How to Buy Surplus Merchandise Online? Liquidation Auctions

Earning extra cash through online sales has become a popular spare time activity for many. The market is expanding each day with online commerce expected to grow from $396.7 billion last year to over $684 billion in 2020.

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Electronics and books are at the top of the list of items purchased online. But if you are looking to start your own online sales business, plunging into the electronics and books market might not be the smartest choice. Yes, the demand is there, but the number of sellers and competition is overwhelming. If you are not offering merchandise at competitive prices, and if you are not spending an extra effort to advertise your products, there is a slim chance of them being noticed, in comparison to those sold by already established sellers.

However, there is a way you could make headway into any market, with a slightly different approach to that most business owners take. The traditional approach is to buy brand new wholesale merchandise from a number of sources, or a number of different wholesale suppliers.

Instead, you could also look into surplus merchandise being shed by retailers. This is something that could not only get you in contention with other market players but also give you an edge over the competition. So, what is surplus merchandise, how and where to buy it? Read on as we discuss all the above further down below.

Tapping into a Specialized Market is the Key

Before going into the surplus merchandise, it is advisable for beginners to research the market conditions and look into the supply and demand dynamics of preferred target markets. You should then make your decision as to which market to enter based on the results of the research.

The aim is to find a niche segment that is undersupplied but has a healthy demand for a certain product. It is best if you could find more of these undersupplied segments and pick one or two that you would feel comfortable working in.

There are several advantages of undersupplied niche markets. Firstly, you already have a healthy demand and enough potential customers. The second advantage is that there isn’t as much competition as in the electronics or books segment, meaning the prices are not as depressed as in other markets. This results in a larger profit margin once you start listing your products online.

Additionally, if you are a beginner, starting your business in a less competitive market means you are working under far less pressure. This will give you the opportunity to learn the ways of running a business on a smaller scale and then bring the gained experience over to a new market. Should you decide to expand, it is only a matter of scaling up.

Sourcing the Merchandise

Once you have found your niche markets and the products you’d be comfortable working with, it is time to find the best option that will guarantee you a steady influx of products to buy in bulk for resale. Buying in bulk comes with many benefits. The main benefit is that you are getting a reduced price per unit. This is a kind of discount that you get when you work with wholesale suppliers. But if you look elsewhere, you could buy merchandise for prices that are even below wholesale.

The fact is that retailers should be your target source as they can provide you wholesale merchandise at the lowest prices. How, you might ask? This is where that surplus inventory comes in. So, before we look any further into where to source the surplus merchandise, we should understand what it is and why you might have already been working with it.

What is Surplus Merchandise?

Surplus merchandise can be anything from shelf pulls to merchandise returned by the customers. This is not such a rare occurrence. With the throughput, the retailers like Amazon or Walmart have, around 30 percent of merchandise gets returned by the buyers. Some of it is due to damage in transport, wrong shipments while sometimes buyers simply use the generous return policy to its full extent.

These returns are known as surplus because, regardless of the condition that the merchandise is returned in, it can’t be sold through normal channels. Instead, the items have to be liquidated. It is also called surplus inventory because the retailer now needs to move this merchandise in order to free up storage space for incoming products.

Now that you’ve heard the word liquidations, you might begin to doubt the quality of these products. But you’d be wrong. The fact is, you might have already worked with liquidated goods before if you sourced your merchandise from wholesale suppliers.

Many wholesale suppliers turn up with a truck to something like a Walmart auction and simply snap up everything they can. The merchandise then gets hauled to the wholesaler’s warehouse, gets reviewed, sorted and readied for resale to you, with a slight wholesaler’s markup. You requested brand new merchandise, but you can’t know if the brand new smartphones you purchased from your wholesale supplier are actually smartphones that have previously been returned brand new, in their original packaging.

The Advantages of Using Liquidators

So now let’s look at why liquidations and surplus merchandise go hand in hand. Well, to avoid the wholesaler’s markup and to boost their reputation as a serious business, a number of liquidation auction sites and liquidation companies have started exploring a new avenue. This is to offer a platform to the likes of Amazon and Walmart to liquidate their merchandise directly to smaller buyers that would like to buy overstock pallets, but haven’t had the chance or power to compete with large wholesale suppliers.

So now, you could buy pallets of surplus inventory from Walmart or Amazon without having to deal with the wholesale supplier. As a result, you are able to buy surplus merchandise at prices below wholesale, which in turn leads to a higher profit margin and greater competitiveness in any market.

And it is not like you have to skimp on quality. You still have the option of buying top-rated surplus merchandise by checking the manifest provided with any liquidated pallet. This shows you the type of products within each pallet, short description, quantity, and most importantly quality, so you know what you are buying and in what condition it is.

Moreover, the merchandise is often shipped directly from the retailer’s warehouse. If it has been reviewed and refurbished, you are getting not only a renewed money-back guarantee but also an extended warranty on the product. So there’s your sign of confidence in the quality of surplus merchandise.

So now that you know what and where to buy, let’s look at little tips on how to sell the products on.

Making a Profit

A mistake many beginners make is expecting to make one big sale that will recover their investment at once. However, the business does not work like that. First, you should always know the retail and wholesale prices of single products you are bidding on, and always set the budget way below that.

When reselling such items, the goal is to keep the prices at a competitive level, cheaper than retail prices and the profit is only counted once every product from the pallet is sold. It takes patience and time, but it is the smartest way to give yourself the best chance of making a profit through online sales.

Direct Liquidation is a goTRG company.

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