Achieving Long Term Success in Liquidation: Leadership Series

2021-05-12

In this article, we are talking with Robin Cheatwood, the owner of Xtreme Recycling, who has over 25 years of experience in the liquidation business. From humble beginnings working a full time job while moonlighting as a liquidator, Robin has grown to be massively successful.

Robin’s Top Tips for Achieving Long Term Success in Liquidation

Be flexible – don’t stick to a single product line.
Popular online marketplaces, such as eBay, are great places to sell inventory due to the high volume of traffic they receive.
Selling both online and offline offers you the most flexibility.
Use multiple established suppliers.
The pandemic has accelerated the trend of doing business online
Treat your employees well – Robin has never lost an employee. Loyal and knowledgeable employees add a lot to a business.
Don’t rush to expand – just because you’ve had a couple of good months of profits doesn’t mean you rush to lease a warehouse or quit your job.

Xtreme Recycling: The Beginning

Robin’s journey began 25 years ago, while he was working as a supervisor with Coca-Cola, making a good living at $60,000 a year. Even as he worked full-time for the giant multinational, he would buy and sell closeouts and liquidation merchandise in the evenings. However, he soon realized his second job had the potential to become something bigger than just a hobby.

At that time, his business involved buying and selling food merchandise from Kroger and Winn-Dixie. In short order, Robin and his partner had one store established and were opening another. After a year, he decided to leave Coca-Cola for good.

Since leaving Coca-Cola, Robin has been doing business in his own name for many years. In 2014, he bought out a company called Xtreme Recycling, which was then facing bankruptcy. After turning the ship around and building the company back up by securing deals with major clients, Robin decided to sell the recycling side in 2019, after being approached by an interested buyer. He now focuses solely on buying and selling liquidation merchandise. Over the years, Robin has opened a total of seven stores, focusing primarily on food retailing.

However, increased competition made these stores less profitable, and Robin started looking elsewhere to make sales, moving into online and live auctions. Catering to these new markets, Robin started buying full truckloads of liquidation merchandise containing all manner of items, choosing whatever the best deal was, regardless of the type of merchandise.

“Like in anything, a deal comes by, and it’s doing really well,” he said when commenting on the focus shift. He noted that there are constant changes in the liquidation resale market, and many new entrants made it so competitive there was no more profit in retail stores for him.

“I don’t do this for free,” Robin said. “I decided to get rid of all the retail stores and focus on online auctions and eBay and live auctions.”

The move away from storefronts coincided with a change of focus in terms of products. Instead of selling mostly foodstuffs, the company now deals with general merchandise from major companies like Target, Walmart, Lowe’s, Coles and Procter & Gamble to sell in auctions, both online and in person.

Achieving Long Term Success in Liquidation After the Pandemic

About a year ago, “all of it was profitable”, Robin said, when asked about his best-selling merchandise.

However, more entrants into the closeouts and liquidation business in 2020 meant load prices increased.

“I understand that, with the pandemic, everyone needed something to do. Unfortunately, this drove the prices up,” Robin said.

He noted that there is also an increase in liquidation brokers popping up that don’t really know what they are doing, and as a result a lot of buyers are ‘getting burned’.

“It has not affected us that much, but I’d say that people just starting in the business need to find two or three suppliers they can trust and build from there,” Robin said.

“The merchandise I deliver, I own, and we have purchased it,” continues Robin. “This is why I advise people to stay away from brokers who are in the business of advertising anything and everything, and advertising someone else’s merchandise.”

“And I am not talking about the likes of Direct Liquidation, you have been around for a while, I am referring to the new entrants to the market,” he stressed, focusing particularly on truckload liquidation brokers popping up on Facebook with no history, selling products they don’t even own.

No matter how big a company is in the business, Robin shares that something will always go wrong, which is why he advises people to find a reliable supplier, or even a partner.

“There is no purpose in burning anybody in the business, and I speak for myself and my company, if an issue happens, we fix it, even if it sometimes means it is coming out of our own pocket,” Robin said. “Someone who thinks that they can invest their last $5,000 hoping they can quickly turn it into a million should not be in this business. It just doesn’t work that way”.

