Dealing with Product Liquidation

By Jason Brick

Product liquidation means sellers are open to converting their held assets into cash, even if their business takes a loss on the transaction. For a wholesaler, this can be an opportunity to pick up merchandise at a steep discount, which can then be sold at increased profits on a fast turnover.

This may sound like a no-lose situation for your business, but it carries its own set of risks. The downsides change based on why a product was liquidated.

Getting wholesale product is like shopping clearance sales every day. 

Shelf-Pulls, also called overstocks and surplus inventory, are items a merchant has taken off the selling floor after it hasn’t moved over a period of time. They can then use the space for an item they feel will more likely sell. Shelf-pulls often come in larger lots, as sellers clear their entire stock at once.

• Advantages of shelf-pulls include low prices, even as compared to other liquidations, larger lots, and the like-new quality of the merchandise.
• The main disadvantage is that the seller was unable to sell the stock. You might have similar difficulty, but priced right, this should be less of a problem. 
• Processing shelf-pulls can be labor-intensive, as you sort through the lots to find the most suitable for your shop; individual items,on the other hand, usually require little work to make them ready to ship. 

End of Season liquidations are exactly what they sound like. Businesses are looking to clean house, so that they can bring in new merchandise. A sporting goods warehouse, for example, might want to liquidate its wrestling shoes in March, so that it can make way for track-and-field equipment.

• The advantages of end-of-season liquidation include like-new quality of the merchandise and a potentially fast turnaround. Many people specifically shop for after-season bargains.
• The disadvantages include a potentially limited selection of colors, sizes and styles, and of course the risk that you won’t be able to move the stock in the off-season, either.
• Processing  end of season liquidations can be quick, if you’re able to get a fast turnover. Otherwise, you may be stuck storing the merchandise until next year’s season comes around.

Customer Returns are merchandise a customer sent back, that the seller was unable to resell for a variety of reasons. These are rarely sold by themselves during liquidation; instead, they’re usually included   in larger lots that may or may not consist entirely of other returned items.

• The advantage of customer-returned items is a strong potential for rapid turnover because these are items that people have recently purchased.
• The disadvantages include a higher chance of damage or other problems with the merchandise, as well as a limited selection.
• Processing this kind of order can take more work than other liquidation options. Customer-return packaging can be damaged, and even undamaged packaging might have the merchandise stuffed in haphazardly. Other items might show signs of wear, which you’ll have to correct before selling to the general public.

Remember, no matter what kind of liquidated merchandise you’re thinking about buying, the most important thing to keep in mind is your customer base and their buying habits. When you purchase lots that fit your customers’ demand, you’ll be successful with your sales.

Post a Comment

3 Comments

• 

  By Robert Cyr, December 6, 2011 @ 9:50 am

  Jason, great article! I’ve been buying salvage returns for about 8-9 years now. Paying a fraction of retail/wholesale for inventory has allowed my family to enjoy a great living. With razor-thin margins, the small resellers needs all the help he can get when sourcing inventory.

• 

  By TechLiquidators, December 6, 2011 @ 12:01 pm

  Robert – Thanks for the feedback! Is there a subject you would like to see covered on TechLiquidators’ blog in greater detail?

  We’re hoping to gain a better idea of what topics will support the specific challenges resellers face.

• 

  By Mike, December 29, 2011 @ 9:06 pm

  Robert,

  I have an online childrens clothing business I recently started and wondered if you have any suggestions for wholesalers I could purchase inventory. Thanks

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