It is not uncommon to hear online sellers debating what the best source for your merchandise is. Some say it is buying merchandise by the pallet from wholesale distributors while others claim that liquidated stock is the way to go. While both ways of procuring merchandise have their pros and cons, purchasing closeouts rather than wholesale has a number of advantages, especially when it comes to the price-quality balance.
However, to realize these advantages you first have to know what they are and why closeouts open up way more potential for your business in comparison to even the most profitable wholesale items.
To focus on differences and advantages, you have to understand what closeout and wholesale merchandise are.
Buying wholesale usually means buying in large quantities where wholesale suppliers first purchase large amounts of merchandise, usually from manufacturers, in order to sell it on to retailers and small online business owners that sell products on one of many e-commerce platforms. Buying in such large quantities allows the wholesalers to keep the prices very low, and even on resale, with their markup, retailers are able to earn a profit.
And while you might occasionally see returned electronics for sale or other customer returned merchandise being sold, it is usually brand new merchandise you can procure through wholesalers, whether you go to warehouses directly or order through online wholesale suppliers. What this means is that the quality of the merchandise you purchase is at a significantly high level, especially when working with reputable wholesale suppliers and distributors, the products are new.
However, closeouts, as we mentioned above, have a better price-quality balance. How is that you may ask, when you can purchase closeouts through wholesale suppliers and the prices don’t really differ much to that of other wholesale merchandise? The issues here is the way you buy closeouts. Buying through your wholesale supplier means you are paying for the markup and not the actual closeouts price. To get the lowest price you should buy directly from the manufacturer or retailers, but before we get into where to buy closeouts by the pallet, let’s first see what these are.
Closeouts are a specific case, because, when you see retailers discounting merchandise and trying to sell quick, you might think there is something wrong with it. Truth be told, it might be that the merchandise for sale on closeouts was not as desirable as some other top models that sold out quickly, but it could also mean that the store was not really in the best location and more importantly it is the turn of the season, or new products are being announced and the retailer has to free up shelf space for the incoming batch.
For example, seasonal merchandise is the most common type of stock being sold through closeouts. This is because, if you look at clothing, or even barbecue grills, you can only use certain items during certain seasons. Summer clothing during the summer as well as your BBQ grill. During the turn of the season, especially when we are talking about clothing, be it summer to fall or winter to spring, you will see retailers popping closeouts signs all over the store. But you will also see them pack up summer clothing in pallets and sell them by the truckload to free up shelf space for the incoming fall and winter collections. This is the time to buy your closeouts.
The same goes for electronic gadgets, smartphones, or laptops. The technology is developing at such a fast pace that you get new models of any item coming out almost twice a year. While the demand is there, often retailers need to get rid of the ‘older’ models to free up space for the newly announced products. This is also the time to buy closeouts. Essentially, these are still brand new products that were just not sold in time.
But you have noticed one trend, large closeouts buyers, usually wholesalers will strike deals for truckloads of closeouts merchandise, leaving you pretty much no other chance than to purchase closeouts through them and pay extra. But is that the only way? Luckily, no. you can now purchase closeouts in smaller quantities, directly from the retailers and manufacturers, just look for liquidation companies.
Why would you buy anything through the liquidation companies when the majority of merchandise sold through these companies are customer return pallets and used merchandise. Well while this might be true for a number of liquidation companies, top-tier liquidators are operating a bit more differently.
Actually, the way the liquidation business is set up, you can buy anything of any quality, from very low quality to brand new products. This is because reputable liquidation companies serve as platforms for manufacturers and retailers to sell their closeouts faster by reaching to a larger audience, usually online. It is no wonder that some of the largest retail chains liquidate their merchandise through such companies, so you can see Walmart liquidations and many others. It has to be stressed however, to work only with top-tier, reputable liquidation companies in order to get the best value for your money.
And what is that value you might ask. For that, we have to go back to the wholesalers once more. As we noted they themselves sometimes purchase closeouts and sell it on with a markup for a profit at, what we know is, a wholesale price. However, closeouts are usually sold at 25 to 50 percent below wholesale price, meaning that profit margin for your wholesaler in this instance is huge. The online trends are such that single items are sold almost at wholesale prices, making it very hard to earn any cash leaving you guessing whether the time and effort you put in is actually worth it.
Well, buying closeouts through top-tier, reputable liquidation companies eliminates that wholesaler markup. You are getting rid of the middleman and buying through a manufacturer’s or a retailer’s storefront on a liquidator’s website. This means you are able to purchase brand new products below wholesale prices, allowing you to be competitive in any market, whether a niche one or some of the most competitive ones like electronics, or books. This allows you not only to earn more, but actually to stand out from the competition with low prices.
A word of caution though, customers are becoming increasingly sensitive to dodgy listings, so if you cut the price of an item, especially if it is a popular one, too much, your listing might be regarded as fake or an error, so your customers may just skip it. The goal is to set your prices just below those of your competition so you are still standing out, but in a more reasonable way, and increasing your profit levels at the same time.
Direct Liquidation is a goTRG company.
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