Robin also noted that during the pandemic there was a massive shift to shopping online, and even if people are starting to return back to some form of normalcy, he thinks the online aspect of the business will only continue to rise.

The live auctions that Robin himself runs are not expected to recover to their pre-pandemic levels. It is actually the online business that he expects will continue to grow larger over time.

Xtreme Recycling’s Strategy to Achieving Long Term Success in Liquidation

Thanks to the robust nature of the business, with its inherent flexibility, Robin explained that he did not have to change anything significant in his business to face these challenging times.

The only notable change to his business was the range of merchandise that the company deals with.

It has to be stressed that all this was achieved without a website, or doing any paid marketing. Robin and his partners used their experience to build up their customer base through word-of-mouth.

The company does plan to build a website. However, the merchandise throughput is so quick in their warehouse that it hasn’t made sense to create website listings since the merchandise would be sold by the time the listings were set up.

The strength of his business is seen through employee retention too. Currently there are around 10 employees, and since Robin started taking people onboard, no one has left.

“Once they come here, they are going to retire here, because we never lose anybody,” Robin proudly claims.

His team is a well oiled machine. Everyone knows their part of the job, and pulls their share of the weight. There are employees who he has not met in person in months, but who operate and keep the business on a steady upwards trajectory, always working together, even remotely.

Asked if he would have changed anything if he had the chance to start over from scratch, Robin answered that he would have done it all the same way. He would have kept his day job as long as it was necessary. His main piece of advice: Don’t just go ahead and quit your job – “it’s insane to do that”.

He again underlined the pitfalls of the business and stressed that it is not realistic to make an investment expecting to double it in a month. Instead, the profits you make need to be reinvested into the business until you can scale it up to where there is enough profit to handle your life expenses. This is something people tend to forget.

Robin’s business focuses on high quality brands and merchandise. However, the nature of the liquidation business is such that every now and then there will be items that are broken, or need fixing.

However, his company does not spend time fixing any merchandise. Instead of fixing merchandise themselves, Robin and his partners use their old business connections to offload some portions of merchandise to recycling businesses, extracting what value he can from these items.

Additional Advice for Newcomers

Talking about advice and upfront investment, Robin stressed how much it is important to start small, in your local community and try selling locally on Facebook Marketplace or eBay.

“It doesn’t matter how much money you have, start small and put in the work until you find your feet and can say you know what you are doing,” Robin said.

“I would stick to general merchandise from retailers like Coles or Target,” Robin said to start with.

And speaking of the initial investment, he added that he put in $4,500 and nothing else out of his pocket. However, there is a huge catch for those thinking the profit came by itself.

His initial investment came while he was still working a full-time job with Coca-Cola. This meant getting off work at 6 PM and working until midnight on his liquidation resale business. And this lasted for a full year.

“Had I needed the store to make money from the beginning, the success wouldn’t have happened,” Robin said.

He added that starting a business with the idea that it would automatically start making a profit is the wrong way to go about business.

Achieving Long Term Success in Liquidation: The Numbers

Robin’s business started with a $4,500 investment for his first truckload of merchandise.

During the last quarter of 2020, he noted that Xtreme Recycling purchased around $750,000 worth of merchandise from Direct Liquidation.

His latest purchase had a price tag of $145,000. And while he is satisfied with the cooperation, he noted that the way Direct Liquidation is set up, it gives an even chance to every-sized buyer to buy merchandise on the platform.

So what can we learn from someone who has displayed long term success in liquidation resale?

A focus on flexibility and reasonable expectations – not getting ahead of yourself, and treating your employees fairly. You will need to be prepared to face changing markets and competition. Finally, don’t quit your day job until it’s clear your business has scaled to a point where it can make up the income you will be losing.

Robin Cheatwood
Xtreme Recycling
https://www.ebay.com/str/xtremerecycling
(678) 901-2750