According to CNBC, the liquidation business has multiplied to more than twice its previous size since 2008. It has now reached the milestone of $644 Billion in 2020, as per Colorado State University.
And the industry is on a rapid rise due to the increase in resellers and liquidation stores. With many such stores and platforms opening up which allow anyone to start their liquidation journey, it is the perfect time to grasp the opportunity.
But there are always some questions or queries that a newbie in this industry would have. Where can you buy liquidation pallets? Or scarborough? Ir Texas? Which wholesale liquidation companies are the best for bulk buying?
There can be a lot of things to get wrong when you are new to this. So here are some tips to help you start out on the right foot.
1. Choose a good liquidation company
As mentioned above, there has been an upsurge in the availability of wholesale liquidation companies and liquidation stores. For the convenience of buyers who want good quality products at a lower price, these stores are hoards of treasure.
As long as people are okay with using returned and refurbished products, liquidation pallets are their lucky charm. Well, most of the time. But it is important to choose a liquidation store or company which is trusted and has a good reputation.
It is also fine to buy from lesser known liquidation companies. But purchasing from such stores can be slightly more risky in comparison to buying from well-known stores. It would be a better choice to buy your first few liquidation pallets from trusted sources as it would help you minimize your losses.
Remember, there are a few risks, which we will talk about in the next point, that remain even in buying from the best of companies.
But you would feel more comfortable buying from Amazon than you would from a no-name store, right? Apply the same logic to your liquidation pallet business, and take more risks when you can afford to take a chance. You can check our articles about liquidation stores to get you started:
- 8 places to buy Amazon Liquidation pallets from (insert link)
- Liquidation stores in Scarborough (insert link)
- Liquidation stores in Kitchener (insert link)
2. Know the risks
There are a lot of pros to reselling liquidated products. They have major profit potential as the actual products can be sold at prices which are profitable, despite being affordable to others.
This is mainly because the liquidation pallets are auctioned off at cheap prices which are barely a fraction of their actual retail price. Hence profiting a piece of cake.
But due to those same reasons, there are a few cons too. Liquidation pallets are so cheap because the products that they consist of are used, returned or refurbished; sometimes all three.
Customers buy products and then return those if it doesn’t satisfy them. These products are sold to liquidation stores through the auctioning off of liquidation pallets.
Hence, there is possibility of many of these products being in a slightly used condition. Thus, the functionality of the items is not guaranteed. To summarize, the products that you buy in bulk from liquidation stores or auctions may not be fully functional.
There can be defective items which are completely unusable, or items which may need repair. In the former case, you would be losing money on the product, while in the latter case you would need to repair the product to make it retailable. These products will hence make you lose more money.
Hence, this is a disadvantage of the liquidation business, as you do not know the condition of the product that you are buying, even if the product is costing you just a dollar.
But don’t worry too much, as such products are not too frequent in liquidation stores. So chances of you getting perfectly fine sellable products are high, and you can hopefully make a good profit off of those.
3. Have a well-thought out plan for the business
So you have chosen a good liquidation store and made your peace with the risks. Now you need to decide how exactly you are going to pull it off. Forming a basic outline of the things you need to do can be helpful if you are feeling overwhelmed or confused.
Firstly you need to stock up on your inventory and go through all the products in the pallets. You will need to sort out all the good products and separate the semi-functional or dysfunctional ones for disposal or repair.
You will need to make arrangements on the transportation of your products to and from the warehouse, if you are not storing the products at home.
Find a front:
But where are you selling from? You can start off from a spare room in your home, or your garage or even a rented room.
Now this part is very important. You need to set the prices of the products in a way that covers all your expenses and brings you profit, while not being too over-the-top.
The total of your retail prices needs to cover all your expenses and bring you extra money. I mean, the basic process of profiteering basically.
Be sure to take into account the buying price, any repairing expenses, transportation costs, warehouse expenses (if any) or any other intermediate costs.
4. Where to sell?
Now comes the question of where to start selling. For starters, if possible, you can start with garage sales, or flea markets. Or even though country fairs where they let you put up a shop.
You could also start selling from any spare room in your house by asking friends and family to spread the word. Further more, this is the era of internet and social media.
A ton of such resellers and small businesses have taken to platforms like Instagram, Facebook, Twitter, Ebay, etc to sell their products or crafts. It is beneficial as you can reach a large number of people from the comfort of your home. And you can have an audience that is not only nationwide, but worldwide.
But the disadvantage posed by this method is that reaching people and building a customer base is difficult. Since there are thousands of other creators competing with you to get ahead of the algorithm.
Selling online also requires extra effort as you have to be a content creator in order to make your product reach people. But having a local customer base, as well as an online store could be a great way to combat the previously mentioned issues.
You can use social media to facilitate your local store, and use your local customers to get traction on your account.
5. Get people talking about your business
And finally, to boost your store and widen your customer base, make sure to get your existing customers talking. The more people talk, the more likely your store is to get noticed by other people. It will grow your customer base and bring in more revenue.
You can do this by requesting your customers for reviews, tags on posts about your products and asking local bloggers or vloggers to post about your social media outlets. With social media, the more creative you are, the better reach you will get.
Those were a few tips about starting off your liquidation journey. It is much more complex, but everything gets easier as you keep walking the path. The liquidation business is a great way to make profits nowadays, so if you are looking to get into it, then don’t wait any further.
Interesting Related Article: “9 Reasons to Start a Business During a Recession“