If you’ve ever wondered how some small online businesses sell genuine luxury items and brands at very affordable prices, the answer may be liquidation merchandise.
Manufacturers and big-box retailers unload unsold and unwanted inventory to liquidation businesses at huge discounts. Resellers then purchase these items and put them back on the market.
Liquidated merchandise is a great business model with a large scope for profits: you can obtain inventory in the dozens or even hundreds at a fraction of their original prices and resell them at markups.
But before you place your first bid at an auction and buy liquidation pallets, you must get the lay of the land. Let’s explore what liquidated merchandise is and how you can use it to your advantage.
What Is Liquidation Merchandise?
Liquidated merchandise is inventory that has been sold to remove them from the retailer’s shelves. They are unloaded in large quantities, way below the original purchase price. Liquidators acquire these items by truckloads and repackage them to be sold to wholesalers and resellers.
Liquidated merchandise often includes great finds, such as branded luxury items or brand-new products in mint condition. Items are arranged in pallets, and buyers can peruse liquidation manifests that contain product descriptions, conditions, quantity, and other details that will help them determine if they are worth purchasing.
Why Is Reselling Liquidation Merchandise Popular?
Reselling liquidated merchandise is a popular business model for many reasons. First, large retailers are selling excess inventory by truckloads to liquidators, which means there is a constant supply of high-quality merchandise available at rock-bottom prices for resellers.
Customer returns alone amounted to $760 billion in 2021. A significant percentage of these items were likely still in good condition and could be sold to other consumers.
Furthermore, the internet has made it easy for resellers to reach a global audience of potential buyers and gain long-term success. The eCommerce boom will only continue, and it is easier than ever to sell products on various platforms and marketplaces. For example, many resellers thrive on auction sites like eBay, where they unload goods at healthy markups.
Where Do You Find Liquidation Merchandise?
There are a few different ways to find liquidated merchandise to resell for profit. Some retail stores hold liquidation sales, selling overstock, return items, and unsold inventory. Buyers need to register to their programs to purchase liquidation merchandise.
The best option to access a wide variety of merchandise from some of the biggest retailers in the world is liquidation marketplaces like Direct Liquidation.
On this online auction marketplace, wholesalers and resellers can purchase liquidation merchandise at a fraction of the retail price. They directly source overstock, shelf-pulls, and end-of-life inventory from some of the largest retailers in North America so that you can enjoy consistent access to branded goods at the lowest possible prices.
You can bid on brand new, refurbished, or even salvage items in dozens of categories: electronics, home improvement, clothing, health & beauty, sports, toys, furniture, automotive, shoes and accessories, and many more.
How To Buy and Sell Liquidation Merchandise
Before you bid on your first pallet of liquidation merchandise, follow these tips to make the most of your inventory and generate healthy profit margins:
Perform Market Research
Gaining access to heavily discounted inventory is an important step, but you must also have a clear strategy for where to go. You may buy pallets of luxury items at bargain rates, but will you be able to market them to your target audience and entice them to purchase?
Do your research on the things that speak to the needs and desires of your market before you buy liquidation merchandise from your chosen outlet. From the jump, a robust sales and marketing strategy will help you make intelligent and profitable purchasing decisions.
Understand the Items You Are Purchasing
Liquidation manifests contain product information, condition, quantity, and other details that will help you determine if a pallet is worth investing in. Review them thoroughly before jumping into an auction—learning as much as possible about the included items will help you arrive at a reasonable bid amount to maximize your profits.
Learn about the terms for product conditions you will find in a manifest: brand new, refurbished (Grades A to D), untested customer returns, overstock, etc.
Determine the Best Pricing Strategy
Brand new branded items in mint condition sealed in their original packaging should be a breeze to resell, and you can price them at or close to their standard retail price. You must determine the best markup amount to net you the best possible profit while still attracting customers.
Unfortunately, not all the items you purchase from a liquidation marketplace will be so easy to price. Refurbished goods are repackaged in unmarked boxes, and untested customer returns only have a 75% chance of functioning correctly. To take on such inventory, you must develop a pricing strategy to sell them quickly but at a healthy profit.
It’s a complex balancing act that you should get better at with more time and experience.
Find the Best Selling Platforms
eBay, Facebook Marketplace, Craigslist, OfferUp, and your eCommerce website are only a few online platforms you can use to sell liquidated merchandise. Your choice of platform will depend on your target audience and the nature of the items you want to sell. Look into the terms and conditions of each platform and make sure to follow them. Create and maintain a reputable seller account to build your brand.
Your product listings should have high-quality photos from multiple angles, detailed product descriptions, and reasonable prices that will attract customers.
Reselling Liquidation Merchandise Is a Great Business Opportunity
If you follow these tips when buying or selling liquidated merchandise, you will be better equipped to leverage reselling as a business opportunity. Do your due diligence and learn to identify a good deal from a lousy one, and you’ll find that liquidation is your friend!
