How to Use Liquidation Companies to Your Advantage

In your spare time, you like to browse the internet searching for great deals on products you can buy and resell on platforms such as Amazon and eBay. Your best sources so far have been various wholesale suppliers and manufacturers’ boutique stores.  

You have also bought merchandise from local distributors. However, since you are covering a specific niche market, the stream of supply has not always been good enough to cover the demand.  

In all that time of juggling between a number of wholesale suppliers, manufacturers, and local suppliers, you have known about the liquidation companies but chose to ignore them because you assume that these companies sell mostly refurbished merchandise.  

The truth is, you could not be more wrong. And although manufacturers will have the best prices, they usually have high minimum purchase requirements that can be hard for small-business owners to fulfill.  

In this respect, liquidation companies are the best source for wholesale products to buy and resell online. So why not use these companies to your advantage?

What are the Advantages of Liquidation Companies?

The first advantage is the most obvious one: the price. Wholesale pallets sold by liquidation companies are priced well below wholesale.  

Although it is true that surplus inventory, refurbished merchandise or bankrupt stock is mostly sold through liquidation companies, this type of merchandise has also rapidly gained popularity among online resale business owners.  

Besides the price, top online liquidation companies will grant you access to top quality merchandise, despite it being surplus inventory, refurbished merchandise or bankrupt stock. Top liquidators have strict rules when it comes to the quality of merchandise listed at their websites.  

The quality of merchandise is guaranteed through exclusive contracts liquidators sign with retailers and manufacturers that liquidate their merchandise directly through their websites, avoiding the wholesale suppliers and keeping the prices low. 

Even the merchandise that is returned by online shoppers (and 30 percent of it does get returned, for one reason or another), is of high quality. In many cases, it gets returned unopened of with very light use.  

In order to keep their good reputation and avoid having a product returned too many times, manufacturers will make sure it is put through a series of tests to verify that it is working as well as new before it gets repackaged and labeled as refurbished.  

Such products also get a hefty warranty, with liquidators that do the refurbishing in-house offering a 90-day warranty on any such product.  

All in all, buying through liquidation companies enables you to buy quality products for cheap, which translates into a higher profit margin and market competitiveness on resale. That is the goal everyone should strive for.  

Cheaper Products Don’t Mean Instant Success

This is a word of caution. Although you are purchasing quality products at low prices, this does not mean you are guaranteed instant success. Profits are calculated once all the products from the wholesale lot are sold. To make sure every product does find its buyer, you should also do some advertising. Simply listing the product on sites like Amazon or eBay won’t get you far. 

Be reasonable when setting prices and use the price advantage you have over the sellers that purchase merchandise through wholesale suppliers. Set very competitive prices and arm yourself with patience, because in the end your smart purchasing and planning will lead to success.

Make sure you set your limits correctly and understand how much you can pay for a certain product in order to make a profit while staying competitive when you list your products online. However, buying products simply for their price could be the wrong way to go about your business as more often than not, if something is too cheap it is probably scrap and not worth your time.

To help you on your way to success you should consider reading our Ultimate Guide to Selling on Amazon. This is a step-by-step guide leading you through every step of setting up an online resale business.

Is Selling Wholesale Merchandise as Easy as it Sounds?

Don’t consider this as an ending on a negative note, but take it more as a word of caution. The above-mentioned advantages of liquidation merchandise, be it electronics, tools, clothing or toys, will bear fruits if everything is done properly.

While reputable liquidation companies will provide you with top quality refurbished merchandise and customer returns, there are other instances where companies will cut corners in order to sell stock that is not really worth selling.

Pay special attention to who you are working with. There are cases of merchandise misrepresentation with sellers labeling the merchandise as grade A, while in reality the products they are trying to sell are either faulty or broken merchandise or even scrap. This is especially the case in mixed merchandise pallets, in which you might get a couple of quality products while 90 percent of the items purchased will be scrap. To avoid this, look for the manifest that should come with each pallet of wholesale merchandise. This is a list of the type, quantity and quality of the merchandise within each pallet. If your supplier is not providing you detailed information or is completely declining to provide you the manifest, this is a sign you should turn around and leave that supplier behind.

In addition to that, you should have realistic expectations. Although you should strive to achieve the most you can, it is not unusual that your business doesn’t take off as well as you had hoped for, or that the sales are not going as well as you wished. Sometimes it takes more than one try to find the right niche market, the right merchandise to sell and the right supplier.  

Online resale business requires a lot of patience, research and hard work. Yes, it could be your spare time job that will become a sort of a secondary income source for your household, but it could also boost your existing business.

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