Online sales business has been growing over the past few years with sales in 2016 hitting $396.7 billion and have a predicted value of $684 billion by 2020. More and more users in the United States and around the world opt to do their shopping online.
But it is not just the United States where e-commerce is growing rapidly. In the United Kingdom, online sales hold a 30 percent share of the total economy.
The pattern that is developing shows a growing customer base. However, online sales are not something that started recently. This is reflected in increasing number of sellers and increasing competition.
Looking at the prices of single products, they are priced very close to wholesale, meaning that sourcing items from traditional wholesale suppliers or retailers gives a slim or no profit margin at all.
Unlike wholesale suppliers, liquidators running online liquidation auctions or selling merchandise without the bidding procedure, don’t own the merchandise, they don’t buy it off the retailers or manufacturers. This has a positive effect on the potential buyer since the prices at these auctions start way below wholesale.
So, how does one gain an advantage with liquidation merchandise? First, you have to understand what liquidation merchandise is.
Liquidation Merchandise Explained
When buying wholesale merchandise through liquidators you will see a list of liquidation stock, customer returns or overstock. Merchandise condition varies, but in the majority of cases, the merchandise is brand new and the difference is how it got to the liquidator.
Liquidation stock or real liquidation stock ends up at the liquidator when a store or a business closes down for whatever reason. The merchandise that remains, usually brand new stuff with price tags attached, gets sold by the pallet through the liquidation companies that help sell the merchandise on to other retailers or resellers. The quality of overstock merchandise is the same. It is usually brand new merchandise that for whatever reason did not sell at the store and the owners are looking to sell it quickly to free space at the store for new products.
Customer returns are a bit different. These products can come back opened but, in a lot of cases, they are returned unused and unopened. They are often returned not because there was a problem with their quality, but because the buyer changed his or her mind, for example, the buyer maybe did not like the color.
Before explaining how you can turn a profit on liquidation merchandise, we have to put in a word of caution for those that are new to the business of buying and selling such products. As with anything you buy online, you have to run as many checks as possible, not only on the merchandise itself but also verify the validity of your source.
Liquidators build a reputation, positive or negative, and you don’t want to find what type of reputation they built only after you make a purchase. Searching online for the type of services they provide, comparing their prices to other similar suppliers is key to finding the best source for you. Also look for customer reviews as the experiences of former clients are a good basis for your decision. This will all enable you to make the right decision when choosing the right liquidator and will also make things easier when you are buying merchandise.
Top liquidators, through their exclusive contracts, require liquidated items to be either refurbished by the manufacturer or by an in-house specialized department in case they are not new. Liquidators may offer a 90-day warranty on any refurbished products listed at their website.
In addition, each wholesale pallet on offer will have a complete manifest, showing what products are contained in the pallet. This means you are not buying blind, especially if a pallet is a mixed one. It is not rare to have liquidators of questionable reputation withhold information on the merchandise contained in a pallet, or give an incomplete manifest. In both cases, it is better to stay away from that liquidator because purchasing such merchandise increases the chances of ending up with broken, damaged products or just trash that you will not be able to sell anywhere.
Turning Liquidation Merchandise into Profit
With all the above considered, you have the perfect opportunity to secure cheap, quality merchandise and a reasonable advantage over other buyers who use traditional sources of supply.
With lower prices, you are still securing a significant profit margin which enables you to stay competitive in a tough market. In addition, buying by the pallet through liquidation auctions means you don’t have to buy new stock every day, giving you more time to spend on securing new customers, finding undersupplied niche markets to fill or just to advertise your online store a bit more.
In addition to being able to dedicate more time to market research and finding the right niche for you, you have more time to figure out how to turn your purchases into profit.
One of the ways is to sell your merchandise on global selling platforms like eBay or Amazon. You will find a detailed step-by-step procedure in our ultimate guide to selling on Amazon.
In short, there are several steps you need to take, some of which have been mentioned above. First, you have to familiarize yourself with the Amazon concept and learn how to set up your business on the website. Then you have to have a closer look at the market and recognize the patterns or market dynamics. This will show you where the demand is high but the supply is lacking, which is basically the niche market showing the most promise and the one you should maybe consider as your starting point.
Then you have to find the right supplier that will allow you to buy quality merchandise at such prices that will enable you to stay competitive in the market while earning on markup. Learning how to market your products is also of great importance, part of which is learning how to list them on Amazon.
All this will set you on course to maximize your profit and only shows how much of an advantage you gain over any other resale concept by working with liquidation merchandise.