A Liquidator’s Guide on How to Process a Product

When you buy liquidation products from a manufacturer or supplier, chances are that you will either get a defective piece or one that is not damaged in any way. However, because there are a range of reasons why manufacturers decide to sell off their products, you must learn how to process a product.

What is Product Processing

Before you learn how to process a product, you must know the actual meaning of processing in the context of a liquidation product. Processing is basically a detailed product diagnosis through which the liquidator decides whether the contents of liquidation lots or pellets should be sold as is or repaired and then sold.

All liquidators who are aware of processing know that it is only better to repair a product if it is feasible, but alternate options should be taken if high costs are involved. The following lines will go over steps to help you process a product and ultimately succeed in the liquidation business.

Investing in Products for Your Liquidation Business

There are many auctions where liquidators can make a great profit if they know how to find good products and assess them.

What Makes a Good Product

A good product is what will guarantee you the most profits. However, “good” is a qualitative measure that can differ from seller to seller. Still, here are the most important factors you should focus on.

Buyer’s Demand – Any liquidation product that you are buying for the purpose of selling must have a consistent stream of customers or buyers. This may mean something that is currently extremely trendy such as iPhone 5 covers. However, don’t follow the trends unless you have a large client base that will take these off your hands in no time. The easiest way to ensure profits for a longer time is to invest in things that are always in demand. For example, you can go for cookware as it is always required regardless of season and trend.

Selling Price – One of the things that you need to consider while processing your potential future product is the price that it will be ultimately sold for. Don’t even think about opting for something that has a low profit margin because it will not be practical when you have to put in so much effort and time in finding these products. So, before leaving the auction and placing a bid on a lot, crunch the numbers and see how much you’ll be getting once you deduct the costs you incur. You can add your own criteria to the list. However, make sure to make your own a little different from your competitors if you want the time you invested in processing a product to be worthwhile

How to Initially Check Products

Before placing your bids or investing a single dime, you need to check the liquidated and returned goods thoroughly. Even if you have just recently started your liquidation business, the processing of a product cannot be ignored under any circumstances.

Not considering the processing of the merchandise that you have received will end up costing you the business that you have built and the customers that you have attracted. So, check whatever you decide to buy for the following.

Physical Damages – When the product or merchandise arrives from the manufacturer or supplier, the first thing you must do is to check it thoroughly for physical damages and deformities. For example, if you are selling pots and pans as a liquidator, you can check each of them for dents, scratches or other signs of damage that reduces their prices.

Even though the smallest scratch may not seem like a big thing to you because it doesn’t decrease the operational value of the product, it is very important for the customer buying from you. Even when customers know that they are buying used products, they don’t want to buy things which are physically damaged.

Operational Damages – Once you have checked the merchandise for physical damages, you must ensure that it is fully operational. Most customers who purchase liquidation products expect their refurbished or repaired products to work properly.

However, there may also be some buyers who are interested in parts of the product instead of the whole. Because the main seller wants the merchandise off their hands, they may be willing to sell to either party as long as it pays more than the other one. So, if you’re planning to invest in something as a whole, you need to make sure that it works properly. This is especially true if you’re dealing with appliances and IT products.

History of Product Recall – When buying a product as a liquidator, you must ensure that you are purchasing something which hasn’t been recalled by the manufacturer due to a major defect. Because these products are pulled out by the manufacturers themselves, you can’t hope to fix the product once it reaches you.

Besides, product recalls are advertised for high and low. So, expect everyone to have read or seen local ads recalling the product. Therefore, instead of buying cheap but worthless recalls, invest in higher quality liquidation items.

Demand for Product – An important factor that you must consider before buying liquidation products are their overall demand in the market. An easy way to do this is to use your smartphone or PDA to research online and check just how many people are asking for the particular item that you are interested in. Going in blind without carefully thinking about the demand first will only end up costing you a little more than you anticipated.

When Damaged Goods are Worth their Price

As someone who sells liquidation goods, you must already know that slightly damaged items can also prove to be quite profitable at times. However, if you are new in the field and don’t know which damaged items are better than others, read the following lines.

