Here we are going to explore what types of products you can buy at liquidation marketplaces, the condition these products are in, and how to tell what exactly is contained in each lot that we sell, so you know exactly what you’re bidding on. After a product is returned, it is packed up and loaded onto liquidation trucks, without any prior checks. The products are then categorized by the liquidators based on their condition. If it is unopened and in the original packaging, it is basically as new. If it has been opened, it gets inspected, and its condition is graded. If it is marked as ‘refurbished’, the items is repaired, repackaged and readied for resale. Even items returned unopened can’t go back on the store shelves and sold as new in many major retailers, so they must also be liquidated. This is why these ‘brand new’ or ‘like new’ items are such a great starting point for a reseller. You will see different categories for liquidated products. These include:

• Brand New (unopened) - These are items that have never been sold. There are several reasons for this: maybe the retailer stocked too many, or they are moving onto another product line, and still have some of the previous stock left over. Maybe a store is closing and their on-shelf stock is liquidated. Whatever the reason, these are prime retail-ready, unopened products in their full original packaging.

• Like New (open-box) - “Like new” items are products that have been verified to be in their original condition. Even though the product itself may not come with its original box, the actual product has no defects. These items are great for retailers that sell items outside of original packaging, like thrift stores, or for market niches specialized in “like new” or unused products. These items are in fully working condition and show no damage, but the packaging may need to be replaced.

• Damaged / Missing Parts - These items are likely to be customer returns, comprising items damaged in the post, or items that have stopped working while still in warranty, and returned to the store. These items are usually only good if you are looking for specific parts for repairing other items. Several damaged items can be cannibalized to make one working item, if you have the skill to do this.

• Untested Customer Returns - These items have been returned to a retailer that has not had the time to test them out. Often, it makes more financial sense for a retailer to liquidate all returns than to check them out individually. This means that many items in this category may be in fully working condition, and others may be in various states of damage.

Refurbished Products

You will also find refurbished products. These products have been repaired and put back to their original working condition. In short, these are products that have been repaired to an “as new” condition, with some blemishes possible. As they are no longer new, they are sold at a much lower price, but work as well as new products. These products are a good choice for people starting out on the resale business as they do not need any repairs and can be sold immediately to your customers. There is also a grading system that determines the condition of refurbished products. These range from the top grade - good as new, and with each grade you move down, you will see more problems, as the condition gets worse.

Tested, Not Working

These items are not currently working, though they are not as damaged as those in the Damaged/Missing Parts category. You may be able to get these items fixed more easily, and they do not show a large amount of visible damage. Items labeled not working have a moderate chance (30-60%) of being restored and may be complete or missing some parts. In the latter case, it should be stated what is missing from the item. In many cases, these items are sold “as is” with no guarantees at all.

Always Look for the Manifest

When looking at a pallet of goods, you should always see a manifest. This is a packing list that shows you what is inside each pallet, in what condition the merchandise is and how many pieces of each type of product is in there. This will allow you to do some calculations based on their cost, estimated shipping fees, and any storage fees you might have at your end, and then the final sale cost you can expect when you sell them on. What’s left is your profit. The more the profit you calculate on a pallet, the better that pallet would be to buy. And if you feel adventurous and would like to take some risks, there is always that “unsorted customer returns” section where you can pay the least but could potentially recover your investment with one sale if the pallet contains brand new unopened items. In the next article, we are going to talk about taxes and your state’s resale certificates, which can save you paying more taxes than you need to.