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The Benefits of Purchasing Liquidation Pallets

All business owners would like to secure affordable merchandise without sacrificing quality to boost profits. However, the supply method of buying from traditional wholesale suppliers often does not cut it anymore. Profit margins are just too tight. The competitive environment of eCommerce platforms such as eBay is pushing sale prices down and eating into the profit margins of sellers relying on this traditional method. Cost-conscious buyers are leaning increasingly towards more affordable options. Catering to that trend is imperative if you’d like to keep your business going, let alone grow in this climate.

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So what are your options? One option is to negotiate better deals with your suppliers. Another option is to find a different supply source. A good option is to deal with liquidation merchandise. This kind of merchandise can give you access to the stock you are looking for, in varying conditions, at a fraction of the usual price.

This article will examine both the potential advantages and potential pitfalls of buying liquidated merchandise online.

  • Liquidated merchandise ranges from unsorted customer returns and used items to brand new merchandise.
  • The main advantage of liquidated merchandise is its low price.
  • Buying liquidated merchandise online is quick and convenient.
  • Avoiding the pitfalls of liquidated merchandise requires some caution on your part. Research is essential.
  • Only buy from reputable liquidation companies.

What Is Liquidation Merchandise?

Under the term ‘liquidation merchandise,’ you will find several different categories of merchandise. These include shelf pulls, customer returned merchandise, overstock, and closeouts. The latter consists of merchandise that has been sold by businesses that have closed down, which means a lot of products that need to be sold to clear out space and recover value from the remaining stock. 

Shelf pulls are, as the name says, items that have been pulled off the shelves of a store. This was either because they did not sell or because they are seasonal products that will not sell after their season is over, for example, clothing. Overstock is similar to shelf pulls, with the only difference being that this sort of merchandise has not been even displayed at the store. Both represent merchandise in brand new condition.

Customer returns make up a major part of liquidation merchandise. These are products that have been sold by the retailers and then returned by the customers for a variety of reasons. In fact, at least 30 percent of products purchased online find their way back to the retailer. The reasons for items being returned vary from receiving damaged products to receiving the wrong item. Statistics show only around a fifth of items returned from online sales were due to damage. Some buyers take full advantage of the generous return policies and ship back products simply because they have that option. The condition of this sort of merchandise also varies, from used to brand new – in original packaging. 

This creates an issue for retailers as they have to deal with returning merchandise while also having to secure space for brand new stock. In order to process the returned merchandise as quickly as possible, clear space, and recover at least a portion of their investment, retailers sell this merchandise in large quantities to liquidation companies that can handle large amounts of merchandise. This then gets broken down into smaller lots and pallets and sold on the secondary market. 

What all these different categories have in common is the fact that they were resold by retailers to liquidation companies for a very low price. The liquidation companies then process these products and resell them to small businesses like yours for prices well below their suggested retail price. 

Why Buy Liquidated Merchandise Online?

If you’re running a resale business, liquidation merchandise can be just what you need to help boost your profits. Whether you focus only on reselling liquidated merchandise or use it as an extra to your regular offering, it has significant potential to give your business a boost.

The main advantage of liquidated merchandise is the price. It is usually sold at prices well below wholesale. This means lower procurement costs for the stock you will sell your customers. This will give you more freedom when setting the final price. Lower final prices are more likely to attract more customers, which means more sales. By buying liquidation merchandise, you are giving yourself a chance of a higher profit.

Purchasing liquidated merchandise online is a convenient way of stocking up your business. It saves you time and money as you don’t have to drive around from one supplier to another or call everyone to check whether the merchandise you need is available. All you need is a computer and internet access, and you are good to order. All you are required to do is create a free account on your favorite online liquidation marketplace and browse the inventory.

An additional benefit is the fact that top-tier liquidators, such as Direct Liquidation, have business relationships with major U.S. retailers like Walmart, Target, or Amazon to liquidate their merchandise. This means that you can buy products sourced from some of the largest and most reputable retailers in the world.

