Running a business that engages in purchasing merchandise for resale can be profitable, whether you do it full time or during your time off form another job, as a second stream of income. The whole point of the business is to secure the lowest possible merchandise and to ensure the best profit margin.
However, making this work is not always as straightforward as it may sound. Yes, you do buy cheap and sell with a markup, but the markets are tightening, more and more sellers are emerging online and are becoming more and more competitive.
To give yourself the best chance of running a successful online resale business, the aim is to keep all your procurement costs as low as possible without sacrificing the quality of the merchandise in order to ensure competitiveness in any market without narrowing your profit margin.
Some guidelines on how to achieve just that follow in this article. In short, if you are only starting your business, it is important to do it the right way, complying with the regulatory framework of your state, it is also important to source the merchandise from a reputable supplier, and one often overlooked but very important point is the ability to source this merchandise near your place of business- cutting down on delivery costs. This can play a very significant role in bringing success to your venture.
When it comes to stocking up the options are plenty, however, it has to be stressed that running a resale business requires you to comply with legal regulations so if you are just starting out, before looking for suppliers, look to keep your business within the legal framework. Once you have all the registrations completed and permits acquired it is time to look for the options you have and where to buy pallets of merchandise.
The ‘traditional way’ would be to look for a wholesale supplier to stock up. Wholesalers deliver merchandise to retailers as well as smaller buyers as they enable buying merchandise by the pallet.
However, if you look closer at the online marketplaces, single items being sold online are getting very close to wholesale prices. Once you factor in the shipping costs, your profit margin dwindles quickly, which in turn shows that if you are not buying large amounts of merchandise to push the price per unit down even further, purchasing merchandise from a wholesaler makes no business sense.
While you could buy directly from the manufacturer, you would usually be faced with a very high minimum order requirement. This in turn requires a significant investment from the start.
There is, however, a middle ground: liquidated stock. When speaking of liquidators and liquidation business, many people get the idea of scrap, used or broken merchandise that no one wants to buy due to the condition or quality. This is not the whole story.
While a large portion of merchandise is customer returns and very cheap products, there is no denying that liquidated merchandise is changing the e-commerce landscape and it is through this stream that many are now able to push resale prices so low.
How is that possible you might ask? Low-tier liquidation companies struggle with selling low quality and used or even broken merchandise. However, top-tier liquidators have taken a different path. While a large portion of merchandise being liquidated is untested and sold ‘as is’ or even tested but not working, the quality issue is being tackled by signing exclusive contracts with top manufacturers and retailers who use the liquidation companies as a platform to liquidate fully working stock, or even unopened shelf-pulls, to reach a wide range of customers quickly.
This not only ensures that merchandise from top brands is being offered, but it also eliminates the wholesale purchase and markup and keeps the prices for you as a buyer below wholesale.
Again, depending on the type of merchandise you want to work with or the niche market you found and are looking to cover, you are presented with a number of opportunities. You could go for the cheapest option and buy pallets of unsorted customer returned merchandise. In truth a large percent of the merchandise sold through liquidators is untested and a percentage is tested but not working and can be bought for parts, which could be a great opportunity if you’re good at making repairs.
Unsorted returns are sold at very low prices, compared to the MSRP, and you could receive a variety of products in all sorts of conditions, So you need to carefully weigh up the costs and what you might be able to do with the products. However, in terms of pallets of electronics that are sold under unsorted customer returned merchandise, the stats say that such inventory has a 75 percent plug and play success rate.
However, if you’d really like to stay on the safe side and still secure a significant profit without sacrificing quality, you should look where to buy closeouts by the pallet. This, of course, can be done through the liquidation companies. Why is this merchandise interesting? Well, this merchandise is top notch in terms of quality and condition. When retailers don’t manage to sell the merchandise for whatever reason, and need to free up shelf space for new incoming collections, they discount the unsold products and sell through liquidation closeout sales.
To get rid of that merchandise as quickly as possible, manufacturers and retailers will use liquidators as a platform to reach a large number of customers online. The important thing for you is that closeout merchandise is in brand new condition, never been used or sold and often comes with the store price tags attached. More importantly, it is offered at prices 25 to 50 percent below wholesale. Whether you are working with electronic devices like smartphones or tablets, or you are buying and selling clothing, or toys for kids, you would be able to stay competitive in any market.
Sometimes though, the costs of shipping can put a dent in your profit margin. So in order to keep the delivery costs at a reasonably low level, it is best to try and find a liquidator near you. This is an easy task for business owners in Kentucky as one of the most reputable liquidators Direct Liquidation delivers closeout merchandise from its Kentucky warehouse, by the pallet, lot or even a truckload. For other types of merchandise, we also have products currently in warehouses in Arkansas, Indiana, South Carolina and Ontario.
For those living outside of these areas, you need to take the following steps. Visit your local liquidation business and also browse online for one. However, before making any purchases, make sure you know what you are buying.
Reputable and quality liquidators will provide you with great service and also they will provide you all the information about the products you are buying at least in the form of a manifest. This is a list showing you the type, the quantity and the quality of products contained within a pallet you are looking to buy. This is usually the test every top liquidator will pass with ease. If you run into a liquidator that withholds information or completely declines to provide you with a manifest, turn around and look elsewhere. In the end, with low prices and high quality, sometimes it doesn’t hurt to pay on top for shipping, just make sure you get your calculations right.
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