How to Set Up a Basic Low-Cost Liquidation Resale Business

Buying and reselling liquidation merchandise either online or in a physical store is an increasingly popular business these days. This type of business can generate good profits, especially in these times of crisis. Recently, online shopping has increased significantly; in some cases, even tripling in sales volume and revenue over the course of just a couple of years.

If you’re interested in starting in a liquidation resale business, you need to do your research first. Many resellers start without enough knowledge of the products and the market and with very high expectations. As a consequence, they end up confused losing time and money. To avoid that being you, we will go through what you need to do before you spend a single dollar.

What are Liquidations?

Every year, retailers like Walmart, Lowe’s, and Target liquidate thousands upon thousands of products for a wide variety of reasons. These products can be customer returns, overstock inventory, or closeout stock. Whatever its classification, this merchandise presents retailers with a significant logistical headache.

This is where a liquidator like Direct Liquidation steps in. Direct Liquidation is an online liquidation marketplace where businesses can find customer returns, overstock, and closeouts sourced from some of the country’s largest and most reputable retailers. This also presents large retailers with a convenient way to deal with the logistical problems caused by excess stock. Stores liquidate their merchandise by selling it to high-volume liquidators such as Direct Liquidation, thereby retrieving some value from the merchandise while freeing up storage space.

Because large retailers sell their liquidated stock at a reduced price, Direct Liquidation can offer our business customers these products at considerably lower prices.

Choosing Your Supplier

One of the most important factors for the success of your liquidation resale business is where you source your merchandise. This is a competitive market, and you will need to be prepared to face savvy competitors that are able and willing to undercut your prices to get that valuable slice of the market. So getting the right supplier will give you the edge you need to attract customers and beat the competition.

What you need is a reliable and trustworthy supplier that will provide you with a steady stream of the merchandise you need at a very competitive price. Liquidation marketplaces can supply you with products at low prices, but you will need to be able to separate the wheat from the chaff, and choose a company that you can trust. Reputation is precious, and checking out how satisfied previous and existing customers are with a given supplier will give you the best indication of the quality of their service.

To avoid problems, you should always go with a well-regarded liquidation company with a long reputation of service like Direct Liquidation. A top-tier liquidation company will also provide you with end-to-end customer support. This makes it a lot easier for you to understand what you’re purchasing and make the best decisions for your business.

Deciding What to Sell

As part of your initial research, you will find that there are many different products you can resell. Choosing your products is a critical decision. One of the factors that should guide your choice is your own profile as a seller. Consider your knowledge base, experience, skills, and interests. It will be a lot easier for you to sell a product you believe in, know, and are interested in than a product you don’t know anything about.

There is a market for practically everything, but you need to keep in mind that not all products will be right for you. Some markets are very competitive and may even be oversaturated. Entering these markets, let alone making a success out of it, can be very tricky. So you also need to consider market conditions alongside your profile. If you’re just starting, it might be an excellent option to find a niche market to get some experience and become more established, before venturing into more competitive markets.

Knowing your market will also be crucially important, even after your business is up and running. Keeping up with the current market trends will allow you to determine what will sell quickly and for the best profit as well as learn how much stock you should buy. There are plenty of tools for this already set up for storefronts on eBay and Amazon – a quick internet search for ‘eBay market tools’ is a good place to start. If you’re selling locally – what have seen sell well in your area in the past – is there any big gap in the market? Do locals have to drive a long way to buy clothing, or electronics, or appliances? If so, then these will be interesting areas to test out.

A Large Variety of Merchandise

At Direct Liquidation’s online marketplace, you will find a large number of lots in a variety of conditions. A large number of the lots available are customer returns. This kind of merchandise can come in different conditions, depending on the reasons that led to it being returned. Some of it will have some defects. But many customer returns have no damage whatsoever and were returned as a consequence of mistakes or due to the customer regretting their purchase and taking advantage of the returns policy. Some customer returns will therefore be ‘as new’, even with original packaging. Typically only 1 in 5 returns for online purchases are due to a damaged product.

Overstock merchandise is merchandise that has been over-ordered by retailers and therefore becomes surplus-to-requirements. A lot of this merchandise is also seasonal merchandise, that is, products that sell well during a certain time of the year (think clothing, Christmas or Halloween decorations, and so on) and that is hard to sell once that time is over. These are mostly brand new items you can source for a fraction of their original price. Closeout stock is similar, the difference being that it originates from stores that are being closed or restructured.