How to Identify a Profitable Damaged Lot

The question that most new liquidation retailers ask is, ‘How do I know if I should buy this damaged piece?’ The answer to this question is simple – if you know and have carefully analyzed the product’s ability to bring you profit instead of losses when sold, then you must buy it.

There are numerous companies that sell damaged goods that are perfectly operational. Such goods are often a good example of a profitable damaged lot because even though they don’t appear perfect, they are fully functional and will provide the user with all the benefits that they are looking for. 

One of the best examples of such damaged but profitable items is the washing machine. Because the washing machine is mostly kept in the laundry room where no guests will be entertained, many people prefer buying slightly damaged ones simply because they don’t cost as much as a brand new one. Besides, some older models are less complex, making washing clothes a breeze for people like college students or bachelors with no Laundromat in the vicinity.

Therefore, when you are setting the price for these kinds of damaged but in demand pieces, remember to set a price which helps you get a profit. Now the question is: how do you know whether a

Now the question is: how do you know whether a certain product will be profitable for you? To answer this question, read the following lines.

Pricing after Fixing – The very first and crucial questions that you need to answer are: how much is the actual cost of the product and how much will it take for you to fix it? Therefore, the price that you have bought the product for, along with the cost of your time and that of those fixing the merchandise, are important factors that play a role in this particular area. For example, if the calculated price of fixing the damage is too high, then you should let the product go because it won’t bring you any sort of profit.

Pricing for Customers – The price that a retailer decided to sell their merchandise or product for depends on a variety of factors. However, as a general rule, most companies use the keystone method where a 50% markup is used to calculate the final price. What this means is that you basically double your cost and establish a retail price according to that. For example, if you have purchased an item for $50 then the final pricing for the customer will be $100.

5 Types of Goods that Still Sell Well Even when Damaged

Now that you know just how to identify damaged profitable goods, here are some of the most common and beneficial categories that you must consider buying.

1. Appliances

As mentioned in the earlier section, appliances that can be kept out of sight like the washing machine or vacuum cleaner can easily be sold damaged. As long as the appliance is operational, it will prove to be an extremely lucrative selling product. These items will save the customer a ton of money because they don’t have to worry about the price tag. You also get to hit two birds with one stone as you too benefit from selling it for a much higher price than your original buying price.

2. Food Items

If you mostly deal with the food market, then selling food items that are close to the sell-by-date is a perfect option. Such food items are in fact one of the most sought after products because even though they are perfect in quality, their expiration date is close and the customers know that they will get them for a lower than usual price.

Even though one of the most common food item used in this category is the bread, there are many who like to buy cakes, pies and other such fun and sweet treats for themselves or their loved ones. However, don’t let greed get to you and never try selling something that has gone bad. Not only is this unethical, you will get in trouble with the law.

3. Clothing

Another imperfect item that people love to buy is clothing. Even though someone going for an interview would prefer a perfect suit with nothing out of place, not everyone will have the budget to buy branded products. This is why many average earning individuals and young adults are deciding to buy slightly damaged clothing pieces. Most of these flaws are barely recognizable so your customers will be happy that they don’t have to pay a much higher price to satisfy their fashion sense.

4. Display Items

Whether you go to an electronic store or clothing line, you will always find items that are on display. These items are there to inform the customers about the look and feel of the product, which is why they are handled by many people. Because of this, display items aren’t sold for the original price. As in the case of clothing, even though these display items have no major defects in them, they are not bought because people fear that they are used. As a result, these display items are sold for a slightly lower price than usual.

5. Mixed Items

Not everything that comes out of a branded store will be perfect in condition. Therefore, just look at different places and you’ll find a variety of mixed and miscellaneous items for selling. Remember: as someone who sells liquidation products, the one thing that you need to do is to carefully research and find the perfect items for selling to your customers.

The Bottom Line

The processing of a liquidation product is an important part of the buying procedure, so it must be properly carried out. If you are not aware of processing and the damaged profitable goods that bring you benefits, then you are not properly informed about the subject. So, keep reading resources like this one in order to boost your knowledge on liquidation products and how to boost your business. 

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