores and businesses.
- Brand name products: Liquidation is one of the easiest ways to source brand name products, without worrying about dealing with an authorized distributor or the possibility of fakes. As most liquidators get their stock from department stores, they frequently stock designer jeans, bags and shoes, plus electronics and appliances.
The Cons of Using a Liquidation Supplier
- Sizeable investment: Many liquidators will only sell by the pallet or truckload, so buying liquidation requires having some spare cash to invest. (Please don't risk your next rent payment!).
- No returns: Liquidators have a "take it, or leave it" policy. Without careful inspection, you could easily end up with a load of broken or difficult-to-sell stock - and you can't send it back! While liquidations can provide you with some great deals, you can also end up with a lot of rubbish if you aren't careful. It's a good idea to physically inspect a liquidation pallet before purchasing. Or at the very least, ask for a full inventory list.
- Cherry picking: Some liquidators are known for 'cherry picking' liquidation lots - that is, they take the best stuff for themselves, and on sell only the trash. Again, inspecting the lot is the best way to ascertain whether the liquidator is cherry picking. As with any supplier type, it is crucial to find one that you can trust to sell you quality goods.
- Expect to get your hands dirty. Some people love this, but for others, it's just a hassle. Liquidation stock is often dirty or badly presented, so stock can often benefit with a wash (e.g. shop-soiled clothing, dinnerware a customer has used once and returned partially dirty) or a bit of a cosmetic makeover (e.g. sheet sets requiring refolding or ironing, finding replacement parts, or mending a small fault). It all goes with the territory when you use liquidation sourcing.
How To Get the Most From a Liquidator
- Research first, purchase second. Sometimes liquidators will sell a pallet load of 1000 identical items such as pink toasters or novelty belly-button rings. Never buy a liquidation lot just because it's really cheap! Always do your market research first so you can make an informed decision. Liquidation lots are always a bit risky, because you can never be 100% sure what you're going to get, but by doing some background research, at least it'll be an educated risk.
- When dealing with seconds or refurbished items, find out as much as you can about their faults. If it is not something you can repair yourself, or is a major fault which will turn most potential buyers off, don't go there.
- nspect liquidation lots before purchasing if possible. If this isn't an option, then ask questions, get plenty of photos, and request a full inventory list and condition report.
- Don't rely on liquidation as your main product source. Liquidators stock whatever they can get, so it's not a reliable way to source a particular item. Rather, liquidations are a great way to supplement your existing product source, and pass on some great deals to buyers.
Quick Recap:
- Liquidators get their stock from many sources including closeout sales, surplus, manufacturer's seconds and stores that need to shift old stock.
- They can offer retailers a large variety of products at very low prices.
- Liquidation has some drawbacks, particularly the unpredictable level of quality. It's also vital to find a reputable supplier you can trust to supply you with lots that haven't been cherry picked.
- You need to have some money to invest to use liquidation: Expect to spend around US$500-$2000.
- Liquidation is different from other supply methods in that you often need to clean or repair the product to resell it.
Did you know that clothes, shoes and accessories are eBay's biggest and best-selling category? In SaleHoo's next newsletter, I'm going to tell you the story of how Nancy Looney got started selling fashion, and how she became a successful eBay seller turning over more than $1,000 worth of merchandise, or 100 items, every month.
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