Regardless of what kind of product you are interested in buying, most lots (with the exception of unsorted pallets or truckloads) come with a manifest detailing the contents, quantities and condition of the items. This means that you know what you are buying and will be spared any nasty surprises when you eventually get your order.

But the products you’ll find at Direct Liquidation don’t vary only in their condition. You will also find an enormous range of categories of merchandise available. These include:

Automotive, Babies, Books, Clothing, Shoes and Accessories, Electronic Products, Fixed Assets, Food, Furniture, General Merchandise, Health and Beauty, Home, Industrial Supplies, Jewelry, Office, Parties and Occasions, Patio and Gardens, Pet Toys and Supplies for Pets, Sports, Fitness and Outdoors, Toys, and more.

Set a Budget

You need money to make money. But what you do with the money you’ve got can be the difference between business failure and success. Like in all other factors we have covered so far, planning is crucial. That’s why you need to set a budget that takes into account all the expenses associated with running a resale business. These will include the cost of buying stock, but also other expenses like shipping and storage. There are also other costs associated with maintaining your business such as; general expenses, commissions and taxes. There are lots of online tools from public institutions to help you set up a small business. Check out the website of you local Chambers of Commerce or your state’s bureau of business or revenue.

Starting small and then gradually buying more to meet demand will allow you to lay the foundations for a sustainable business over time. Little by little, as your business grows, you will have more money available to buy more merchandise, which will give you greater opportunities for profit.

Buying the Merchandise

Buying merchandise from Direct Liquidation liquidator couldn’t be easier. Most lots liquidators offer business customers on their online marketplaces available to buy in pallets or truckloads. This means you get a choice of how much stock you buy, depending on your business needs and capabilities. If you want smaller quantities, you can go for a pallet; if you want to buy in large quantities, you can go for a full truckload. Item by item, full truckloads will typically be cheaper than smaller lots, and you’ll a lot on per-item shipping when buying in bulk.

At Direct Liquidation, lots can be bought in three different ways. Most lots are available to buy via live liquidation auctions. These work like any other online auctions (eBay, for example). There is a time limit for the auction, you place your bid, and if your bid is the highest by the time the auction ends, then congratulations: the lot is yours! You can read more about the auction process here.

Many of the lots offered at Direct Liquidation are also available to buy for a fixed price. This is particularly useful if you wish to avoid the stress and uncertainty of the bidding process. Just click the “Buy It Now” button and the lot will be yours by the price indicated. Alternatively, Direct Liquidation is happy to listen to business propositions, especially from loyal customers. Just propose a price to our customer service staff, and if we like it, the lot is yours!

Once you buy your merchandise, you will need to have it shipped to your location. If you have a van and if you are close to one of the many warehouses Direct Liquidation has throughout the United States and Canada, you might be able to pick up your lot yourself. If that’s not the case, you will need to hire a shipping company to do the job for you. In this case, it is a good idea to check with Direct Liquidation first. Direct Liquidation has deals with transport companies and you may find out that you’ll get a much better price if you let your liquidator help you arrange shipping.

Selling Liquidated Merchandise

Once you know what to sell and where and how to get your supplies, you need to decide how and where you are going to sell them to your customers. If you are considering starting your own retail business then you may want to go the traditional route, selling from a store on Main Street or starting small, hiring a stall at a local flea market.

Alternatively, you can use the internet to reach a wider customer base. Many startup online sellers look to open a store on established big name brand leaders such as Amazon and eBay. While this might be tempting, both companies charge costly fees, which might eat into your profits just at the time you need to be making as much money as you can, while spending as little as possible.

Instead, it might be a good idea to start out small by starting out local. Craigslist and online local classifieds, for example, will connect you with your local customer base, and because these customers may even come to you, you’ll cut down on distribution costs.

And don’t forget the power of social media. Sites like Facebook Marketplace are a great place to sell their wares, and Facebook also offers attractively-priced targeted advertising packages if you have any spare money to devote to marketing. Twitter and Instagram are also great places to grow your customer base, but you must learn to stand out from the crowd by being informative, helpful and engaging.

Whatever path you choose to enter retail, the keys to success are finding a source of low-price and reliable merchandise to supply your retail business, considering the market you need to fill, and not getting in over your head.

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