Home eCommerce Blog Liquidation: The sourcing strategy other sellers don’t want you to know about!

Liquidation: The sourcing strategy other sellers don’t want you to know about!

Liquidation is a popular sourcing option for sellers who want to offer unbeatable prices and don’t mind doing a bit of leg work in order to do so.

What are Liquidations?

Liquidation is when stock is sold off below cost so that the owner can generate some fast cash. There are many reasons why companies may need to liquidate. Going out of business is one; relocating is another, as it may be more costly to move inventories than it is to sell them off at a loss. Companies may also require cash in order to carry out expansion, or undertake a project. Sometimes, it’s simply the end of the season and retailers wish to clear out old stock before bringing in the new. Whatever the reason, you will need to know why the products are being liquidated to avoid getting stuck with products that you can’t sell later on.

How to Source Liquidated Products

Here are some of the typical deals to watch out for:

•    off-price products
•    excess inventories
•    closeouts
•    clearance sale
•    out-of-season products
•    promotional items

A search on the Internet will yield loads of companies that offer liquidation products and services, but resist the temptation to immediately jump in and do business with just anyone. The last thing you want is to have a truckload of items no one wants to buy.

Some things you should consider before jumping into the liquidation business.

  1. Gather as much info on the products as you can. Liquidation items are usually sold by the pallet load and may include shelf pulls and customer returns. An inspection is ideal, but at the very least, make sure you view an inventory list.
  2. Determine your true product costs (including shipping, storage and repairs).
  3. Understand your market – don’t buy it just because it’s cheap!
  4. Have a plan for dealing with damaged and dirty items (there are always a few in every pallet load). Many of these items will still be suitable for resale after a DIY cleaning or mending job.  

There are two ways to find liquidation items:

  1. Searching locally. Check the classified section of your local paper for liquidation and bankruptcy sales. Or you can go knocking on the doors of manufacturing, marketing, and retail companies and negotiate your own liquidation arrangements. Buying locally is often the best option because it means you can establish a good relationship with the supplier and pre-inspect merchandise before purchasing.
  2. The alternative is to use online liquidators, of which there are many. Among these are American Merchandise Liquidators, Jacobs Trading Company, and the closeout directory Closeout Central. There are some excellent deals to be had, but watch out for cherry-picking (the practice some liquidators have of removing the best items for themselves and leaving pallets of rubbish) and exorbitant shipping costs (try to arrange shipping yourself if possible).

Liquidations can provide exceptional profit margins and its one of the best ways to source authentic designer items as bargain basement prices. Just don't dive in unprepared - there's a lot to learn about this sourcing method, so take it slow until you learn the ropes. 

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1 Comments Add your comment
If you are handy with repairing electronics you could get a pallet of electronics and repair broken ones and sell them as refurbished. There is a market for refurbished electronics and you could get a descent markup on the broken stuff if you buy right. You will also have less to throw out. The working ones would be sellable as is and will not need to be repaired. Reply
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