Pitfalls of Buying Liquidated Merchandise Online

There is always a risk when dealing with liquidated merchandise, especially if you are not reading the fine print in the listings or not doing your research. Research is key when selecting your preferred liquidation company and will also help protect you against possible scams.

Fake websites offering liquidated merchandise and promising huge profits on resale can be set up overnight and be gone the next day. This is why, when selecting your liquidation company, you should look into the history of the company, go through their offering and their services.

The best indicator of a company’s quality and reputation are the online reviews left by their customers. But don’t rely on the reviews posted on the company’s website, rather browse the internet and the forums where buyers are posting their reviews and sharing their experiences with liquidation companies. Those that are barely mentioned are probably the companies you should stay away from, just like those with bad reviews. Only buy merchandise from reputable liquidation companies. 

A reputable liquidation company will also provide you with as much detail as they can about each lot. This will include a manifest, a packing list showing you the quantity, the type, and the quality of merchandise within a pallet.

A reputable liquidation company will also be clear about the condition of the merchandise they are selling. The condition of the merchandise ranges from ‘as new’ to ‘unsorted customer returns.’ The latter comes at the lowest price point but can contain used merchandise, faulty merchandise, and even scrap that can either be used for parts or not usable at all. You may also get a brand new item in there that would be worth more than what you have paid for the pallet, but you are the one who has to decide whether you are willing to take that risk or not.

If you do decide to work with unsorted customer returns, be prepared for additional work. This means reviewing every item you have received once you receive it. A lot of the merchandise will need cleaning, fixing, or repairing, especially if you are dealing with electronic devices. You will also have to provide new packaging for the merchandise you have purchased in a pallet of unsorted customer returns. However, there is a serious potential of losing money on such pallets, so make sure you understand the risks. It is not a “get rich quick” scheme, and it is certainly not for those looking to get some easy extra cash; such merchandise requires more work.

In the end, the pitfalls can be mitigated by some additional research and a clear head when dealing with liquidation companies. You have to know what you are looking for and read all the details. When it comes to bidding on pallets of liquidated merchandise, you have to stay within your budget. And besides staying within the budget when purchasing, which should always include delivery and handling costs, as well as additional labor, you may have to do to bring the merchandise to a sell-ready condition. 

How Can Liquidation Merchandise Boost my Business?

We have already mentioned that liquidated merchandise comes at a price well below wholesale. This means that you may get yourself in a good position to get some extra cash if you follow the pointers given above.

Whether you run an online store or a physical store, liquidated merchandise can help you in several ways. For example, if you are looking to buy a pallet of liquidated summer clothing, but you would like to buy brand new merchandise, all you have to do is look for overstock merchandise or shelf-pulls offered by the liquidation companies. As noted previously, this is basically brand new merchandise that did not sell before the season for summer clothing ended. Although this kind of merchandise comes at a higher price point, you are getting exactly what you wanted: brand new merchandise at a low price.

You may also use liquidated merchandise to lure more customers to your physical store. Clothing accessories are a perfect addition to the clothes you already have on offer in the store. You could create sale bundles without actually discounting your regular offering. You can simply add a liquidated accessory to any other clothing item you already have on offer.

You could even sell liquidated merchandise at a slight loss just to increase the traffic in your store, as the profit margin on your regular items is good enough to keep you in profit. Liquidated merchandise can simply be used to add value to your current offering. 

But buying unsorted customer returns with a plan to increase foot traffic in your store by bundling these items with your existing offering may not be the best strategy. Without proper research and some additional work put in by you or your employees to bring this new merchandise to a sale-ready condition, you may have a problem.

Liquidated merchandise can be a great way to earn some extra cash by reselling it online. It can also be a great way to boost your already existing business. The main thing you have to remember is to deal with reputable companies and to do your research to the best of your ability. If done properly, buying liquidated merchandise online has proven to be a very profitable venture for many.

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