A General Overview Guide About Liquidation!

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  • Karma:
10 Sep 10 06:49:53 pm
Greetings Salehoo members!

My name is Tim and I am with a company called Titan Liquidation. For years now we have been a liquidation company located in the Midwest specializing in the sale of liquidated department store, manufacturer, and retail store goods. Up until this point we have only served local customers as well as a small amount of online and international customers through 3rd party selling venues (Liquidation.com, wholesalecentral..etc). As of last week, our company has taken an exciting new step and opened our website Link hidden: Login to view to service customers in all 50 states as well as internationally.

Now that you know who we are, I would like to announce an exciting new contribution we will be making to the Salehoo community, which will be several guides over the next few weeks all about the liquidation industry. We understand many members are new to the idea of liquidation, so we believe several guides thoroughly explaining the topic and discussing its potential for great profits will be very beneficial to both new and seasoned sellers. Upon reading these guides please feel free to post or email/pm us with any questions. The more questions the better, as we have many years of experience within the industry and would like nothing more than to educate anyone who wishes about the liquidation industry.

Also, please note that although we ourselves are a liquidation company and would absolutely welcome any business toward our company, these guides will be based on liquidation in general and not tailored to only what our company can offer. In fact we recommend you research many liquidation companies, especially those local to you, as there are many great companies out there! (And a few not so great.)

The first guide below contains general information about liquidation, a model of how it may be sold, and its potential for great profit! In upcoming guides we will get more specific on topics such and shipping of liquidation, understanding how products are priced, tips to watch out for/know when dealing with a liquidation company, as well as how to sell different condition types among other things. If you have specific aspects you would like me to discuss in a future guide, please post those as well and we will be happy to accommodate.

Guide #1: Basic information about liquidation, as well as a brief sales example to show potential.

What is Liquidation? Liquidation is the sale of the remaining product from department stores, retailers, or manufacturers that no longer will be sold through their sales channel. Products are liquidated from these entities for a variety of reasons including: changing of seasons, excess holiday inventory, to make way for new product, store closings, to decrease excess capital, and customer return product that has left the store as well as many other reasons.

When department stores, manufacturers or retailers liquidate their goods, this creates an exciting opportunity for re-sellers that discount buying, wholesaling, and especially drop shipping does not offer. With liquidation, you are able to get popular designer products at sometimes as low as 10% of the retail value! That’s 90% off!! Even in markets such as Ebay with heavy competition where products seem to never sell near retail, there is a huge potential for great profits, and fast turnover due to cheap, popular products and brands that can be purchased through liquidation.

Liquidation is usually sold in 4 main conditions:

1. New – This is brand new product that has never been handled by a customer. This has 0% damaged items and should include all poly bags, accessories and tags.

2. Overstock – This product has been on the sales floor but has never been purchased. Although some pieces may have been tried on, most are in like new condition with very little to no handling. All of these items should include their tags and labels. Usually 0 to 3% of a lot would be considered damaged due to customers handling the product.

3. Customer return – This product has been purchased by a customer and returned for a variety of reasons. These reasons could include buyer’s remorse, did not fit, return of a gift someone did not like, or that the product was defective. Most of the customer return items we have encountered are buyer’s remorse returns which means the products are returned in shelf pull condition with full tags, boxes, etc. There is usually a small percentage that was returned due to defects or damage and this ranges between 5-15% usually. To make up for this, customer return lots are generally sold for a much lower percentage of retail than new or overstock.

4. Salvage – This product classification is usually reserved for untested electronics. This means there may be damage/malfunction with 0% all the way to 100% of the product. These lots are intended for professional buyers, usually with repair experience. Lots that are sold in salvage condition are usually sold to the buyer at a very low percentage of retail and can be a very profitable buy if the buyer knows to repair, sew, or assess damage related to the products.

Now we will show an example of how liquidation is sold. This is an exact real-life example that we have been given permission to show from one of our buyers to share their experience with a lot they bought from us. They sold this lot entirely through Ebay, which is one of the tougher markets to sell on due to customers demanding heavy discounts. If sold through your own website, other sales venues such as Amazon/Bonanzle, or a brick and mortar store, profits would usually be much higher than this example.

Category: Men’s Dress wear.
Sale price to the buyer: $849.00
Quantity: 100 pieces.
Retail value: $4,700
Price per piece: $8.49
Retail value per piece: $47.00

This lot contained:

30 Dress shirts (Brands included Ralph Lauren, Michael Kors, DKNY, Eagle, Hugo Boss, Geoffrey Beene, Tommy Hilfiger, and more.) Dress shirts ranged between $45 to $115 per piece retail.

20 Ties (Brands included Ralph Lauren, Tommy Hilfiger, Hugo Boss, Calvin Klein, and more.) Designer ties ranged between $40 and $115 per piece retail.

40 Underwear and sleepwear (Brands included Emporio Armani, Calvin Klein, Nautica, Ralph Lauren, Hugo Boss and more.) Under wear and sleep wear ranged between $20 to $65 per piece retail.

10 Designer dress leather gloves (Branded Isotoner.) Gloves all retailed $55 per piece.

Ebay sales data after 2 weeks:

25 of 30 dress shirts sold at an average of $25 per piece for a total of $650.

15 of 20 ties sold at an average of $18 per piece for a total of $270.

25 out of 40 underwear and sleepwear sold at an average of $15 per piece for a total of $375.

All 10 Designer dress leather gloves sold at a buy it now of $8 per piece for a total of $80.

Revenue total: $1,375. The cost of the lot was $849.
Total profit before Ebay fees was: $526.

AND they still have 5 dress shirts, 5 ties, and 15 pieces of sleepwear left to sell which will increase their profit even more!!

Here in lies the secret of liquidation. When you have a large lot of diverse products and brands, the average sale price of all products within the lot is what gives you the great profit that liquidation is capable of!

For example: With dress shirts, some brands such as Alfani or Geoffrey Beene retail for $45-$50 per piece but are not the most popular brands. These shirts may only sell for $10-15$. On the other hand, brands such as Hugo Boss and Ralph Lauren which range from $85 to $115 can sell for $50+ on Ebay due to the premium brand name. When averaged together you are actually selling dress shirts you bought for $8.49 for $25 per piece on average!!

The same principle works for the other categories as well. Where Ralph Lauren ties retail for $115 and sell for $40, Charter club ties may retail for $40 but only sell for $8-$10 per piece. When averaging all tie sales between the premium and mid range brands, the buyer sold at $18 per piece which is a great profit when buying at $8.49 per piece. The designer leather gloves which retail at $55 per piece could probably have been sold for more, but the buyer wanted quick turn over so they sold at a buy it now of only $8. With a little patience they may have been able to sell those for a much higher price!

We hope this is a good example of the potential that liquidation stock offers. As you can see although some pieces may be sold right around the cost they were purchased at, the high valued pieces bring the average sale price per piece to a very nice figure, which offers a great opportunity for the buyer to really profit!

I would like to let it be known that this is not a best case scenario. These products were sold at the usual going rate on one of the toughest markets to sell on which is Ebay, because Ebay is a wholesalers market. If you were to sell these products on other venues such as a brick and mortar store or a website such as Bonanzle, the profit should be even higher!

I hope this guide gave you a good introduction into liquidation. We will be releasing more guides within the coming weeks that will explain aspects of the industry in depth, but we wanted to first give you the basics before providing more detailed knowledge. We welcome any questions you may have for us about this guide or liquidation in general, and we look forward to speaking to everyone more in depth if you decide liquidation sounds like the right option for your business!

Thank you for reading, and have a great day everyone!

Titan Liquidation.

Titan Liquidation

Listed Supplier on SaleHoo

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  • Karma:
10 Sep 10 08:06:49 pm
Thanks for that Tim, we'll make this a sticky for the member's benefit and look forward to reading more from you in the near future.

Now I know Tim personally, and know well that he will be more than happy to respond to any inquiries into this area of supply. So you can contact him or even drop myself a PM for any inquiries into the liquidation market in general.

Mark (fudjj)

Community Manager

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  • Karma:
10 Sep 10 10:41:03 pm
Thank you Marc! I hope this guide will be helpful to some of Salehoo's members. If anyone has any questions please email/pm or leave the message on this thread and we will be happy to answer!

Please keep an eye out for more guides within the coming weeks where I will be giving an in depth explanation on the many aspects of liquidation. This post was just a mile high view basically to start pointing members in the right direction.

Titan Liquidation

Listed Supplier on SaleHoo


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